Sinopia News Top

Ethiopia Reforms Policy to Improve Coffee Production

As Ethiopian coffee continues to dominate world markets, the government is now putting in place a new reformed policy in place to create more opportunities for farmers, suppliers and exporters in the industry, so they can benefit from direct market chain.

Adugna Debela, Director General of Ethiopian Coffee and Tea Authority, speaking to CNBC Africa, said the new policy intends to improve quality control and marketing elements of the value chain system.

When asked which challenges are keeping Ethiopia from being the top coffee producer in the world, Adugna mentioned what he called “bottlenecks” to the country’s coffee producing potential. One, he noted, is the extended value chain system which does not add any significant value neither to the market nor the product. The farmer receives no more than 50 to 60 percent of the true price, he noted. Another reason, he said, is the fact that since most coffee trees are old, production quality and quantity per unit of land is lower, compared to other coffee producing countries.

Now the policy is reformed, it will ensure a higher share of benefits for the farmers, Adugna hopes. “In the previous policy, the farmers were allowed only to sell coffee to the primary buyers. Not to the exporters, not to the suppliers, they [did] not get the chance to directly export. But in this policy, we designed different options for the farmers,” he said.

If they have the capacity, the farmers themselves can now be directly involved in exporting the coffee they produced. Or they can opt to sell to exporters, or to local industries that roast and pack coffee. Hence, Adugna remarked, the new policy offers Ethiopian coffee farmers “a number of options.”

In the previous policy, Adugna observed, there used to be sink holes in the middle that would absorb more than 40 percent of the price of the coffee produced, without adding any value. But now, once the reform is implemented, Ethiopia hopes to see the farmers’ share of benefits to rise up to 90 or 95 percent, from a previous rooftop share of up to 60 percent.

When asked how much concerned he is about competition from other coffee producers in East Africa, such as Uganda, Kenya and Rwanda, Adugna replied there is not much reason for concern for it since there is a difference in the type of coffee they produce, which translates into different market niches for the different countries. For instance, he noted that Uganda, the leading coffee producer of the three mentioned, produces Robusta coffee, while Ethiopia produces Arabica coffee, which Adugna articulates is “known for its quality [and] has its own special [place in the] market.” So, he insists, it is no bother what other country in the region is producing coffee. However, he also notes, the new policy in Ethiopia’s coffee production system will help ensure quality even better.

Another distinguishing factor for Ethiopia’s coffee industry, especially when compared to other countries in the region, is that 50 percent of the coffee produced is consumed locally. Adugna relates this to the fact that Ethiopia is the birthplace coffee, and coffee has old roots here. “Coffee means culture for us…. It is in our hearts,” he said.

Ethiopia exported 238 thousand tons of coffee to the world market last year, and now hopes to see this figure rise to 300 thousand this year, Adugna further remarked.


Source: CNBC Africa 

https://solfet.com/