Value Chain Analysis of Coffee: Key for Upgrading the Smallholder Farmers in Sidama Zone of SNNPRS

Abstract

Smallholder farmers in developing countries like Ethiopia need to improve their position for agricultural products like coffee in order to improve productivity and profitability through innovations within the chains. The study was conducted to analyze the coffee value chain in Sidama Zone of SNNPRS. Both primary and secondary data were used. Descriptive statistics, value chain mapping and econometric methods were employed to analyze the data. Proportional stratified random sampling techniques for farmers and random sampling techniques for traders were used. To analyze the collected data the Statistical Package for Social Sciences (SPSS) version 21 was used. The result of value added activities among the major value chain actors showed that all actors involved in the coffee value chain were adding value to the product; processors were the dominant in adding value (47.58%). In addition, the study also disclosed that six value chain actors: Farmers, Collectors, Wholesalers, Retailers, Processors and Consumers were identified. Result from econometric analysis indicates that four variables are significantly affecting value chain and education has a positive and significant effect with value of beta = 0.573 whereas age of plantation has negative (-0.025). The findings also indicated that farmers faced with production, marketing and transportation problems among which poor disease control, low irrigation facility, low supply of coffee seed, low price of coffee, price fluctuations, brokers interference, shortage of truck and high transportation cost. Therefore, the findings of the study underscore strengthening extension service, sharing experience among farmers, increase production and productivity and strengthening input supply, increase the proportion of coffee selling at significant premiums, timely updated and sustainable market information services, coffee quality improvement, solving existing problems of hulling machine, and cooperatives expansion as important policy issues to improve coffee value chain in the study area.

Keywords: Coffee, Sidama Zone, Value Chain Mapping, Value chain Analysis

DOI: 10.7176/FSQM/112-01

Publication date: January 31^st 2022