Officials in the Oromia Regional State have imposed a levy on coffee bought for export, targeting thousands of producers in a bid to restructure longstanding inequities in the sector’s value chain.

A directive issued by the Trade Bureau under the region's government introduced a five percent levy on every kilogram of coffee bought from farmers. The region produces nearly 79pc of total coffee exports, making it the undisputed giant in a country where coffee is the top export earner. A directive issued by the State's Trade Bureau now mandates that over 4,000 coffee producers selling to exporters should pay the levy, which is calculated based on benchmark prices set by the Ethiopian Coffee & Tea Authority (ECTA).

Regional officials argue that the sheer volume of coffee produced in the region has not translated into proportional gains for the farmers who grow it. Decades of infrastructure gaps, they say, continue to weigh on farmers' earnings across the major coffee-growing zones. The last six years saw 600 billion Br invested in the coffee sector, yet roads, storage, and modern processing facilities have lagged far behind the needs of the region’s growers.

A regional study found that selling green coffee for less than 100 Br a kilogram is non-viable for most farmers. That has prompted authorities to consider market interventions to keep prices above that threshold and ensure the sector's sustainability.

The authorities who introduced the levy hope to bolster the regional economy and fix long-standing imbalances in how value is shared along the coffee supply chain.

According to Tesfaye Gesho, deputy director general of the Oromia Trade Bureau, the directive was primarily intended to improve coffee quality and, by extension, boost export revenues. He disclosed that zonal administrations have submitted detailed plans for the use of revenues collected through the new levy, with an emphasis on farmers' training as a central objective.

“We’re focusing on giving producers more instruction in coffee production techniques, quality management, and post-harvest handling,” said Tesfaye. "With higher standards, Oromia’s export performance will rise as well."

The distribution of coffee-related taxes is another sore point. According to Tesfaye, urban centres have long benefited from the “kote” system, which collects coffee cleanliness fees, while rural farming zones have missed out. The new directive seeks to correct this, encouraging exporters to invest directly at the source to improve quality before beans reach city-based processing centres. Tesfaye disclosed that neighbouring regional states have already been briefed on the levy, and consultations with industry stakeholders are underway to explain the new approach.

Hussein Ambo (PhD), chairman of the Ethiopian Coffee Growers, Producers & Exporters Association, confirms that discussions with authorities have taken place and that the directive could eventually extend to other regional states.

“We've got some important concessions,” he said.

Expenses tied to the levy are now tax-deductible, and the “kote” fees will be waived for suppliers covered by the new rule.

However, Hussein sees potential pitfalls if domestic prices rise too quickly.

“If the quality increases, we don’t have a problem,” he told Fortune. “But rising prices in farmers’ markets could create challenges for exporters.”

At the national level, federal authorities in charge of the sector plan to ensure the export of three billion dollars worth of coffee this year, with Oromia Regional State targeting 2.6 billion dollars of the total. This year, officials in the regional state plan to deliver 650,000tns of coffee to the central market, a sharp rise from last year’s 470,000tns. Zonal revenue bureaus across the region will collect the revenue from the new levy.