Examining Market Determinants of Ethiopian Coffee
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Date
2026-11-30
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Addis Ababa University
Abstract
Coffee is the backbone of the Ethiopian economy, contributing a substantial share of Ethiopian export earnings and rural livelihoods. Ethiopia’s coffee export performance has shown large volatility and underperformance relatively compared to its existing domestic production potential. This study investigated the factors affecting coffee export performance in Ethiopia, focusing on the timeframe from 2000 to 2025. The research utilizes a mixed-methods approach, combining time-series analysis with a cross-sectional survey of 101 sample respondents. The Multiple Linear Regression (MLR) model was used to analyses Cross sectional data using Stata version 17. Unit root tests, Johansen co-integration, and vector autoregression (VAR) modeling were used in the time-series data analysis. The results presented that Export Volume has been rising exponentially, reaching almost 500,000 metric tons after 2021. A unit root test was carried out using an Augmented Dickey-Fuller (ADF) test for each variable of time series data, and the Johansen co-integration test result indicated no co-integrating relationships among variables. The VAR model results expose the short-term interdependencies between the growth rates of Ethiopian coffee export volume and unit prices. The results of the multiple linear regression analysis reveal that six variables significantly affect Ethiopian coffee export performance at 1% significance level, with logistics, domestic production, and quality exerting strong positive influences, while domestic price has a significant negative effect, indicating that higher local prices tend to divert supply from export markets. World production and global price are also statistically significant but have smaller coefficients, demonstrating that domestic structural factors such as transport efficiency, output volume, and quality standards play a more significant role than external market conditions. Thematic analyses found that Ethiopia lacks a sustainable and clear traceability management system, which undermines its credibility in international coffee markets. The time-series analysis indicates that prices are very unstable. These findings underscore the need for policy consideration of infrastructure, production expansion, quality upgrading, and domestic-export price coordination to sustain and enhance Ethiopian coffee export performance
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Keywords
Ethiopian Coffee, Export Performance, Multiple Linear Regression (MLR), Augmented Dickey-Fuller (ADF), VectorAutoregression (VAR), Price Volatility