Analysis of Risk and Supply Response of Agriculture: Empirical Investigations from the Ethiopian Coffee Growing Zones
No Thumbnail Available
Date
2007-07
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Addis Ababa University
Abstract
A study was conducted to examine the major shocks and their impact on coffee
production and the livelihood of smallholder coffee farmers in five major coffee
growing zones of Ethiopia, namely, Sidamo, Jimma, Illubabor, Wolayta and West
Hararghe.
After pooling the available data set using the error component model, the pooled OLS
and fixed effects regression methods were used to analyze the effects of shocks on
coffee production and supply response variation across the study areas.
It was found that a combination of shocks including drought, pests and coffee
diseases, drastic fall in world coffee price and health problems have serious effects on
coffee yield and household income. Households living in different zones of the
country have different supply responses because of the socio-economic and agroecological differences.
In the face of the severe effects of shocks, farmers have adopted a range of risk
management strategies such as intercropping, depleting assets, borrowing,
membership to a social support system and production/marketing unions. However,
under the prevailing production technology and farming systems, the strategies
employed by farmers are not adequate enough to cope with the effects of the recurring
shocks.
Policy implication of the study is that one-size-fits-all policy packages and blanket
recommendations cannot solve the problems of coffee farmers. Therefore, under the
current dynamic market scenario, the success of the Ethiopian coffee sub-sector highly
depends on targeted support to reduce the impacts of shocks and to build the capacity
of indigenous institutions. Interventions need to be disaggregated by agro-ecological
zones and socio-economic settings.
Description
Keywords
Economic Policy Analysis, Economic Policy