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Value chain analysis of certified coffee in sidama zone, southern ethiopia: review of opportunities, constraints and governance structure

Author: 
Temesgen Zana and Hiwot Abayneh
Subject Area: 
Social Sciences and Humanities
Abstract: 

In international commodity market coffee is the second most traded commodity next to petroleum. Ethiopia produces coffee Arebica and it is also widely believed that the country is the birthplace of the most cherished bean. Coffee has a great social, cultural and livelihoods importance for the majority of Ethiopian population, and it is tied to complex and strong socio-cultural settings. The country produces more than 30% of the total coffee production in Sub-Saharan Africa and it also consumes nearly 50% of the total production blended with complex socio-cultural settings. The objective of this study was to analyze certified coffee value chain in the context of Sidama zone, Southern Ethiopia. The study used both qualitative and quantitative data collected through focus group discussions (FGD), key informant interviews (KII) and field observations and review of various secondary sources. The study adopted the Global Value Chain analysis framework and assessed the input-output structure, institutional context and the governance structure. Apart from the study also reviewed constraints and opportunities facing upstream value chain actors. The identified value chain actor includes input suppliers, smallholder coffee producers, coffee farmers cooperatives, Sidama Coffee Farmers Cooperatives Union (SCFCU), and international certified coffee importers, roaster and retailers. Under the value chain supporters category the government institutions at various level, research institutes and Universities, and NGOs were identified. The government through the top level ministries plays regulatory function in the overall agriculture and export trade sector, including coffee. Besides this international third party certification bodies set standards demanding all actors in the value chain to comply with. The major constraints identified includes: underdeveloped organizational and business management systems, lack of capacity to adequately implement different sustainability certification standards, gaps in coffee quality inspection skills and facilities, lack of quality payment system at smallholder level, higher cost of certification, insufficient collateral for credit guarantee from the bank, low level of female participation at leadership level. The value chain governance structure review also showed a growing power of the downstream actors’ contrasted with suppliers’ incompetency in production and export coordination.

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