The Legal Regime Regulating Coffee Trade in Ethiopia

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Addis Ababa University


Coffee’s role in the national economy of Ethiopia has been unparalleled for the past five or so decades particularly in generating hard currency. Presently, about 25% of Ethiopian population depends on coffee for its livelihood. Owing to this, Ethiopian governments have been regulating the industry more strictly than other agricultural sub-sectors. Regulating the industry by putting legal framework started from early 1950s. Coffee auction system in contrast was set up in 1972. The legal and institutional frameworks governing coffee trade diverges across the three governments. During the imperial government, it was relatively liberal and had fairly positive impact to the industry. During the Dergue era, on the contrary, the overall regulatory regime including the coffee auction system was highly centralized which negatively affected the industry. The Transitional Government’s market based economic policy on the other hand lifted most of the restrictions which enabled the country to export record amount of coffee. Yet, the coffee trade system including the coffee auction was similar. In August 2008, however, the Ethiopian government introduced a new legal and regulatory regime which replaced the former one. This regime, among other things, switched coffee trade from the auction system to commodity exchange model of trading. It is, however, understood in a different ways by different stakeholders. Some seriously criticized it and others applauded it. This work studies the detail contents of this new coffee trade regime and its implications to the coffee industry. The study was conducted based on document analysis, interview, and observation. The findings of the study show that the present coffee trade regime is generally good scheme for modernizing the coffee industry. Even so, there are many shortcomings arising from the very law and/or practice. This work points out the major ones and suggests some recommendations which the writer thinks to be appropriate



Coffee’s role in the national economy of Ethiopia, has been unparalleled for the past five or so decades particularly