This report is part of a wider research project on the political economy of coffee in Ethiopia in the context of the political transition since 2018. It focuses on the Sidama–Gedeo–Guji coffee belt in southern Ethiopia, aiming to understand the local implications of the 2017 coffee sector policy reform in this area.
Sidama, Gedeo (Yirgacheffe) and Guji are globally recognized for their organic Arabica coffee. These communities use agro-forestry practices that integrate coffee with natural forests and other crops, which supports local ecology.
The study draws on primary and secondary sources. In-depth interviews and focus group discussions were held with more than 80 respondents, including coffee farmers, leadership of coffee cooperatives and unions, coffee traders (suppliers and exporters), brokers and government officials from regional, zonal and woreda (district) offices in Sidama Region, Gedeo zone (South Ethiopia Region) and Guji and West Guji zones (Oromia Region). Secondary sources comprise reports, articles, policy documents, unpublished doctoral and master’s theses, and web content.
Although coffee is primarily produced by smallholder farmers, it remains heavily controlled and regulated by the state. The sector is also dominated by traders, with the primary objective of generating foreign currency. Since the 1920s, coffee production and trade have continuously reshaped state–society and society–society relations in the selected study areas. Arguably, the interaction between state coffee policy, pressure from the global coffee market and the local struggle for resource control has played a key role in shaping local autonomy movements and conflicts.
The 2017 coffee sector liberalization reform has significantly reshaped relations among coffee traders by increasing the number of local coffee exporters. In particular, the vertical integration model, which allows exporters to produce and buy coffee directly at local levels, has increased market choice for coffee farmers. At the same time, the direct involvement of exporters at the local market level has generated grievances among suppliers, who were previously the dominant players in the local coffee trade. Vertical integration has also heightened the risk of smallholder farmers being evicted from their land, a practice that existed during the imperial regime.
The 2017 coffee policy provides space to coffee producers who own 2 hectares of land or more to export the coffee produced on their plots. This reform, coupled with rising coffee prices, has sparked increased interest among farmers in the study areas to produce specialty coffee and secure export licences. Few farmers succeed in exporting, however, due to lack of capital, limited market access and corrupt practices in local governance. Operating since the 1970s, coffee farmer cooperatives, designed to serve the majority of smallholder farmers, have shown little improvement over time. More recently, they have been weakened by corruption, fierce competition, illicit coffee trade and security problems.
It is therefore vital to revisit the 2017 coffee policy in order to better protect the interests of the majority of coffee-producing farmers, who have yet to receive fair prices for their products. Specifically, it is necessary to mitigate the side effects of vertical integration, such as the eviction of smallholder coffee farmers from their land, increased illicit trade and the discontent of new entrant young coffee traders who hold supply licences but are unable to compete with exporters in the local coffee market. High youth unemployment in coffee-producing areas, combined with the minimal prices farmers receive, has already produced grievances that have fuelled both struggles for local autonomy and widespread violence against coffee traders and associated members of ethnic identities not considered local, thereby affecting inter-ethnic coexistence in Sidama, Gedeo and Guji.
The Ethiopia Peace Research Facility
This report was written for the Ethiopia Peace Research Facility (PRF) as part of its Knowledge for Peace (K4P) 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 (RVI) and funded by the UK government.
