Why have Ethiopian coffee farmers earned lower incomes between 1990 and 2019 despite increasing coffee production, and what solutions are there to improve their incomes?

Ethiopia is one of the largest and oldest coffee-producing countries in the world; it is internationally recognised for having some of the rarest and most sought-after varieties of arabica coffee, which earns a premium compared to other strains and varieties, such as robusta. The country is also highly dependent on coffee exports for its (1) foreign exchange, allowing Ethiopia to more easily purchase goods it cannot produce domestically, and (2) for its employment, with the coffee sector directly and indirectly employing millions of people in the Ethiopian work force. Yet, despite the country’s dependence on coffee production, coffee farmers are becoming poorer, and exiting the industry altogether to cultivate more lucrative crops. These lucrative crops, unlike coffee, do not depend on forest-cover, which is incentivising people to deforest entire landscapes to make room for the production of other goods, such as monocultured cereals. This transformation from agroforestry production systems to monocultured systems threatens both the livelihoods and food security of farmers, as well as the ecological landscape of the country’s forests. This work first aims to understand the various economic, environmental, and policy dynamics that have shaped coffee production decisions for farmers between 1990-2019. This analysis will then feed into the short and long-term solutions that may be implemented to symbiotically raise farmer incomes while also reducing the incidence of deforestation. The paper posits that improving the incomes of coffee farmers will require creating new agricultural and economic systems that value the existing forests. Ultimately, the paper recommends short-term solutions that will increase farmer incomes in the short-run through simple policy-adjustments to current domestic sale restrictions, as well as a long-term strategy to develop Participatory Forest Management (PFM) as a national strategy to combat deforestation and support farmer incomes