Generating 882.4 million USD in 2016/17, coffee hits record amount
Ethiopia’s economy is in the realms of a dominant agriculture sector, which displays the diversification of commodities to export for increased revenue but still striving for competitive quality.
Ethiopian agriculture remains an important source of economic growth that not only contributes 39 percent of the country’s Gross Domestic Product (GDP) but also employs 73 percent of the population.
It is also extending its leading role in export performance by contributing over 75 percent of the 2.91 billion USD that the country has secured in the 2016/17 fiscal year.
Despite its pivotal role for national economy and peoples’ livelihoods, the agricultural export performance has been challenged by quality gaps.
Dr. Hussein Ahmed, economist, states that there are certain shortcomings in meeting international quality standards, which has remained being one of the major hindrances in becoming strong competitor in the global agricultural markets.
The government and stakeholders’ engagement to increase the volume of agricultural exports and diversify commodities has not yet brought the desired outcomes due to quality issue, Dr. Hussein emphasizes.
Ministry of Trade Information Center Directorate Director Dr. Yibeltal Assefa on his behalf says poor farming, handling, packaging and storage techniques in the agricultural value chain are the major challenges in the export quality.
The performance of coffee, sesame, cereals and other major exportable commodities has also been inconsistent; thereby, affecting the country’s foreign currency earnings, he adds.
Dr. Yibeltal says: “Despite the enormous success Ethiopia has gained in diversifying commodities and increase the volume of products, there are still gaps in meeting international quality standards that have been hampering our competitiveness in global markets.’’
Reminding the country’s plan to obtain 3 billion USD from agricultural exports in the 2016/17 fiscal year, Dr. Yibeltal indicates some 28.12 percent shortfall as the actual performance registered 2.18 billion USD.
Despite the country’s fertile soil and conducive climate for the cultivation of coffee, its share in the world coffee market, for instance, has not yet reached at the desired level in comparison to countries like Brazil and Vietnam, he elaborates.
Dr. Hussein also agrees at the Director’s idea. He says shortcomings in applying modern and viable technologies among farmers, suppliers and exporters is the primary factor for quality driven price fluctuation.
The analyst further states that inadequate transport connectivity has also played adverse role in reducing the quality and competitiveness of Ethiopia’s agricultural commodities in the global market.
Dr. Hussein says: “In spite of the huge demand North American and European consumers have shown for Ethiopia’s organic coffee, we could not have retained the market at the desired level due to issues in export quality.’’
Dr. Yibeltal elaborates that the government along with other stakeholders has engaged in inspecting the quality and safety of commodities that could brought remarkable changes. There are also efforts exerted to meet the international quality standards for agricultural products with the help of successive capacity building trainings.
He says: “In the 2016/17 fiscal year, Ethiopia secured 882. 4 million USD from coffee by commodities and the revenue obtained from oil seeds and cereals was 345.2 and 280.2 million USD respectively.
While Khat and cut flower brought Ethiopia 272.9 and 218.5 million USD, the total revenue the country secured from agricultural commodities in 2016/17 fiscal year surpassed that of the past year same period by 26 million USD.
Representatives from Ministry of Trade have paid frequent visits in various states and held consultations aimed at enhancing the value chain among farmers, cooperatives and Ethiopian Commodity Exchange /ECX/.
The consultations have evidently successful in identifying gaps witnessed in commodity grading, inspection and storage services and issued possible solutions.
ECX have also expanded its warehouses in cereal and oil seed growing areas to address problems associated with poor storage facilities.
Dr. Hussein stresses multi- stakeholder intervention is crucial to improve agricultural commodities quality thereby enabling the country to maximize its revenue.
He says: “The government expected to strengthen the role it has played in supporting smallholder farmers access to modern technologies and inputs as well as easing the loan and custom procedures.’’
Enhancing storage facilities and the transport system would also have a pivotal role to a timely delivery of exportable items particularly for cut flowers, meat, vegetables and other perishable products.
Furthermore, the commodities should be well packed and labeled to gain wider acceptance.
In addition to improve the farming and handling techniques, due attention has to be given to brand additional coffee items to keep the current achievement in the commodity and attain more foreign currency.
Dr. Hussein says facilitating conditions for smallholder farmers share experiences of commercial farms in applying modern technologies is need to be among government’s priority.
The economic analyst states that development agents have the greatest responsibility to introduce smallholder farmers with modern technologies and build the latter’s knowledge in practical way through pilot plots and other mechanisms.
Dr. Yibeltal notes that the practitioners are exerting key share in enhancing export quality, saying: ‘’besides their engagement to familiarize farmers with up-to-date technologies and inputs, development agents have also aware them about the relation in producing quality products with increasing revenue.’’
On its part, Agricultural Transformation Agency/ ATA/ has played an essential role by providing high yield items to smallholder farmers thus supporting commodities’ competitiveness in the world market.
Ethiopia has set target to generate 6.76 billion USD from agricultural commodities by the end of the Second Growth and Transformation Plan (GTP II) period (2019/20 fiscal year) and to become the second leading coffee exporting country in the world next to Brazil.
Both professionals agree that to meet the aspiration in the GTP II, quality issue is the priority, saying: “Quality is not the assignment of a single entity rather a shared responsibility of all actors in the sector to provide an integrated support, supervision and follow up to stakeholders in agricultural value chain.’’
Cognizant of the role agriculture has played for economic growth and the livelihoods of the people, the government has attached due emphasis to enhance its product and productivity carrying out Agricultural Development-Led Industrialization (ADLI) policy, which pave ways for the sector’s development.
Under the umbrella of ADLI, Ethiopia set successive five-year plan that has enabled it to register seven percent agricultural growth on average during the past decade.
Agricultural products have contributed over 75 percent of Ethiopia’s total revenue from foreign trade in the 2016/17 fiscal year and if the quality of exportable commodities improved, the revenue would automatically increase and enable the country to exploit the potential market niche, the experts recommend.