Epsilon Archive for Student Projects

Abstract

Coffee is of global importance, ranking second to petroleum in world commodity trade. In addition, coffee is of particular importance as a major export commodity in many low-income countries in Latin America, Africa, and Asia (Lucier, 1988). Similarly in Ethiopia, coffee is the most important backbone of the Ethiopia economy, which accounts for an average 5 percent of GDP, 10 percent of the total agricultural production and 60 percent of export earnings. Since coffee is highly labour-intensive, a very significant part of the population derives its livelihood from coffee, there by playing a significant part on the socioeconomic life of the people and the economic development of the country. With this fact of its crucial importance, the Ethiopia Commodity Exchange (ECX) has included coffee as one of the commodities to be traded on the platform. The ECX is Ethiopia’s latest attempt to enhance the performance of agricultural markets. Conceived as a meeting point for buyers and sellers of grains (sesame, haricot beans, maize, wheat) and coffee, This study attempts to examine whether the creation of the ECX, and particularly the Government’s decision to make coffee trade through this mechanism mandatory for smallholders, and explains how the ECX market value chain is benefited to the smallholders coffee farmers, , with a particular emphasis on: 1) examining whether the ECX is contributing to address the asymmetrical power relations faced by smallholder producers in the overall coffee market value chain and facilitating a more beneficial integration; 2) the main socioeconomic implications of coffee trading through a national commodity exchange as a policy instrument to promote the coffee subsector and, thus, Ethiopia’s agricultural economy. A market value chain approach reveals the inner workings of chain and non-chain actor coordination, with its implications both at the domestic and global level. A new economic sociology approach takes the analysis beyond the logistical bottlenecks to reveal the motivations and interests of particular chain actors and their influence in allowing for change or maintaining the status quo.