What: Assessing the impact of COVID-19 on Ethiopia's coffee value chain
Where: Ethiopia
When: 2020-2021
Understanding COVID impacts on the coffee sector
What: Assessing the impact of COVID-19 on Ethiopia's coffee value chain
Where: Ethiopia
When: 2020-2021
COVID-19 and the Ethiopian coffee sector.
COVID-19 has affected supply chains throughout the world, and Ethiopia’s coffee sector is no exception. The International Coffee Organization (ICO) report in February 2021 indicated that coffee shipments from Ethiopia fell by about 32% (~780k bags) during the pandemic.
Further, Coffee is Ethiopia’s most important commodity, accounting for about one-third of the country’s exports, providing livelihoods for more than 2 million smallholder farmers, and employing about 15 million people across the value chain.
To understand the effect of the COVID-19 disruptions on coffee producers and processors, we worked with Enveritas and CGIAR Research Program on Policies, Institutions, and Markets (PIM), led by IFPRI, who conducted two rounds of phone surveys with 737 smallholder coffee farmers and 80 midstream processors in Ethiopia’s five main coffee regions (Guji, Illubabor, Limmu, Sidama, Yirgachefe) during November/December 2020 and February 2021. The rapid assessment focused on access to production inputs (e.g., labour, storage, credit), support services, and markets; food and nutrition security of coffee producers; and the business performance of processors.
The project is still ongoing - with the results of a combined analysis with external data still outstanding. You'll find a summary of the results of the first two rounds as well as our formal report below.
Half of the sampled farmers in both rounds reported that they were not concerned about the pandemic. However, 20% of respondents were worried about community health and 18% about the impact on their livelihoods due to potential effects on coffee prices and a lower income overall.
Most households in this sample (~70%) reported that the pandemic had no impact on their food security. The remaining 30% reported higher food prices, with only 10% indicating that the increase made certain food items unaffordable. Sample households, on average, consumed the national average of close to seven food groups, with no significant variations by pre-pandemic poverty level nor survey round (Mekonnen et al., 2020).
Processors were more concerned about the pandemic and experienced more negative impacts on access to inputs and services than farmers (see below: figure 1). Farmers were most impacted by the pandemic with regards to access to hired labor, with 35% of households reporting issues such as higher wages and fewer workers being available.
About one-fifth of coffee processors expect lower profit from this year’s harvest due to lower trade volumes and higher production costs. Over half of processors reported purchasing lower volumes of coffee compared to the last harvest. Of these, almost two-thirds indicated that lower coffee procurement was due to high prices and lower yield, while 44% indicated insufficient cash flow (in part due to cash-withdrawal limits) to procure cherry.
Main implications and lessons
Overall, the COVID-19 pandemic seems to have a limited impact at the farmer level, except on access to labour. This means COVID-19 is not only affecting coffee farmers but also unskilled labourers in the community or region, and to a greater degree. Often, smallholder coffee farmers hire workers who travel throughout the region seeking work in various value chains depending on the season. When these workers face transportation restrictions or worry about the virus, it not only reduces their employment opportunities and income, but also may result in coffee farmers hiring more vulnerable labour groups, such as minors or children as indicated by Enveritas’ Ethiopia Verification Results, 2020-21.
There is a more measurable impact on coffee processors’ access to inputs and services, transaction volumes, and profitability. However, it is difficult to isolate the extent to which the COVID-19 pandemic is solely responsible for these effects. Other factors played a role, including higher local coffee prices, cash withdrawal limits, and lower yields due to weather patterns and the biennial crop cycle. No matter the cause, a reduction in coffee supply and coffee exports will have implications on national foreign exchange earnings and the livelihoods of people employed across the coffee value chain.
We believe the data reveal a few key lessons for the coffee sector’s main stakeholders.
• Smallholder coffee farmers are mostly unconcerned about the COVID-19 pandemic, viewing it as yet another challenge they face. Their livelihoods, though affected by the pandemic, are more dependent upon farmgate prices, which fluctuate widely due to a variety of market forces. Both governmental and non-governmental stakeholders should focus on supporting coffee farmers to consistently obtain competitive prices and increase their yields, thereby, increasing their income.
• Empowering and actively assisting primary cooperatives and private coffee mills to provide support services for their farmers and local communities may be the most effective way to target coffee farmers during shocks, such as during the COVID-19 pandemic. Co-ops and mills know the community and can quickly identify effective ways to support farmers while continuing to hire employees and pay wages. For instance, processors responded by working with local health authorities to provide public transportation and hiring labourers from more distant places during the pandemic.
• Many processors and exporters reported that government restrictions, such as cash withdrawal limits and price floors, prevent coffee value chain actors from operating at maximum capacity. Where possible, the Government should ease restrictions on doing business in the coffee sector, especially given how important it is to foreign exchange, the overall economy, and smallholder livelihoods.
If you're interested to read the full report, click the download link below:
The data is also presented in a webinar by CGIAR, covering major findings of studies from Kenya, Ethiopia and Bangladesh. To aquire a deeper understanding on how agro value chains have been adapting to the new scenario, the CGIAR COVID-19 Hub working group on value chains issued a call for proposals on the theme of “Assessing the effectiveness of innovations and measures in maintaining agri-food value chains functional during COVID-19.”
