Coffee is one of the well-known and traded commodities in the world. In fact, coffee is the second most traded commodity in the world after oil. According to Global Exchange, more than 15 million people derive their livelihood from the coffee sector. Coffee is believed to have been first consumed as early as the 9th century in the highlands of Ethiopia. According to history Ethiopian goat herd Kaldi was the first to discover coffee. From Ethiopia, it spread to Egypt and Yemen, and by the 15th century had reached Persia, Turkey, and northern Africa. From the Muslim world, coffee spread to Italy, then to the rest of Europe and the Americas. Coffee is known worldwide for its two kinds of varieties commonly grown: Arabica and Robusta. These varieties are cultivated in Latin America, Southeast Asia, and Africa. Arabica coffee is by far the most popular variety because of its smooth taste and aromatic qualities. Today, coffee is one of the most popular beverages worldwide. Ethiopia is known more for cultivating special blend Arabica coffee.
In what is deemed as recognition to Ethiopia’s place as the birthplace of coffee an important event gathering important players in the industry was held in Addis Ababa. The Fourth World Coffee Conference recently held in the capital of Africa and the cradle of Arabica coffee gathered many senior government officials, high dignitaries, coffee buyers, roasters, exporters, researchers, growers as well as various stakeholders.
The conference was organized by the Ministry of Agriculture and Natural Resources of Ethiopia in partnership with the International Coffee Organization (ICO) from March 6-8, 2016. It is the first time that a conference of such kind is held on African soil. The previous conferences were held in London (2001), Brazil (2005) and Guatemala (2010). This year’s conference themed “Nurturing Coffee Diversity and Culture” provided an important opportunity for the 77 members of the ICO to discuss the trends, challenges and the ways forward of the coffee sector.
The hosting and successful completion of such an important industry wide meeting in Africa and especially in Ethiopia was a testament to the growing importance of the role of the continent and Ethiopia in the global coffee industry. The event gave an opportunity to the producers, processors and exporters of the continent to promote their produce on a large scale. As much as the conference provided a much needed stage for the promotion coffee it also highlighted the continent’s many challenges in the coffee sector as a whole.
In Ethiopia coffee is an integral part of the identity of the nation, and is part and parcel of the social fabric. The everyday traditional coffee ceremony is central to the Ethiopian lifestyle. Tens of millions of Ethiopians consume coffee both in happy or sad social occasions. Coffee plays important place in traditional conflict resolution rituals. Indeed, it is no exaggeration to claim that coffee is an important element of an Ethiopian social milieu. As a result, contrary to most of the producing countries, 50% of the production is consumed domestically. Also coffee remains a source of livelihood for more than a third of the 15 million farming households in the country. Over a quarter of the population depends on coffee production, processing, transport, domestic or export trade directly or indirectly. Coffee is also the leading export earner and generates on average 25-30% of the annual foreign currency earnings of the country.
Notwithstanding its socio-economic importance in as in most coffee growing countries the benefit that goes to Ethiopian coffee growers is far below what they were supposed to get notably due to various problems in the coffee value chain. Some of these other notable challenges were outlined in various panels held during the conference.
The Volatility of Coffee Prices
One of the challenges that coffee farmers in Ethiopia face is price volatility. The constantly low coffee prices despite increased supply has exacerbated the misery of smallholders who are producing over 70% of the world’s green coffee.
This has made children of aging coffee farmers lose interest to take up the mantle and continue coffee growing, which is a catastrophic situation for the future of coffee production. Returns are not encouraging as many farmers make less money from the sale of their crop than their investment in form of labour and capital. Small farmers and producing countries are often price takers in the market. This remains a challenge and drives most farmers to abandon coffee farming and switch to other crops.
Climate Change and Its Impact on Coffee Production
Rising temperatures, a decline in rainfall, and proliferation of resilient pest and plant diseases all endanger the coffee industry. Climate change is also a serious threat to the coffee industry and its impacts is felt most severely by small coffee growers and their families. As most farmers rely on rain patterns their slight disruption could not only affect the farmers but also the whole of the industry as seen in the Brazilian drought. Moreover, climate change could also have adverse effects on the genetic diversities of coffee.
Although, most of coffee consumed worldwide is produced by smallholders, a large share of the gains made from the sale of coffee remain in the hands of few in this multi-billion dollar industry. This is the other factor leading farmers around the world and in Ethiopia to abandon coffee production altogether.
It has been estimated that if women farmers across the developing world had the same access to productive inputs as their male counterparts (such as labour, fertilizer, and seeds), yields would have increased by as much as 30 per cent per household. As a result, countries could see an increase of 2.5 to 4 per cent in their agricultural outputs. Ignoring gender equity is a missed business opportunity, and the global coffee industry can no longer afford to let the significant capabilities of women go to waste as it tries to resolve the many challenges that threaten to disrupt supply.
Several other problems also persist in the Ethiopian and global coffee sector such as the absence of a strong coffee seed supply system, very low quality control, lack of clear vision and direction to support the sector and its actors as well an insufficient attention to provision of agricultural inputs, credit for productivity and quality enhancement support. Furthermore, population pressure and land degradation, access to improved technology, limited access to inputs such as credit, seeds, fertilizer, irrigation and others as well as the ever increasing costs to produce and process high quality coffee are some of the other challenges witnessed by the sector.
So What Needs to Be Done?
In his opening speech during the World Coffee Conference, Prime Minister Hailemariam Desalegn stressed the need for a fair distribution system of the proceeds from coffee in view to improve the lives of the coffee farmers and their families. This fair distribution system will also help maintain a sustainable supply of the highest quality coffee beans. The Premier also noted that the government’s Climate Resilient Green Economy Strategy (CRGE), which is being implemented since 2011, seeks to protect agriculture and forestry -including coffee- from the adverse effects of climate change.
Fair distribution of the revenues of coffee is indeed important in making growers more resilient to pressures whether they are environment or market related or not. This requires a complete remaking of the coffee value chain in a way that ensures that coffee growers get right price for their produce. The development of a national strategy is also important as it gives roadmaps and sets clear goals to buffer the negative impacts of the looming climate change. Investing on research in coffee production and the importance of changing coping strategies frequently as well as updating methods of production and improving technologies to strengthen resiliency can also help mitigate the effects of climate change.
Focusing on production of Speciality coffee is also important for Ethiopia and of course for Africa to ensure better benefit from the global coffee market. Although this segment is growing compared to the mainstream coffee, small growers are not able to engage fully due to high cost of production. However, trends in this segment show improving income to producers in speciality coffee segment compared to the mainstream coffee making the future of the sub-sector very bright. As Africa has comparative advantage in speciality coffee, it is in pole position to benefit from this trend. Hence, it is important that countries encourage small holder coffee growers to grow more speciality coffee.
With respect to challenges in promoting gender equality for sustainable coffee sector, ensuring equal right on land acquisition and recognition for women labour in coffee industry will play a major role for women empowerment. Moreover, increasing women’s participation in training programmes, their access to credit and assets, support giving to joint decision making and ownership of income and resources at the household level will create more equity in the sector. More actions such as achieving greater gender balance in leadership positions, the development of a list of gender equity principles for coffee to unite and galvanize the industry and finally continue to build understanding through research and measurement will also help the sector be more gender sensitive
However, despite the aforementioned challenges there are some silver linings mainly Ethiopia’s genetic diversity and favourable environment, farmers’ rich tradition of coffee growing and known coffee brands such as Yirgacheffe and Harar. If well used these opportunities can make the Ethiopian coffee sector really stand out and be more competitive worldwide. The efforts undertaken by the government of Ethiopia to get intellectual property protection to Ethiopia’s famous brands is also another praiseworthy effort to protect the interest of millions of coffee growers who barely benefit from their own produce due to distorted global coffee market. The success of the Ethiopian Commodity Exchange in cutting out a long chain of middle men has also taken our coffee sector a step forward in modernizing the local value chain.
The Ethiopian government recognizing the importance of challenges and the opportunities of the sector has recently re-established the Tea & Coffee Authority. The authority is expected to increase productivity and enhance competitiveness of the Ethiopian coffee sector. The establishment of the authority would serve as a major leap forward in the modernization of the sector.
In conclusion, the world coffee conference was another important venue to discuss the coffee sector and its challenges. As Ethiopia engages itself in the second phase of its transformation it should brace for a more robust action towards the modernization of its biggest source of export revenue and ensure that it gets the right benefit out of the global coffee market from this green gold nature has endowed it with.
Disclaimer: The views in this article represent only those of the author and do not necessarily reflect the views of the Ministry of Foreign Affairs of Ethiopia.
Yonathan Guebremedhin writes on international and national economic and social issues. He works at the Ministry of Foreign Affairs of Ethiopia in the Public Diplomacy and Communication Directorate General.
He can be reached at firstname.lastname@example.org