It has long been witnessed that the largest export crop in Ethiopia, Coffee, is the mainstay of the country’s economy. The Ethiopian coffee sector is highly dependent on international prices and affected by the structure and workings of the world coffee market. As Ethiopia has not yet fully exploited its position as the producer of some of the best coffees, a number of competitive advantages could still be grabbed if quality and consistency are secured. In order to maximize this potential, the country has to make a long trek ahead.
Cognizant of the fact that it is better to have professional concept about this precious commercial crop national economic significance, The Ethiopian Herald had recently a stay with Yadeni Muktar, an agro economist graduated from Haramaya University in agro economics.
Yadeni said that Ethiopia has been the oldest exporter of coffee in the world and is the largest coffee producer and exporter in Africa, too. It is also well recognized that coffee is one of the highest treasured commercial crops in Ethiopia and the most widely consumed brews in the world and one of the most merchandized commodities internationally. Coffee production is witnessing an increasing trend in the application of various strategies and the country is well capitalizing on this commercial crop.
She further elucidated that coffee is a major popular beverage and an important commodity cash crop in the world. It is also the second most valuable commodity next to fuel. Coffee has grown mostly by small farmers all over the world.
Ethiopia is widely known to be the birth place of coffee Arabica, which is demonstrated by its variety and quality of beans. Its coffee is grown in both highland and lowland conditions, nurtured with care by the farmers, garnering the beans a range of unique flavors and textures, she added.
She said, “Coffee accounts for the lion’s share of Ethiopian export earnings. It plays an important role in the economy and livelihoods of Ethiopia’s rural population. Thus, increasing efficiency of the sector and exporting coffee would enable Ethiopia to sustain domestic economic growth. The Arabica coffee bean, widely consumed globally, is native to Ethiopia, where it has thrived for centuries and generated valuable jobs related to coffee cultivation, processing, roasting, packaging and transport.”
According to Yadeni, large coffee producers and smallholder farmers alike are exploring ways to preserve an environment conducive to coffee bean cultivation in Ethiopia.
She said, “The largest coffee producing countries are Brazil, Viet Nam and Colombia, whereas the European Union and the United States of America are the largest consuming and importing markets globally. Coffee can indeed contribute to the achievement of the Sustainable Development Goals (SDGs) by generating income, creating rural employment and alleviating poverty.”
The future of the coffee sector depends on a coherent process of modernization and on the effective engagement of young people. As the opportunities arising from youth engagement in the entire coffee global value chain are immense, they must not be overlooked and require special attention and funding, Yadeni added.
“The attractiveness of coffee production has been assessed across several districts of Ethiopia. Financial institutions and a range of organizations are expected to work hard to help the coffee sector grow sustainably via reducing barriers to trade, fostering social, economic and environmental sustainability and generating prosperity for all those involved in the coffee value chain,” she said.
As to her, an inclusive development of coffee sector requires major shifts, through enhanced sector-level cooperation based on shared values and responsibilities and an alignment of actions, funding and schemes through pre-competitive action, public-private partnerships and investments.
According to Yadeni, the socioeconomic consequences of changes in coffee prices on a set of indicators for employment, economic activity, investment, poverty and food security, per-capita, value added by sector, fixed capital formation, consumption expenditure, use of fertilizers and pesticides, poverty headcount, poverty gap, undernourishment, protein supply for diet.
Generally, Ethiopia’s organic coffee is looked-up by an international market. If farmers produce high amount of coffee with high-quality, it is very profitable and advantageous business for Ethiopia’s producers, exporters and the country as well. There is a need to educate farmers about the outbreak and economic importance of coffee, as well as about the new technology. This education campaign should be complemented with the availability of high-quality planting materials and the provision of other services to stop the declining productivity and export earnings of Ethiopia’s green gold. Educating farmers and coffee bean collectors on how to keep the quality of coffee and increase the product and productivity is an important asset. Increasing the volume as well as the quality of the coffee product through-out coffee potential areas may bright the future of coffee.
She further stated that the increasing global demand for high value commodities, such as coffee raise the importance to understand whether the expansion of commodities is a force for good and contribute to the global 2030 Agenda for Sustainable Development Goal.
Yadeni said that coffee prices are related with this market balance and current coffee markets are experiencing excess supply driving prices down. Supply and demand can also change rapidly creating market volatility. Market volatility can adversely affect producers who grow the coffee only for demand.
She said, “The coffee value chain, processing, the conversion of raw coffee into dried coffee, either through the more resource intensive wet processing or dry processing is usually carried out at processing mills. Therefore, additional processing and transportation costs can be added contingent on the processing method and distance to mills.”
“Roasting, cooling, blending, grinding and packaging of coffee can be well run. The coffee is then purchased by retailers and consumers from roasters or international traders. Market liberalization coupled with the increased concentration of traders and roasters has expanded their market power which has squeezed the prices given to value chain producers. As increased processing, marketing and distribution costs have negatively affected the bargaining power of producers, this aspect has to be properly addressed,” she added.
She further stated that most certification initiatives directly and indirectly target at improving income by ensuring that actors lower down the value chain receive higher coffee prices. Fair-trade, unlike other certification schemes, has requirements on pricing through minimum pricing and premiums that focuses mainly on benefiting smallholder coffee farmers. Coffee trade otherwise inhibits progress in sustainable development in terms of alleviating poverty, reducing hunger, improving health and well-being and enhancing the quality of education.
The coffee is valued and supplied passing through main stages such as cultivation, processing, roasting and consumption. Cultivation involves the production and picking of coffee cherry beans, often done labor intensively by hand, by farming households in the country. Besides, processing, the conversion of raw coffee into dried coffee, either through the more resource intensive wet processing or dry processing is usually carried out at processing mills, as to her.
In sum, additional processing and transportation costs can be added contingent on the processing method and distance to mills. Roasting involves the roasting, cooling, blending, grinding and packaging of coffee, normally in factories. This step would add costs linked with electric power and packaging materials. Roasting companies can often acquire their coffee from international traders who initially purchase processed coffee from producers.
Yes, the coffee is purchased by retailers and consumers from roasters or international traders. In most places coffee market price signals are more directly transferred to farm gate prices. This means that producers are paid very little for coffee, sometimes less than production costs. This roaster-farmer relationship can vary due to factors such as supply chain efficiency, levies and export taxes.
She exhorted her case urging the Ethiopian government to well eye at the coffee sector to help the nation garner the benefit it deserves out of this precious commercial crop.
BY MENGESHA AMARE
THE ETHIOPIAN HERALD WEDNESDAY 25 OCTOBER 2023
