Our analysis identified four major coffee value chains: formal, informal, domestic, and international chains. Stakeholders' competing goals and conflicts have created a complex structure, as exemplified by the strict market regulations in place. Reforms, such as Ethiopia's monetary policy, have caused foreign exchange and FDI deficits, impacting the coffee sector, which remains the primary source of foreign currency but limits domestic coffee development. This also spurred informal trade for local and cross-border markets. An overvalued currency and cheap imports attract informal traders, as exporters seek foreign currency through coffee, thereby hindering the sector's development. Poor quality control further restricts the competitiveness of domestic chains, favouring small, inefficient, and informal traders. Institutions failed to regulate reforms, such as the 2018 coffee reform, which reduced transparency and undermined trust. Furthermore, the failure of institutions to monitor and regulate policy reform meant that farmers, primary cooperatives, and traders working on quality considered it a less rewarding activity. The Ethiopian coffee market does not function effectively in terms of differentiating and remunerating different product and process qualities. ...
Ayele et al. (Thu,) studied this question.