Yesterday afternoon, amid much fanfare, the Ethiopian government announced a partnership with the European Union that entails a $16.5 million, five year program that is “designed to boost the Ethiopian coffee sector”. The news was sold as a boon for Ethiopia whereby coffee bean farmers would gain a wide array of “benefits” including access to credit, increasing export volumes and strengthening premium market channels.
What was missing in this grand pronouncement was any concrete plan to build industries in Ethiopia that have the capacity to turn raw coffee beans into finished and branded goods. This $16.5 million program is not meant to enhance the economic viability of Ethiopia as much as it is an investment in the supply chain of multinational coffee corporations. Companies like Starbucks, Illy and Dutch Bros stand to reap huge profits by increasing the supply of coffee beans which will subsequently drive down the bargaining power of coffee bean farmers. What is a health potion for the EU is a poison pill for Ethiopia.
Over the past decade, the price of coffee beans has witnessed more than a 70% drop in valuation driven by a glut in market supply. During that same time period, the price of branded coffee goods has increased sharply. This is the reason why coffee bean farmers earn pennies on the dollar while companies that brand coffee and sell them on shelves reap all the profits. Unless Ethiopia find ways to export our coffee as a finished good and...continued...
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