Analysis of Factors that Affect Coffee Value Chain Development in the Upstream Supply Chain Members in Gudeya Bila District, Oromia, Ethiopia

Abstract

Purpose – The study analyzed factors that contributed for coffee value chain underdevelopment in the upstream supply chain members (farmers) in Ethiopia in terms of factors related to coffee value chain governance, coffee value redistribution among actors, and the level of government support to develop coffee value chain in the area. Design/Methodology/Approach – The survey of 202 respondents was made in East Wollega Zone, Gudeya Bila District, Ganda Gute Canco coffee farmers located in the West of Addis Ababa, Ethiopia. In addition, observation and two key informant interviews were made to triangulate the surveyed data from farmers to enable conclusion about coffee value chain development in the study area. Findings – The findings indicated that factors attributed to the underdevelopment of coffee value chain are mainly explained by: value chain governance dominance in the downstream coffee supply chain, lack of subsidy and hedging to coffee farmers, high logistics cost to market due to poor accessibility to road infrastructure to coffee farm site, long coffee cash-to-cash cycle time, low margin to farmers in the coffee value chain, no value addition to intrinsic coffee value chain up to export gate but increased price at downstream coffee value chain, and low level of mechanization and innovation. Research Limitation/Implications – The findings of the survey on reasons for coffee value chain underdevelopment are generalizable for other agricultural commodity value chain in Ethiopia and developing countries. Practical Implications – The way coffee value chain is governed in the upstream supply chain member can be optimized through policy intervention by government through coffee value chain development. Originality/Value – The paper has significant contribution in terms of case observation in the area, and the way coffee value is redistributed among coffee supply chain members in the absence of governance.

Keywords: Coffee Value Chain, Subsidy, Hedging, Value Chain Governance, Coffee Farmers

View PDF