A synthesis of three case studies in the Sidama–Gedeo–Guji, Kaffa–Bench-Sheko–Sheka and Jimma–Buno Bedele–Ilu Aba Bora belts

SUMMARY

• Coffee is as a major export commodity that has been widely studied in Ethiopia from economic, technical and agro-economic perspectives. There are, however, few analyses of the political economy of the Ethiopian coffee sector. This reflects a critical gap in the extant literature.
• The Ethiopian coffee sector witnessed a major reform in 2017, the implementation of which coincides with the 2018 regime change. It is imperative to study the changes and continuities of the political economy of coffee during the Ethiopian People’s Revolutionary Democratic Front (EPRDF) and Prosperity Party regimes.
• This synthesis report covers three case studies conducted in three major coffee belts; namely, Sidama–Gedeo–Guji, Kaffa–Bench-Sheko–Sheka and Jimma–Buno Bedele–Ilu Aba Bora. The study covers four regions, including Sidama, South Ethiopia, Southwest and Oromia.
• The three case studies were selected because they are major coffee-producing belts in the country. The Jimma–Buno Bedele–Ilu Aba Bora belt in Oromia provides for a comparative analysis with the adjacent Southwest Region on key themes of the study.
• Three thematic features are identified in relation to the history and governance of coffee: extraction, land tenure and a disjuncture between political autonomy and economic power. These themes are inherently inter-related and intertwined across four successive regimes.
• The centre–periphery dichotomy has continued in the coffee sector since the time of Menelik II (1889–1913), with changes only in the configuration of the extractive mechanism, which has not yet been dismantled. Landownership is another key issue, with state control of land and the centrality of land tenure persisting. The disjunction between political economy and economic power has also continued under successive regimes, with economic power held by the centre and the regions unable to capture coffee value.
• Smallholder farmers are essential to the coffee sector but they continue to receive little benefit for their participation. Neither the 2008 reform nor the 2017 reform has clearly improved their situation, even as results vary across the three case studies. It is too early to conclude whether the 2017 reform has helped farmers gain a stronger position or earn more income.
• After 2018, a major change allowed coffee farmers with 2 hectares or more to obtain an export licence. In practice, however, many face challenges such as limited access to finance and markets.
• Coffee suppliers note that their role as intermediaries has shrunk since the 2017 reform, as exporters can now buy directly from farmers.
• Well-established coffee suppliers and exporters often discourage new entrants, especially local traders. The 2010 and 2016 conflicts in Gedeo were partly fuelled by these tensions. Coffee reform needs to go beyond the national level and address regional issues to encourage local traders to participate in coffee trade and export.
• Exporters welcomed the 2017 reform because it reduced the role of the Ethiopia Commodity Exchange (ECX), which required centralized coffee marketing.
• Coffee cooperatives and unions now face stiff competition from traders and exporters who offer farmers immediate cash payments. Their role has declined since 2017–2018.
• After the 2017 reform, institutional competition between the ECX and the Ethiopian Coffee and Tea Authority (ECTA) in coffee marketing has continued. Since 2021, the ECTA vertical integration model has become dominant, involving more than 90 per cent of coffee exports.
• The illicit coffee trade is widespread. Illicit domestic trade is especially significant and reduces foreign exchange earnings from coffee exports.
• Not all coffee exporters are focused solely on marketing coffee. High demand for foreign currency and the import of expensive goods influences the market, sometimes pushing coffee prices above global selling prices.
• Patronage and clientelism heavily influence licensing, land grants and coffee marketing.
• Corruption is widespread in the coffee sector, involving cooperative leaders, local officials and state institutions such as law enforcement and customs.
• Neither the ECTA nor regional governments are well prepared to meet the European Union Deforestation Regulation (EUDR). Their limitations include a lack of technical capacity, especially in the geo-location of coffee farms to ensure traceability.
• There are two competing narratives about where coffee originated in Ethiopia: one in Kaffa zone (Southwest Region) and another in nearby Jimma zone (Oromia). Both areas have similar agro-ecology and were once part of the same administrative unit under Menelik II until 1991. After the 1995 multi-ethnic federalism system was implemented, these two zones were split into different regions and the origin narrative became divided. There is no doubt, however, that coffee originated in south-western Ethiopia. A shared narrative could reduce political competitions and open opportunities for coffee tourism, branding and specialty coffee marketing.
• The Manjja and Majang ethnic groups remain marginalized in the coffee sector. Being evicted from their ancestral lands and working as labourers for commercial plantations could lead to open conflict. Intermittent conflicts and property attacks are already occurring.

The Ethiopia Peace Research Facility

This report was written for the Ethiopia Peace Research Facility as part of its Knowledge for Peace series on the political economy of coffee in Ethiopia; Dereje Feyissa served as research advisor for this series. The PRF is an independent facility combining timely analysis on peace and conflict from Ethiopian experts with support for conflict-sensitive programming in the country. It is managed by the Rift Valley Institute and funded by the UK government.