The Performance of Coffee Marketing in Ethiopia: The Case of IIIubabor and Jimma Zones

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During the era of Derg, there had Deen state monopoly in the coffee trade. the state coffee markecing parastatal (Ethiopian Coffee Marketing Corporation ) wa s ope rating based on fixed price arrangements . Once the state parastatal is in place entry t o the coffee trade was difficult . The system has also reduced competition among traders. The long term effect of such a move was .suppression of producer incentive and production. Hence it was apparent to the transitional government of Ethiopia to liberalize the coffee market at all levels. The main objectives of this study are: i ) to describe the coffee marketing system in illubabor and Jimma zones, ii} to assess the structure of coffee marketing in the study area , iii} to measure the efficiency of the coffee marketing system, and iv} to assess the effect of the reform on performance of coffee marketing and to provide basic information which assist policy analysis. The analysis was carried out by using S-C-P approach. The results show that the liberalization policy adopted has achieved certain improvements in the structure and efficiency of the coffee trade. The reform have lifted the licensing barrier and reduced tax levied on coffee trade and license issuance fees. It has also abounded the restrictions imposed on licensing. The reform have also resulted in the free movement of prices. The bivariate correlation analyses shows that prices in the selected markets are highly integrated with the central market. The Timer's indices and the co integration test also show the same result. There are, however, a lot of shortcomings in the structure and inefficiencies in the coffee marketing . There are high market concentration, lack of capital and credit, and restrictions on areas of operation. In some markets there is also poor market information flow among traders. In view of the efficiency, there appears to be significant seasonality and inter - temporal price inefficiency.



Coffee Marketing, Jimma Zones