VALUE CHAIN ANALYSIS OF COFFEE: THE CASE OF SMALLHOLDERS IN SEKA CHOKORSA DISTRICT, JIMMA ZONE, ETHIOPIA

Abstract

This study aims at analyzing the value chain of coffee in Seka Chokorsa district of Jimma Zone in Oromia Region with specific objectives of mapping coffee value chain and examining the performance of actors in the chain; analyzing the determinants of coffee marketed surplus in the study area; identifying marketing channels and factors determining channel choice decision of farm households; and exploring opportunities and constrains along the coffee value chain. The data were collected from both primary and secondary sources. The primary data for this study were collected from 124 households, 10 collectors, eight suppliers, two cooperatives, two exporters and one cooperative union. The major actors of coffee value chain in the study area are input suppliers, coffee producers, collectors, suppliers, cooperatives, cooperative union and exporters. The study result indicated that the exporters and suppliers were the key coffee value chain governors due to the economies of scale. Three main coffee marketing channels were identified in the study area. The result indicated that producers incur the highest cost about 60% of the total cost incurred by actors in the chain and gained less net margin around one-third of the total. The result of multiple regression model revealed that coffee farming experience, family size, land size, coffee market information and membership to the cooperatives affected marketed surplus of sundried coffee positively and significantly whereas sex of the household head and distance from the nearest market affected negatively and significantly. The results of multinomial logit model indicated that the probability of choosing cooperatives marketing outlet was affected by coffee farming experience, educational level of the household head and postharvest value addition compared to suppliers’ outlet. Similarly, the probability to choose the collector outlet is found to be significantly affected by the age of the household head, livestock in tropical livestock unit, access to coffee marketing information and access to extension service relative to suppliers’ outlet the base category. Moreover, the majority of sample producers indicated that coffee related diseases, labor shortage, land shortage, seed shortage, weeds and high rainfall as major constraints of coffee production whereas low price of coffee, lack of transport, limited access to market information, low quality of the crop, market distance, lack of market, poor linkage with commercial value chain actors, lack of quality storage and low demand for coffee were the major coffee marketing constraints in the study area. Therefore, policy needs to emphasize at improving the dissemination of modern inputs technologies, strengthening farmers cooperatives, increasing the production and productivity of coffee, encouraging extension service provisions, developing farmers experience through skills and knowledge, expanding the accessibility of market infrastructure, facilitation of market and information access; and enhancing supportive and enabling service are highly recommended in order to increase producers’ share and accelerate the overall value chain development.