From Crop to Community: Crafting a Brighter Future for Ethiopian Smallholders

Written By:Katharina van Treeck
Date:10 April 2024
Increasing livelihood of Ethiopian Smallholders

The project “Coffee Alliances for Ethiopia” (CAFE) aims to increase the livelihood of smallholder coffee farmers in Ethiopia. The latest evaluation of the project has shown that sustainable support for these farmers requires a holistic approach. Such an approach goes beyond focusing on single aspects such as farming techniques or distribution methods. In the following, we explain the rationale behind this assertion and share our key findings.

About CAFE II 

Coffee is Ethiopia’s main export commodity and over 25 million Ethiopians, a quarter of the population, are involved directly or indirectly in the coffee industry. 

The current project CAFE II by Hanns R. Neumann Stiftung (HRNS) funded by the Austrian Development Agency (ADA) and International Coffee Partners (ICP), which started 2019 aims to improve the livelihoods of coffee smallholder families in the Amhara region. A total of 2,500 coffee farmers and their families, representing 15,000 people, participate in the project. 

The project focuses on enhancing farmers' livelihoods by

  • further promoting the professionalization of farmer cooperatives and a union,
  • providing training to farmers through farmer field schools to increase their adoption of good agricultural practices (GAPs) and to diversify their production systems,
  • promoting gender equality through couples’ seminars, encouraging a more equitable and efficient use of the available resources, and
  • supporting youth income generation along the coffee value chain.

CAFE II builds on the results of its predecessor CAFE, which ran from 2014 to 2019 and was funded by the Lavazza Foundation, the Löfberg Family Foundation, ADA and HRNS.

Laying the Foundation: The Impact of Good Agricultural Practices

CAFE II has considerably improved the coffee productivity of smallholder farmers: Farmer field schools trained farmers in good agricultural and climate-smart practices, which they increasingly adopted - with remarkable results. While farmers reported an average yield of 385 kg of green coffee beans per hectare in 2020, this figure increased to 655 kg by 2023 - an increase of 70%. During the project, farmers increased their GAPs from an average of 2.7 GAPs (out of 10) to 4.8. As a result, also coffee profitability increased, more than quadrupling between 2020 and 2023, partly due to higher coffee prices, but mainly due to increased GAP adoption.

This clear upward trend created the necessary conditions for farmers' livelihoods to improve.

Kirsten Ehrich Monitoring, Evaluation and Learning Manager at HRNS
Livelihoods continued to improve in terms of poverty and food security, and in 2023, only 14% of farmers were living below the national poverty line, 3% were living below the extreme poverty line of 1.25 US-Dollar per capita per day, and no household was experiencing food shortages during the project phase.
Kirsten Ehrich, Monitoring, Evaluation & Learning Manager at HRNS

19% of farmers were living below the national poverty line, 5% were living below the extreme poverty line and 2% were experiencing food shortages at baseline.

A Holistic Approach to Improving Smallholder Livelihoods in the Long Run

At the same time, the results of the project clearly show that improving the quality of life of smallholder farmers in the long term requires more than just focusing on agricultural yields. Instead, many different factors must be considered and integrated into a holistic picture. It has become apparent that two factors in particular play an important role in successful implementation:

1) Stable and lucrative sales channels: For agricultural production to generate economic returns, sales channels must be lucrative and stable. Typically, farmers can sell their coffee through different channels: local traders, private consumers, and farmer cooperatives. Farmer cooperatives are usually the best option, because they allow farmers to organize themselves and support each other and are not dependent on local middlemen and the prices they set. “However, inadequate price-setting techniques, business skills and financial literacy among the farmers who make up the cooperatives often lead to inefficiencies that could be addressed though“, explains Rahel Kassa Amare, Monitoring & Evaluation Coordinator in Ethiopia. 

2) Risk management: Resilience to shocks is key to protecting farmers from various uncertainties. Smallholder farmers can face external shocks - such as changing climatic conditions, extreme weather, pests and diseases, conflict or market fluctuations - as well as internal shocks - such as separation, death or illness. Risk management is therefore an important part of running a family business like a coffee farm. During the course of CAFE II, Ethiopia experienced two major shocks that also had an impact on smallholder coffee farmers:

  • The armed Amhara conflict has been destabilizing the region since 2023.
  • Climatic conditions in the region continued to be challenging, with a prolonged rainy season, including heavy rain and snow.

The project therefore has - in line with the Foundation's Theory of Change - implemented further measures in addition to the promotion of GAPs, particularly in the areas of gender equality, income diversification, climate resilience, and farmer organizations. The most important of these activities and the lessons learned are presented in the following.

Project Success Factors and Key Points for Adjustment

1) Farmers should be trained in GAPs as these have multiple positive impacts: The increased adoption of GAPs not only led to higher yields, but also made farmers more resilient to climate change (especially through proper shade tree management). As mentioned above, climatic conditions in the region continued to be problematic during the project. However, the proportion of farming families that suffered no or only light climate-related crop losses remained stable at around 90%.“The use of organic fertilizers instead of chemical fertilizers also protected farmers from the price shock of chemical fertilizers, the cost of which has risen due to Russia's war against Ukraine”, adds Ehrich.

2) Gender equality is a safeguard against internal shocks: The project conducted couples’ seminars to improve gender equality and thus the use of available resources. These have been very successful, as joint decision-making for implementing a given practice increased remarkably from 61% to 87% across all practices during the project. “Sharing responsibilities increases the likelihood that one person can step in and take over for the other in the event of a loss. It is therefore an important factor in protecting against internal shocks such as illness, death or separation”, explains Kassa Amare.

Rahel Kassa Monitoring and Evaluation Coordinator
Sharing responsibilities increases the likelihood that one person can step in and take over for the other in the event of a loss.
Rahel Kassa, Monitoring & Evaluation Coordinator

3) A well-diversified income is an important source of resilience to external shocks: Over the course of the project, farmers have diversified their production systems and also planted more vegetable gardens for home consumption. This is an important step in increasing both income and food security, as it builds resilience to shocks, such as price drops, disease outbreaks or adverse weather conditions. Interestingly, the project revealed that female-headed households plant more food crops (they are more risk-averse with regard to food security), while male-headed households focus more on cash crops.

4) It is important to take the interests of the youth into account and to create opportunities for them in rural areas: In Ethiopia, young people are increasingly leaving rural areas - a phenomenon that is also seen in other countries. The result has been labor shortages and rising wages that have significantly increased production costs. Productivity gains and a high coffee price have so far been able to mitigate this, but have increased the business risk for farmers. CAFE II supported youth groups in developing economically self-sustaining nurseries for improved coffee seedlings. These activities need to be expanded in order to be able to provide better support and assistance to young people also in the event of conflict or other unforeseen circumstances.

5) Comprehensive organizational development of farmer organizations is key to helping farmers become financially independent and resilient to shocks: Well-functioning farmer cooperatives are a central pillar of successful smallholder agriculture. Farmer cooperatives strengthen the role of coffee farmers in the supply chain and their access to national and international markets. But project experience shows that stable and efficient farmer cooperatives are not a given. Although all participating cooperatives as well as the Amhara Coffee Farmers Cooperatives Union (ACFCU) have made progress in their professionalization, there is still room for improvement as only one out of ten cooperatives could be classified as strong and professional. Also, comparatively low quantities of coffee have been sold to cooperatives and prices were significantly lower than via other sales channels - mainly due to a lack of business skills and storage problems, which led to a decline in coffee quality, as well as a delay in coffee exports due to the emerging Amhara conflict. The high domestic coffee consumption is another factor as it enables farmers to sell coffee directly at often better prices. This, however, does not give them access to services that could help them to improve their overall livelihood situation. Key lessons from the project are:

  • Improve risk management of farmer organizations: Farmer cooperatives enable farmers to collectively mitigate shocks, but this requires targeted training in risk management. In the project region, the Amhara conflict made transportation difficult. By expanding risk management training and creating more stable conditions, such as adequate and sufficient storage space for coffee in the cooperatives and safe transport routes that can be guaranteed in the event of conflict (or other contingencies), farmers can become more resilient.
  • Increase business knowledge among farmers: To make farmer cooperatives a profitable sales channel, it is important to improve business skills. “Increasing the business knowledge of farmers and cooperatives should be emphasized as much as increasing their agricultural knowledge. The lack of full-time skilled manpower working in cooperatives and unions is the root cause of inefficiency in marketing. Therefore, strategic thinking and knowledge-based coffee pricing is crucial,” explains Tadesse Getachew, Field Operation Manager of CAFE II. This is also confirmed by other projects: “In Tanzania, for example, it has become clear that quality segregation of coffee is important for achieving good coffee prices. So far, cooperatives have done so only to a limited extent, even though it makes good business sense to do so”, Ehrich explains.
  • Expand the services of farmers' cooperatives: Agricultural cooperatives can be an important source of various services for farmers. In addition to providing distribution channels, they can offer training, financial services, tool libraries, and collective purchasing of inputs or coffee quality testing to ensure optimal prices. The project has shown that these services are not yet available or widely used - despite their great potential to empower farmers.
These findings also guide us as we continue the project in the future: Improving livelihoods will continue to be the primary objective, with an increased focus on shock resilience, income diversification, farmers' financial literacy and business skills, and overall strengthening of farmer organizations.
Tadesse Getachew, Field Operation Manager