De-commoditizing Ethiopian coffees after the establishment of the Ethiopian Commodity Exchange : an empirical investigation of smallholder coffee producers in Ethiopia

The repercussions of reforming an agricultural market are mainly observed at the most vulnerable segment of the value chain, namely, the producers. In the current commodity market created with trade through the Ethiopian Commodity Exchange (ECX), coffee is less traceable to its producers. Only cooperatives that sell certified coffee through the unions they belong to, are allowed to bypass the more commodified ECX market. This study aims to investigate if small-scale coffee producers in southwestern Ethiopia that sell coffee through the certified cooperative are better off. It is assumed that the coffee sales through, and membership of, a cooperative, allows farmers to improve their coffee production as well as to improve other aspects of their livelihood. A sustainable livelihood approach was used as the inspiration for the welfare indicators that needed to be considered, data collected amongst members and non-members of certified cooperatives, and a propensity score model to investigate the impact of cooperative membership on the livelihood indicators. Results suggest that members of certified cooperatives indeed receive, on average, better prices. Yet, no evidence was found that indicates that the higher price is translated into better household income. Furthermore, coffee plantation productivity of those members who were interviewed was lower than that of the non-members. This finding could explain the failure to find an overall effect. Since the majority of the producers' income emanate from coffee, a sustainable way of enhancing the productivity of the coffee could revitalize the welfare of the coffee producers

Coffee market performance and producer welfare upon the introduction of the Ethiopian Commodity Exchange

Coffee has been and remains the cornerstone for the Ethiopian economy for a long time. Over the years, numerous policies were implemented with the aim to extract benefits out of the sector. The most recent policy reform was the introduction of Ethiopian Commodity Exchange (ECX) that is serving as trading platform for coffee in 2008. This thesis attempts to examine the impact of the introduction of ECX on the performance of the coffee sector and welfare of the coffee producers. The thesis is structured in four separate sections. First it examines the extent to which the prices of Ethiopian coffees integrate with the coffee prices on the international market. Second, it tests the spatial integration of the prices of coffees between the different coffee producer markets in Ethiopia. Third, it tries to understand the price transmission between the world and the domestic Ethiopian coffee market. Finally, it seeks to unveil the impact of de-commoditization which is introduced by ECX, on the welfare of the coffee producers. Generally, ECX is a great milestone for a developing country economy such as that of Ethiopia which encountered numerous socio-economic problems. However, ECX faces challenges in achieving the institutionalization of the Ethiopian coffee market. Failure to understand the coffee market and the lack of institutional trust at all levels, especially at higher-level of Ethiopian coffee market need due consideration

De-commoditizing Ethiopian coffees after the establishment of the Ethiopian Commodity Exchange: an empirical investigation of smallholder coffee producers in Ethiopia

The repercussions of reforming an agricultural market are mainly observed at the most vulnerable segment of the value chain, namely, the producers. In the current commodity market created with trade through the Ethiopian Commodity Exchange (ECX), coffee is less traceable to its producers. Only cooperatives that sell certified coffee through the unions they belong to, are allowed to bypass the more commodified ECX market. This study aims to investigate if small-scale coffee producers in southwestern Ethiopia that sell coffee through the certified cooperative are better off. It is assumed that the coffee sales through, and membership of, a cooperative, allows farmers to improve their coffee production as well as to improve other aspects of their livelihood. A sustainable livelihood approach was used as the inspiration for the welfare indicators that needed to be considered, data collected amongst members and non-members of certified cooperatives, and a propensity score model to investigate the impact of cooperative membership on the livelihood indicators. Results suggest that members of certified cooperatives indeed receive, on average, better prices. Yet, no evidence was found that indicates that the higher price is translated into better household income. Furthermore, coffee plantation productivity of those members who were interviewed was lower than that of the non-members. This finding could explain the failure to find an overall effect. Since the majority of the producers’ income emanate from coffee, a sustainable way of enhancing the productivity of the coffee could revitalize the welfare of the coffee producers

Empirical investigation into spatial integration without direct trade : comparative analysis before and after the establishment of the Ethiopian Commodity Exchange

This paper presents a comparative analysis of the spatial price cointegration of coffee markets in Ethiopia in the pre and post Ethiopian Commodity Exchange (ECX) era using the autoregressive distributed lag (ARDL) cointegration framework. The study takes into consideration a market condition in which government policy restricts arbitrage coffee trade between coffee producing areas. Using coffee price data from 1998-2013 and applying a bounds test approach and Toda-Yamamoto Granger causality test, the study finds that the establishment of ECX has strengthened regional integration rather than a national harmony between producer markets. We also find evidence that, since the establishment of ECX, an opportunity was created for high quality coffee to dominate price formation while also allowing lower quality coffee producing areas to establish themselves. The study underlines the importance of market transparency and exchange of price information between producer markets