COFFEE VALUE CHAIN ANALYSIS IN KOMBOLCHA DISTRICT, EAST HARARGHE ZONE, OROMIA NATIONAL REGIONAL STATE, ETHIOPIA

Abstract

This study was initiated to analyze the coffee value chain in Kombolcha district, East Hararghe zone, Oromia region, Ethiopia. East Hararghe coffee has the highest distinctive quality that deserves premium prices both at local and international markets. The specific objectives of the study were to identify actors, map them, assess their linkages and roles, marketing costs and margins of all actors, identify factors affecting market supply of coffee and market outlet choice, and opportunities and constraints of coffee value chain in study area. Data for the study were collected from both primary and secondary sources. Primary data were collected from 147 coffee producer households, five collectors, three suppliers, one cooperative, 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. Data were analyzed using descriptive statistics, value chain mapping, market performance and econometric methods. Results indicated that there are three coffee value chain channels. The first consists of farmers, suppliers and exporters, the second consists of farmers, cooperatives and union and the third consists of farmers, collectors, suppliers and exporters. Gross marketing margins for producers in channels I, II and III are 68.5, 66.6 and 65.3 respectively. The 2SLS model results showed that quantity of coffee produced, experience, coffee price, postharvest value addition and membership to cooperative significantly affect coffee supplied to the market. The MVP model results indicated that quantity of coffee sold, age, education level, sex, and experience, off/non-farm income, postharvest value addition, access to credit, and total land size significantly influence coffee producers’ choice of market outlets for their produce. Major problems of coffee production and marketing were coffee disease, shortage of land, shortage of irrigation water and rainfall, low price, lack of improved varieties, lack of market information, lack of marketing cooperative, and adverse weather events. Opportunities in the study area were availability of extension worker, availability of irrigation water, environmental suitability for coffee production, experience of farmers in seedling and coffee production. Therefore, the findings of the study underscore strengthening sharing experience among farmers, increasing production and proportion of coffees selling, price of coffee and cooperatives expansion as important issues to improve coffee value chain the study area.