THE COFFEE AND TEA BOARD - International Best Practice in the Context of Ethiopia

1. THE COFFEE AND TEA BOARD - International
Best Practice in the Context of Ethiopia
John W. Mellor
Cornell University and John Mellor Associates Inc.
IFPRI Coffee Conference, Addis Ababa, September 14,2015
I am grateful to USAID contract #-------- for supporting the initial work on this paper
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2. OVERVIEW – THREE COMPONENTS
• THE CURRENT CONTEXT FOR THE COFFEE (AND TEA) BOARD
• INTERNATIONAL EXPERIENCE – AN OVERVIEW
• KEY FEATURES RELEVANT TO ETHIOPIA
• IMPLICATONS

3. COFFEE MUST NOW PLAY A MAJOR ROLE IN
GROWTH
• COMPENSATE FOR EVENTUAL SLOWING OF CEREALS
• ON THE ORDER OF 10% COMPARED TO CURRENT 4%
• LARGE POTENTIAL –
• Quality (relative price) increase
• Yields very low – varietal improvement, fertilizer
• Area expansion (smallholder plantation)
• Large domestic market
• International market growth is for high quality

4. GROWTH (CONTINUED)
• Constraints
• Farmers consistently say not profitable
• Research underfunded
• Extension underfunded, not specialized, not integrated
• Potential for major disease
• Lack of integrated promotion
• Discouragement of domestic market
• Contrast to all S. American countries

5. CURRENT INSTITUTIONAL STRUCTURE
• Interests not mutually congruent
• National exporters association
• Ethiopian commodity exchange – unique
• Ministry of Agriculture
• Ministry of Trade
• Producers (continued next slide)

6. PRODUCERS (continued)
• Producers (continued)
• Ethiopian Coffee Growers and Exporters Association
• Very narrow representation
• Ethiopia unusual in;
• No powerful smallholders organization
• Smallholders closest of all groups to Governments interests
• A few large cooperatives could play this role

7. WHY COFFEE NEEDS A SPECIALIZED BOARD
• BOARD MUST TACKLE ALL THESE
• EXPORTS DOMINANT
• Competition requires faster cost reduction
• Competiveness increasing
• Requires more finance at all levels
• Requires extra research/extension
• Quality standards more important and dynamic
• Large potential for regional branding
• Complex and difficult
• Guatemala success
• Vulnerable to fast spreading disease

8. IMPLICATIONS TO THE BOARD
• Ensure large funds to ensure competitiveness
• Ensure proactive approach to disease potentials
• Provide leadership in international negotiations
• Solve the quality/branding problem
• IRC produced a set of case studies
• Four countries stood out
• Where was Ethiopia?
• Ensure complete statistical system
• CSA first class, but
• Coffee far more complex than cereals
• Especially important for international commodities
• No statistics no effective policy

9. IMPLICATIONS (CONT.)
• Two old irrelevant functions attributed to Boards
• Extracting and transferring resources away from an export
• Meeting international quotas
• These gave Boards in some areas a bad name
• Must be clear Ethiopia is different

10. INTERNATIONAL EXPERIENCE
• Most relevant to Ethiopia
• Guatemala, Honduras, Columbia
• All have large earmarked source of funds
• Usually tied to exports
• Used for high intensity of activities
• Some for social programs
• With large domestic market, must tap that
• Regional branding
• Guatemala like Ethiopia, but
• Huge investment, successful, tourism
• Specialty coffee
• Easier for small country
• Honduras very successful
• CQI (contractor with AMDe) large input
• All have powerful producer representation/organizations
• Some spend heavily to grow domestic market

11. LEAST RELEVANT TO ETHIOPIA
• Brazil
• Very large scale farms including coffee
• Six times as a large a producer
• Highly developed institutional structure
• Covers all aspects including coffee
• Meets specialized needs of coffee
• African Countries
• Weak overview agencies
• Therefore serve largely to lobby government
• Tend to have stronger producer organizations than Ethiopia.
• Café Africa has played substantial role pulling together
private/public in context of weak organizations.

12. CONCLUSIONS Re
INSTITUTIONAL FUNCTIONS
• Insulated from day to day Government
• Single body
• Ethiopia has several institutional bodies
• Conflicting interest
• Board must be in charge
• Need powerful smallholder producer organization
• Coffee Coops could lay that role
• Dominant representation

13. CONCLUSIONS (CONTINUED
• Need large reliable funding specific coffee
• Usually an export levy of some sort
• But Ethiopia has large domestic market to tap
• Board disburses those funds
• Need large powerful organization to ensure quality
• Ethiopia years of talk but not gaining on competition
• Unusual opportunity for multi region branding
• Coffee tourism
• Requires powerful Board.

14. CONCLUSIONS (CONTINUED)
• Need comprehensive strategy implementation
• Relative roles and timing of
• Area increase
• Yield increase
• Quality improvement
• Regional emphasis
• Infrastructure (lobby for)
• Administrative structure/budget for above
• Representative board weighted to small producers
• Professional analytical unit
• Professional implementation unit
• Administrative/budget unit