Coffee Value Chain Analysis

2.3.4 SUPPORTING MARKETS/SERVICE PROVIDERS

Supporting markets and chain specific service providers are critical to increase the competitiveness of a value chain. Among the key supporting markets are agricultural extension agents and firms that provide advisory, consulting, and chain specific training and research services. At the producer level, agricultural extension and support services are typically provided by the Ministry of Agriculture. They are providing extension services such as disease control, soil analysis, developing new varieties and fertilization. These services remain limited and do not cover the farmers ' needs. It does provide chemical analysis and testing services required before agricultural processed products are authorized

Recommendations:

The key opportunities discovered in the coffee value chain include the following:

• Deficit in international markets of high quality coffees due to: Increased labor costs
Global warming and climate change

• Increased use of HYV and pest/disease resistant varieties with lower cup quality in main coffee producing countries (Brazil, Colombia, Costa Rica, etc.)

• High potential in the niche markets of Arab countries, Scandinavia, North America and East Asia Strong demand in traditional regional markets
Small but increasing demand of Ethiopian roast coffee

The key constraints discovered in the coffee value chain include the following:


• Smallholder farmers are risk averse and reluctant to move from subsistence to commercial coffee production

• Limited access to inputs and extension services are underdeveloped

• Traders (akrabis) have accumulated bargaining power and do not pass price incentives to the growers

• Quality control system is not efficient, transparent and not reliable

• Difficult to access good quality packing materials

• Customs information does not consistently track coffee quality by destinations (what quality goes where?)

• Existing market channels limit opportunities for direct export sales and do not support

One of the largest findings for the coffee value chain was the lack of standards, grading system, and cupping skills (ECX) which can be vastly improved upon. The current enabling environment is over regulated and very complex. It is recommended that there be a thorough revision of coffee standards and grading systems to come up with a lean and efficient grading system to facilitate a consistent and efficient grading of coffee quality. Along these lines, several training courses should be designed to increase the level of competence of key human resources in the coffee chain (senior quality controllers in ECX, CLU, exporters and Farmers‘