A new report from the United Nations Conference on Trade and Development (UNCTAD) suggests that coffee producers in Ethiopia and Burundi could better exploit the full potential of their coffees by responding to the growing interest in high-quality products and environmental sustainability.
In a special issue of Commodities at a Glance on East African coffee, UNCTAD points out that over 120 million people worldwide depend on the coffee sector, including 25 million smallholders and coffee workers, half of whom live in Africa. East Africa supplies 9% of the world's coffee.
"Ethiopia, the ancestral home of sought-after Arabica varieties, and Burundi, where coffee has been a mainstay of the economy since the 1920s, can do more to capitalize on high-value micro-markets and take steps to ensure the sustainability of their supply." Pamela Coke-Hamilton, Director, Division of International Trade in Goods, Services and Commodities, UNCTAD
Among the factors threatening the sustainability of coffee production in East Africa are the decline in cultivar quality and productivity, rising production costs, and the lack of interest among young farmers, who are familiar with the difficulties encountered by previous generations in making a decent living from coffee growing.
The case study shows that the instability of production in Burundi is due to climatic cycles, the ageing of trees, often over 40 years old, soil degradation, the absence of suitable agricultural practices and, to some extent, political instability. According to UNCTAD, coffee exports, along with tea, account for 90% of Burundi's foreign exchange earnings.
"Burundi has proved that it is capable of producing excellent coffee that is highly prized by consumers, so everything should encourage it to strengthen the power of smallholders through better organization of cooperatives".
For the Geneva-based UN agency, the Central African country should invest in business intelligence to help market players better understand the factors behind the growing demand on micro import markets. It's a way of inviting Bujumbura to capitalize on the country's reputation as "an appreciated producer of original coffees".
Ethiopia faces a similar scenario. According to UNCTAD, its main problem is "inconsistent coffee quality compounded by pests and diseases, climatic variability, poor farming practices, inadequate training of producers, not to mention poor organization and management of the value chain". However, there is still room for improvement, particularly in terms of producer remuneration.
"Ethiopia is naturally rich in coffee varieties, which allows it to benefit from market and product differentiation," said Ms. Coke-Hamilton. Indeed, Addis Ababa has a significant comparative advantage in organic coffee production, which in fact accounts for over 90% of its total production.
In its recommendations, UNCTAD calls for important measures to ensure the sustainability of supply, particularly in the context of growing demand. "These measures could include strengthening countries' capacity to improve coffee varieties and promote better agricultural practices," notes the agency. They also involve improving the distribution of coffee revenues among all players in the value chain, notably by increasing the share accruing to producers, and stimulating domestic consumption.
All the more so as coffee is still characterized by an extended value chain that is only partially present in producing countries - most of the value is captured by industrial roasters and distributors in consuming countries, i.e. the developed world.
Generally speaking, the challenge for the two African countries is also to achieve a better sharing of the coffee wealth. In this respect, UNCTAD points to the structural imbalance in the coffee value chain, which, as in many coffee-producing countries, contributes to the further aggravation of rural poverty. This leads to "related problems of food insecurity, low levels of education, child labor and rural exodus."