Participants: Ajantha Korukonda, Alina Pospelova, Sylvia Shank, Yordan Pankov
Ethiopia is widely considered to be the birthplace of coffee, yet the nation has not been able to make its mark in the world coffee market like Brazil and Colombia. Ethiopian coffee is of the Arabica type, which is very rich coffee that can get a good price anywhere in the world compared to other coffees. So the question remains, why has the country been unsuccessful in this market?
Our APEX project focusses on one of the primary issues within the Ethiopian coffee market – the little value the coffee farmer receives from the sale of their coffee. Currently, the farmer receives less that 1% of the price from the sale of a bag of coffee sold in the world market. As a team, are addressing this issue and are developing a viable solution to add value to the farmer. From our research so far, we have found that there is a significant amount of information asymmetry amongst the players in the value chain. Poverty and the lack of communication have led to the farmer being exploited by the middleman. In the coffee-making process, the roasting of the green coffee bean is a critical process. The few big players who source coffee in the world primarily control this process, sourcing green beans from all over the world.
Ethiopia is a country that relies heavily on coffee, forming 50-60% of its exports. The Ethiopian government has made steady efforts to protect the farmer and in turn their export revenue. The Ethiopian Commodities Exchange now regulates the sale of green beans for export in an effort to stabilize prices. Since the farmers need a means to sell their coffee beans, the aggregators take advantage of their despondent situations and exploit them by paying the farmer a low price. The farmer, unaware of the actual value of the coffee, and desperate to provide for their families sell their beans at very low prices.
Our project included two of our team members traveling to Ethiopia. On our trip to Ethiopia, we were able to see firsthand the challenges the Ethiopian coffee farmers are faced with and learn about other issues that we did not fully consider prior to our trip. We also had the opportunity to listen to many presentations addressing these issues at the East African Fine Coffee Association Conference. We visited the Sidama and Yirgacheffe coffee regions where we saw washing stations, a processing station where the dried coffee cherries were being pulped, processed, and bagged for shipment and coffee farmer co-operative unions. We observed just how remotely located the coffee farmers are and how easily they can be taken advantage of by the aggregators with coffee prices. This situation only exacerbates the cycle of poverty in which they live.
The lack of sufficient number of training centers makes it very difficult to educate the coffee farmers. The resounding message at the EAFCA conference was that the tools, technology, and knowledge are available; it is just difficult to get them to the coffee farmers. Due to these barriers, Ethiopia has the lowest productivity yields per hectare of coffee trees than any other country in Africa. We learned that many organizations have found successful platforms to disseminate tools, technology, and knowledge to coffee farmers in other countries; however these platforms will not easily or necessarily work in Ethiopia.
Through our trip and research, the team has developed a plan to address these challenging issues to bring more value to the Ethiopian coffee farmers. We look forward to the implementation of our business plan and the future result of the goals of NutrAfrica being realized.