The Impact of Climate Change on Ethiopian Coffee

Ethiopia is Africa’s largest coffee producer, and the third largest Arabica producer in the world. As the climate changes, the country will have to adapt its agricultural practices in order to maintain production levels. Ethiopia’s ability to change how and where they grow coffee will have economic implications both locally and abroad.

According to a recent study, 39–59 percent of Ethiopia’s current coffee production area could become unsuitable because of rising temperatures. Due to anticipated temperature increases, regions at higher elevations (above 2000 meters) could become better suited for coffee production in the coming decades. – USAID

We used Fraym’s data platform to illustrate what this changing climate could mean for the livelihoods of Ethiopian coffee farmers. Specifically, we looked at farmers living and working in areas above 2,000 meters to understand how similar or different they are to farmers living below 2,000 meters. This exercise raised some interesting considerations for development program design across several dimensions, including: production, gender, and financial inclusion.

First, we looked at coffee production at the national level.

Nationally, about 33% of households engaged in agriculture grow coffee, but only 20% of agricultural households sell some amount of coffee. Among agricultural households with plots over 2,000 meters above sea level, only 16% grow coffee and only 4% sell their coffee.
Among coffee growing households, 64% of those with plots below 2,000 meters sell some of their coffee crop, compared to only 26% of households with plots above 2,000 meters.

Design Consideration: Although there are households above the 2,000 meter threshold currently growing coffee, the relatively small proportion of households engaged in coffee production suggests that there will need to be substantial livelihood trainings to enable more farmers to adopt coffee as a major cash crop.

Next, we researched women and coffee farming:

Farm wages tend to be higher for women at higher elevations. Women working plots below 2,000 meters tend to make about one-quarter of the daily wage women who work plots above 2,000 meters make.

Design Consideration: Any investment in coffee production will have to have a gender lens – what does generating more income from coffee mean for women’s income and household dynamics? We see that below 2000m men are the ones making more money from coffee.

Lastly, we reviewed financial access and inclusion:

Above 2000m households are more likely to have a bank account, so market-based interventions may have more success in these new zones than below 2000m.
While households that grow coffee are slightly less likely to have a bank account than other agricultural households, financial inclusion is relatively low for agricultural households in general. For coffee-growing households, fewer than 1 in 5 has a bank account. 24% of coffee growing households above 2000m have bank accounts, vs 17% below 2000m.

Design Consideration: There may be a role for market-based interventions, including programs to promote investments in coffee inputs, or to insure against risk.

Significant effort will be required to avoid climate-related disruptions to the coffee value chain. Projects aiming to ease the geographic transition will need to consider more than agricultural viability. Information on populations in specific locations will be critical for creating sustainable solutions.