Impact, drivers, and constraints to changes at the farm

1. ETHIOPIAN DEVELOPMENT
RESEARCH INSTITUTE
Impact, drivers, and constraints to
changes at the farm
1
Bart Minten
IFPRI ESSP
Ethiopia’s coffee value chain: Evidence towards improved investments and policies
Addis Ababa Hilton
September 15, 2015
Addis Ababa

2. 1. Improved practices and production
• What are factors associated with the adoption of
improved practices (compost, weeding, tilling,
improved varieties)? Run a regression with the
following results:
- Extension visits positively related to adoption of
improved practices
- Distance of plot to residence all negatively related
- Forest and semi-forest negatively related
- Richer households more likely to adopt
- Titling of plot ambiguous effect on adoption decision

3. 1. Improved practices and production
• What explains higher productivity (use production
function approach; Cobb-Douglas fixed and random
effect model)?
1. Characteristics of trees: a/ Density of trees; too
dense lead to lower productivity; b/ Increase share
improved trees from 0 to 100%; doubling of yields
2. Improved practices: all practices linked with higher
productivity but especially weeding and compost
use significant for productivity
3. Shocks: especially disease shocks important and
large and significant negative effects

4. 2. Improved practices and prices
• Determinants of adoption of improved post-harvest
practices (Selective harvesting; improved drying;
share red cherries); Run a regression with the
following results:
- Extension visits have a positive effect
- Remoteness of the household negative effect
- Distances to wet mills negative effect on adoption of
washing

5. 2. Improved practices and prices
• Impact on prices:
- No impact of quantities sold on price
- Red cherries: if mostly green, price is 10% lower
- 7% lower price if dried on bare ground
- Farmers with choice between traders 11% higher
price
- Lower prices for red cherries sold at the roadside;
higher prices for those sold at place of akrabi or
cooperative; no significant difference in price
between PMC and farmgate

6. 3. Drivers for change
Driver 1: Extension: Improvement in access to
extension agents as well as in perceived quality of
extension advice
At the time of
the survey
Ten years
earlier
Availability of coffee extension agents …
- Very available (%)
- A bit available (%)
- Not available (%)
- Do not know (%)
47
36
12
5
11
46
29
13
Quality of extension advice on coffee related issues:
- Very good (%)
- Moderately useful (%)
- Not useful (%)
- Do not know (%)
48
31
9
11
14
32
22
31

7. 3. Drivers for change
Driver 2. Market reform. Perceptions on primary
marketing centers (PMC) by farmers (100% = all
farmers)
“Since the start of the PMCs, … Agree Disagree Depends Do
not
know
… there is more competition among traders” 82 12 2 4
… there is more price transparency” 67 27 2 4
… I have to walk less far” 69 28 1 3
… I strip less as I have to walk less far to sell my
cherries”
60 36 2 3

8. 3. Drivers for change
Driver 2. Market reform. However, some processors not
happy
“Since the start of the PMCs, … Yes No Do not
know
… the quality of procured red cherries has declined” 34 64 2
If yes, this is due to ….
… The agents I use are not very capable in assessing the quality
of coffee”
51
… The quality of cherries deteriorates during storage at the
market”
60
… The quality of cherries deteriorates during transport to/from
market”
69
… The time between procurement and processing is too long” 62
… Because of increased competition between akrabis, I am
obliged to buy lower quality”
87

9. 3. Drivers for change
Driver 3. Large price improvements over time
0
50
100
150
200
250
300
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
UScentsperlb.
year
producer
export
NY/London price

10. 3. Drivers for change
Driver 3. Price changes. Because of high prices, farmers
consume less coffee themselves.
“When prices of coffee go up … Agree Disagree Depends Do
not
know
… I consume less coffee” 46 52 1 1
… I use coffee husks more to prepare coffee
drinks”
35 63 1 0
… I use coffee leaves more” 15 85 1 0

11. 4. Constraints to change
Constraint 1. Access to improved seedlings. Despite
efforts, access to improved seedlings an issue.
Agree Disagree Depends Do
not
know
“Improved coffee varieties have higher yields
than traditional varieties”
86 11 2 1
“ I do not trust the improved seedlings sold by
the BoA”
24 73 1 2
“It is hard to find reliable improved coffee
seedlings”
47 51 1 1

12. 4. Constraints to change
Constraint 2. Constraints to uptake of improved
techniques such as washing.
Agree Disagree Depends Do not
know
“I make more money when I sell coffee as
dried cherries”
67 31 1 0
“I prefer selling coffee in dried form (instead of
red) as I can spread out my income that way (it
is a way of saving)”
76 19 5 1

13. 4. Constraints to change
Constraints: 3. Weather and diseases.
Early Late Normal
“This season, the rains were […] compared to
normal” 18 60 21
Less than More
than
Normal
“The beans for this season were affected by
pests or diseases […] compared to normal” 13 28 59

14. 5. Conclusions
• Important changes are happening in the Ethiopian
coffee sector
• At the production level, increasing adoption of
improved practices for production inputs, improved
good access to extension agents and better harvest
and post-harvest practices;
• However, no major effect on production possibly due
to disease problems and climate change (but also
older less productive trees)

15. 5. Conclusions
• At the marketing level, important changes in
markets; Policy of primary market centers is
unevenly implemented over regions and by coffee
type
• Overall, farmers have more choice between traders,
have the additional option to sell to cooperatives,
have to walk less far for their sales, and sell more
washed coffee; however, no perceived quality
premium

16. 5. Conclusions
• Policy implications for further changes upstream:
1. Further improve extension system; still work to be done
2. Stimulate higher adoption of improved tree varieties
(good for yields; reduce disease vulnerability; adjust to
climate and weather changes)
3. A more conducive and liberalized market. Well-intended
market reform can sometimes lead to negative impacts
4. Stimulate other institutions, such as savings institutions,
as they impact coffee sector as well
5. Improved information, monitoring and evaluation of the
sector needed: will lead to better policy
design/investments