Impact of Fair-trade Certification on Socio-Economic Condition of Coffee Farmers and Cooperatives in Ethiopia The Case of Bule Hora and Abaya District Borena Zone Oromia Regional State Ethiopia

Abstract

Coffee stands next to oil among the international pivotal commodities in generating income. It is also the first priority for Ethiopia in fetching the lion share of foreign currencies. About 25% of the population in Ethiopia is directly or indirectly dependent on coffee. More than two million coffee farmers are directly dependent on coffee and derive their livelihoods from it. But the volatility of the coffee price has been challenging the coffee producers together with climate changes. Mean while, the coffee farmers all over the world in general and coffee farmers in Ethiopia in particular, have been hit by coffee price falls over the last several years. Specially, during the last eleven years, the coffee farmers in Ethiopia had been strongly hit by coffee crisis, which highly affected the economic, social and cultural base of every household. Fair trade is one of the remedies to combat the prevalent coffee price falls and coffee crisis that occurs frequently at interval of times. The vulnerable coffee farmers of Ethiopia, particularly in Oromia Regional State became Fairtrade certified through the Oromia Coffee Farmers Cooperative union in 2002 during sever coffee crisis, in order to mitigate the risk of coffee price and to rescue coffee farmers from distraction of the family. Therefore, the aim of this study is to examine the impact of Fairtrade certification on socio-economic condition of households in study areas. The study was conducted on six cooperative societies located in Bule Hora and Abaya districts of Borena zone, Oromia Regional State. Two of the six cooperatives are non-certified. All these cooperative societies are the members of the Oromia Coffee Farmers Cooperative Union, through which their coffee is supplied to international market. xiii The comparison was made between Fairtrade certified and non-certified cooperative societies, in this study. The necessary data was collected from the households, cooperative societies and OCFCU, analyzed and interpreted to reach a conclusion. The study revealed that, Fairtrade certification has positive impact on Socio-economic condition of certified coffee farmers and cooperative societies, especially it played vital role in provision of social services to coffee farmers and cooperative societies. However, there are challenges, the members and cooperative societies facing to reap the benefit of the Fairtrade .Non-compliance of Fairtrade standards, low productions and productivity, narrowness of the Fairtrde market to absorb all certified products, indebtedness to banks, low participation of members and poor performance of cooperatives due to inefficient management of cooperatives structure. As the result, the study revealed that there is no significant difference between certified and non-certified cooperatives in economic well being of households. But, remarkable achievement is observed in social services. The study concluded with the following recommendations for further solution, that the FLO standard and criteria needs attention to look into, to cope according to the specific situation of each country. OCFCU should give due attention to investigate why the fairtrade benefit is not significant in livelihood of households. The coffee farmer’s linkage with agricultural research and agricultural offices should be bridged for technological transfer, in order to boost coffee production. The organizational structure of cooperative societies requires professional back-up and capacity building program in order to meet the objectives of the cooperatives and Fairtrade certification to attain the intended goals. Because of the dynamism nature of coffee price and rapid change in economic development of the coffee sector continuous assessment is required. The problems and opportunities may attract the attention of further researchers to solve the problems.