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Eastern Africa
Ethiopia’s Sidama coffee
This case study examines the production of Sidama coffee, a premium coffee, grown
primarily by smallholders. When coffee prices collapsed during the 1990s, farmers
were faced with decreasing yields, poor quality and low prices. The establishment
of the Sidama Coffee Farmers Cooperative Union (SCFCU) in 2001 and subsequently
the Ethiopian Government’s policy change to allow direct exports from recognised
sources like SCFCU played a major role in resuscitating the Sidama coffee industry.
SCFCU’s involvement in vertical integration of production, processing and marketing has
resulted in yield, quality and price increases for producers. Additionally, SCFCU service
to members that includes training, advice, inputs, savings and credit ensures yield and
quality maintenance. Simultaneously, Government has provided important support for
research in improved varieties and management practices.
Initial context. Ethiopia is the world’s sixth largest exporter of coffee, produced primarily in the
southern and western parts of the country. The Sidama region is the second largest producer,
after Oromiya, but its coffee has unique qualities that are acknowledged by importers. There
are four main types of coffee production systems in Ethiopia: forest, semi-forest, garden and
plantation. Sidama is a garden type grown near homesteads at lower than normal densities,
ranging from 1000 to 1800 plants per hectare. Prior to 2001, smallholder producers sold their
coffee primarily to private foreign traders, who were not farmers, often receiving low prices
and facing high production risks, especially during the 1990s after the market was liberalised.
Initial challenges. The challenges faced by Sidama producers included: poor infrastructure,
old coffee trees, reliance on traditional cultural practices, scarcity of finance and limited use of
modern inputs, all of which contributed to low-quality coffee. In the early 2000s world coffee
prices collapsed and farmers were faced with a period of major price fluctuations. Furthermore,
traders who were neither farmers nor Ethiopians marketed good export coffee. Producer
incomes remained low and the proportion of the consumer price reaching the producer was
not known.
Innovation triggers. The Sidama Coffee Farmers’ Cooperative Union (SCFCU, 2005) was
established in 2001 to mitigate some of the initial challenges and support farmer welfare.
SCFCU subsequently obtained special Government permission to bypass organised coffee
auctions and sell directly to clients.
22 Agricultural Innovation in Sub-Saharan Africa