Performance and Institutions of the Ethiopian Coffee Sector

The production and sale of coffee is central to the Ethiopian economy and the livelihoods of many Ethiopians. This chapter considers how different policy regimes have impacted its institutional development and performance. Policy has, arguably, been overly focused on the regulation of market exchange with little attention paid to improving productivity and quality. The chapter situates the Ethiopian coffee sector in the context of the global market, before presenting trends in coffee production, marketing, and trade. It discusses the evolution of market institutions in the sector, the most recent of which is the Ethiopian Commodity Exchange. The chapter highlights new and emerging forms of production organizations in Ethiopia, looking in particular at producer cooperatives as well as socially or environmentally certified coffee. Finally, the chapter considers the prospects of the coffee sector to illustrate how issues such as climate change and low productivity require strategic and long-term intervention.