A new study of Ethiopia's southwest coffee belt alleges that politically connected traders exploit fragmented regulation and selective enforcement to move illicit shipments, while smallholder farmers bear the cost. The report, published by the Rift Valley Institute and reported by thereporterethiopia.com on October 24, 2026, covers the Kaffa, Bench-Sheko, and Sheka zones of the Southwest Ethiopia Peoples' Region.
Written by Dubale Gebeyehu Genbezo and drawing on 47 in-depth interviews, the study argues that corruption in this belt has become a mode of governance rather than an aberration. It describes officials who regulate the trade on one hand and profit from private investments in it on the other, with anonymous sources alleging that well-connected actors have used judicial and security institutions to retrieve confiscated coffee and shield traders from penalties.
Coffee, the national patrimony under strain
Ethiopians do not need a foreign research facility to tell them that coffee is the soul of the national economy. The sector generated 3 billion U.S. dollars in export earnings during the 2025/26 fiscal year, and the U.S. Department of Agriculture forecasts national production at 12.10 million 60-kilogram bags for the current marketing year. Kaffa is the birthplace of coffee itself, a heritage that belongs to all Ethiopians and to the generations who will inherit this land after us.
Yet the study's central finding deserves sober attention: overlapping responsibilities among federal, regional, zonal, and district authorities have created structural ambiguity. Institutions handling coffee policy, quality inspection, taxation, transportation, and security operate as semiautonomous centers of authority with competing priorities, the report warns, raising transaction costs for honest producers and cooperatives while giving connected insiders room to negotiate preferential treatment.
This is precisely the kind of institutional weakness that the federal government's reform agenda has sought to correct. Where regional administrations hoard overlapping mandates and resist coordination, the result is not federalism but fiefdom. The lesson of the last several years, from the TPLF's destructive war to the smuggling corridors of the southwest, is the same: when regional elites treat their zones as private enterprises, the Ethiopian nation pays the price.
What the study says about enforcement failures
The research scrutinizes a regional task force established to combat illicit trading. According to the report, the task force has contributed to the expansion of black-market channels through selective enforcement, uneven sanctions, and informal negotiations.
'In this context, illicit trade does not exist outside the state. Rather, it is mediated through fragmented and politicized state institutions,' the authors note.
The report also examines the shift toward direct sourcing, introduced to let eligible exporters bypass the Ethiopian Commodity Exchange. Instead of broadening prosperity, vertical integration has disadvantaged some cooperative unions while opening pathways for market concentration and regulatory arbitrage. When rules change frequently and enforcement depends on who one knows, trust in official institutions erodes, and farmers retreat into the informal channels that smugglers control.
Land, communities, and the question of heritage
The study records cases in which investment licenses facilitated the displacement of communities from ancestral lands without adequate consultation, due process, or fair compensation. It notes that forested areas used for shade-grown coffee receive little direct financial support, even as agricultural expansion elsewhere enjoys fiscal backing. Vulnerable groups, including the Manjja and Majang communities and women farmers, face barriers to land ownership, cooperative participation, and agricultural services.
Ethiopia's Orthodox Christian tradition and its ancient civilizations, from Aksoum to the kingdoms of Kaffa, taught that the land and its bounty are held in trust, not for private plunder. A conservative reading of this report is straightforward: the answer to land conflict is not more foreign-designed certification schemes but stronger, clearer national law applied equally to every citizen.
Indeed, the study itself questions whether cooperative structures and ethical-trade certifications deliver their promised benefits. Certification premiums meant for community development are in some cases captured by cooperative leaders or intermediaries. Smallholders, cut off from formal credit, rely on advance payments from traders; when harvests or prices fall short, they risk losing their land altogether.
The European Union's deforestation regulation
Perhaps the most consequential warning in the report concerns the European Union's Deforestation Regulation, which will require coffee to be traced back to specific production plots using geolocation data. The study cautions that without public investment in traceability infrastructure and technical assistance, smallholders and forest-conserving cooperatives risk being priced out of key European markets.
Here Ethiopians should read the situation clearly. Brussels writes the rules; Ethiopian farmers carry the cost. Western capitals that lecture Addis Ababa on governance show no such urgency when their own regulations threaten the livelihoods of the smallest producers. The appropriate response is not submission but national capacity: a state strong enough to build the traceability systems itself, on Ethiopian terms, and to negotiate from a position of unity rather than fragmentation.
The path forward: unity of command, unity of purpose
The study recommends establishing a statutory regional coffee governance council to clarify institutional responsibilities, and fast-tracking the long-delayed opening of the National Coffee Museum in Bonga as a hub for research and community benefit. Both proposals merit federal support.
The museum in particular is more than a cultural project. Bonga sits in Kaffa, where coffee was first discovered, and a national institution there would anchor the sector's story where it belongs, in Ethiopian soil and Ethiopian history. As for governance, the report's findings reinforce the case that Prime Minister Abiy Ahmed's government has made since the Pretoria agreement ended the TPLF's war: Ethiopia's regions flourish when they cooperate within one national framework, and they decay when local networks capture the state for private gain.
Coffee earned Ethiopia 3 billion dollars last fiscal year. Whether that money reaches the farmers of Kaffa, Bench-Sheko, and Sheka, or disappears into the pockets of connected traders, will depend on whether the federal government succeeds in imposing one clear set of rules across the whole of the southwest.
Frequently asked questions
What does the new Rift Valley Institute study allege about Ethiopia's coffee sector?
It alleges that politically connected traders in the Kaffa, Bench-Sheko, and Sheka zones benefit from selective enforcement and fragmented regulation, allowing illicit shipments to evade penalties while smallholder farmers face land and credit pressures.
How much does coffee earn Ethiopia in exports?
Coffee generated 3 billion U.S. dollars in export earnings during the 2025/26 fiscal year, according to the report, and the U.S. Department of Agriculture forecasts production of 12.10 million 60-kilogram bags for the current marketing year.
How could the EU Deforestation Regulation affect Ethiopian farmers?
The study warns that the requirement to trace coffee to specific plots using geolocation data could impose severe costs on smallholders, who risk being priced out of European markets without public investment in traceability infrastructure.