Authority Pins Hope on a Coffee Fund as Trees Grow Old

Jul 12 , 2026. By BEZAWIT HULUAGER ( FORTUNE STAFF WRITER )

Federal regulators are preparing a Coffee Fund to shield growers and exporters from collapsing prices and ageing trees, at a moment when nearly 80pc of the country’s coffee stock is too old to yield well. According to Shafi Umer, deputy director of the Ethiopian Coffee & Tea Authority (ECTA), a technical committee is overseeing the reserve, meant to compensate stakeholders across the value chain when the market turns. The pooled Fund would work as insurance, cushioning suppliers and exporters when global prices swing.

Federal regulators of the coffee sector are preparing a fund to shield growers and exporters from collapsing prices and ageing trees, at a moment when nearly 80pc of the country's coffee stock is classed as too old to yield well.

The pitch is a financial guarantee stretching across the value chain. The difficulty is that the money, the manager and even the Fund's central purpose are still being worked out.

What the Ethiopian Coffee & Tea Authority (ECTA), under Adugna Debela (PhD), is building is less a single instrument than a wager that a pooled reserve can do what the banks will not, carrying the risk of keeping coffee alive as a crop.

The Authority has established a technical committee to oversee what it calls a “rehabilitation fund,” also known as the “Coffee Fund.” According to Shafi Umer, the Authority’s deputy director, the initiative is meant to support the industry's development and compensate those along the chain when the market turns against them.

Its first job, as the authorities described it, is insurance.

“If a supplier buys coffee from a farmer and international coffee prices decline, causing exporters to stop purchases, the Fund will provide compensation," Shafi said.

The mechanism is meant to cushion exporters and farmers against losses when the global price swings, the shock that periodically freezes the trade and leaves suppliers holding beans nobody will buy.

The second job is modernisation.

“The Fund is intended to modernise the inputs, development, and marketing,” Shafi told Fortune. “It should be considered as a guarantee, to be collected periodically.”

He disclosed a reserve that would speed up development, lift production and productivity, maintain quality, ease external marketing problems, and take on other supporting roles as it grew. However, how it will be run is not settled.

According to Shafi, a task force is being formed to develop the strategy and legal frameworks, involving the Authority and industry bodies, including the Ethiopian National Coffee Association and the Ethiopian Coffee Exporters Association (ECA).

“Once the fund is established, a decision will be made on who will manage it,” said the Deputy Director. “Given the existence of the Authority, it is well-positioned because it has extensive knowledge of the coffee sector, from production to marketing.”

According to Shafi, an independent entity set up jointly with the associations could manage it instead.

Where the money comes from is looser still. Funding is expected to be raised by legal means from several sources, among them suppliers, exporters and possible support from international donors, buyers or individuals. Shafi pointed to Brazil, which has run a similar mechanism, as the path Ethiopia intends to follow.

Ethiopia’s coffee production and export earnings are rising.

The U.S. Department of Agriculture forecasts Ethiopia will produce 11.6 million 60kg bags of coffee during the 2025/26 marketing year, which runs from October to September. That is equivalent to about 696,000tns and represents a nine percent increase from the previous year.

The area under coffee cultivation is expected to reach 790,000hct, with an average yield of about 0.88tns a hectare.

Export earnings have also increased sharply.

Ethiopia earned about 1.4 billion dollars from coffee exports in 2023. Revenue edged up to 1.43 billion dollars in 2024, then climbed to about 2.65 billion dollars in 2025. In July 2026, the Authority announced that coffee export earnings for the current fiscal year had reached a record three billion dollars.

“The Fund would also train and support farmers when they face market losses or production problems, within a framework being organised with stakeholders,” he said.

The urgency sits in the trees. Nearly 80pc of the country's coffee is aged, and output has settled at about 0.9tns a hectare, or about seven to eight quintals, while policymakers want to see 21 quintals. That gap between what the plants give and what the state expects is the crisis the Fund is meant to answer.

Rehabilitation has already begun, but the bill is the obstacle. According to Adugna, half a million hectares had been rehabilitated over the past five years, yet a fund was critical to solving the financial problems farmers meet when they uproot old trees and transplant new ones. That cost falls hardest on those who grow most of the crop.

Tekelemariyam Aweke is a researcher at the Food & Land Use Coalition (FOLU) who has spent 17 years on rural and innovative financing. He saw smallholder farmers, who manage 95pc of production, face steep barriers because rehabilitating coffee is “expensive, combining heavy labour with a three-to-four-year loss of income before the new trees bear fully.”

He believes that the proposed Ethiopia Coffee Renovation Fund would bridge the gap left by lenders that favour export and marketing over production, and would be a risk-sharing mechanism run by an independent entity, with its capital potentially drawn from carbon credits and export levies. The aspiration is to keep coffee a generational crop and dissuade farmers from switching to more lucrative crops such as khat or eucalyptus.

Trees are generally considered old after 25 to 30 years, and while some in Ethiopia have stood for 70 to 100 years, their yields are very low by modern standards. There are two ways to deal with them. One is renovation, uprooting the tree and replacing it with new seedlings. The other is rejuvenation, pruning the tree while the root stays in the ground.

“Renovation is very costly,” said Teklemariam, whose numbers match the regulator's findings. “They demand major labour for uprooting, digging and transporting materials, and beyond that the farmer loses income during the three to four years it takes for renovated trees to fruit.”

According to Tekelemariyam, a durable funding system matters because coffee is not wheat but a generational crop needing long-term investment. He warned that if productivity does not improve, farmers may shift to other cash crops, at the expense of forest cover. The Fund he envisions is an independent body able to share risk with commercial banks, financed by carbon credits and a proposed 10-cent contribution from every coffee export.

For the growers, what is in store appears already brutal. Many trees in the coffee zones have reached 70 to 80 years.

"Twenty years ago, I used to harvest around 15 sacks from my farm,” said Melesse Abebe, a farmer in Jimma Zone, Oromia Regional State, blaming old, low-yielding trees. “Today, the same plot produces only about three sacks.”

Replacement is widely seen as the way back.

"Plantation renewal and adoption of newer seedlings would help us increase output and improve our living standards," Melesse stated.

Yet renewal carries a high short-term cost.

"If we replace the trees with new seedlings, it could take as long as three years before they begin generating any income," said Teshale Belay, one of the 116,000 coffee farmers in the Mana and Goma weredas of the Jimma Zone. "Our biggest concern is how we’ll support our families during that period, as we would have no reliable source of livelihood."

The number of coffee farmers across the country is estimated at 4.5 million. Many fear the physical work is costly too, calling for money to cut and clear, buy seedlings, and pay for labour and transport, sums beyond many smallholders.

"There is no access to loans or credit to help us replace the trees and restart production," said Anwar Abasabin, a farmer from the same zone, where households account for 2.6pc of the country's coffee farmers. "Without financial support, we can’t afford to begin the process again. During the years it takes for the new trees to become productive, we’ve no dependable source of income to feed our families."

PUBLISHED ON Jul 12,2026 [ VOL 27 , NO 1367]