Case study: Brewing transformation through agribusiness digitalization in Ethiopia
Written by Sarah Charles - article sponsored by the International Trade Centre
Ethiopian coffee farmers, who have long been the stewards of the country's rich coffee heritage, are increasingly recognizing the essential role that digitalization plays in revolutionizing their practices, enhancing market access, and ensuring sustainable livelihoods.
Despite Ethiopia's renowned coffee production, many smallholder farmers grapple with systemic challenges that hinder their productivity and profitability. Limited access to market information, volatile pricing dynamics, lack of financial inclusion, and inefficient supply chain management are among the critical barriers that impede the growth and resilience of Ethiopian coffee farming communities.
The absence of digital tools and technologies exacerbates these challenges, creating a significant gap between the potential of Ethiopian coffee farmers and the realities of their daily operations. Even though agritech innovations are growing across agricultural value chains, usage and adoption remain low.
To address these challenges, the International Trade Centre’s (ITC) Alliances for Action, under the Netherlands Trust Fund V (NTF V) programme, has partnered with Bopinc, which works on tech solutions for businesses, to close the gap between small agribusinesses and the tech sector. They’re working with small and medium-sized processors of cocoa in Ghana, coffee in Ethiopia, and cashews and other crops in Senegal.
The goal is to upscale their operations to generate better profits, improve incomes, and create more jobs by processing local crops in-country. Activities focus on market research, product development, sustainable processing, packaging, marketing, and developing targeted commercial linkages. To ensure a holistic approach, tech tools and platforms are integrated into business operations. This also prepares small businesses for the new EU mandatory due diligence compliance requirements through more precise data collection, greater transparency, and improved traceability.
OCFCU farm in Jimma - Credits ITC
Unlocking potential through digital solutions
To better understand their partners’ needs, ITC conducted two assessments: one in which partners were asked to identify their most pressing needs, and another that evaluated each cooperative’s readiness to adopt the proposed solution. In this baseline assessment, enterprise resource planning (ERP) systems were identified as the priority digital solution for Ethiopian coffee cooperatives. It addresses their main gaps and development obstacles as it centralizes management, streamlines supply chain and inventory processes, and enhances financial transparency. It also supports traceability and quality control, crucial for maintaining the high standards of Ethiopian coffee. They allow for more transparency and traceability of operations to comply with rules like the EU Deforestation Regulation and the EU Corporate Sustainability Due Diligence Directive.
By providing data-driven insights, improved collaboration, and scalability, an ERP enables cooperatives to make informed decisions, boost efficiency, and grow sustainably. Additionally, it supports fair trade and sustainability initiatives, improving market access and ensuring the cooperative’s competitiveness in the global coffee market.
Grounded in a tested methodology and a participatory approach, Bopinc then assessed the digital needs of selected Ethiopian coffee cooperatives to match them with local tech service providers. The criteria applied to the matchmaking strategy include:
Impact: Does the solution enhance the well-being of cooperative members and minimize environmental harm?
Desirability: Is this solution something the clients genuinely want?
Viability: Will this solution lead to increased income?
Feasibility: Can the solution be implemented effectively from both technical and organizational perspectives?
Adequacy: Is this partnership the optimal choice for achieving success?
ITC is currently running a pilot project under the NTF V programme, with a focus on setting up an automated system to track the coffee production and increase efficiency of the Bench Maji Coffee Farmers’ Cooperative Union, which has 21,000 farmer members. “Digitalizing Bench Maji Forest Coffee Union's operation through a good ERP system is a massive achievement and the system being a gateway for complying with the EU directives is a milestone output for the future of coffee production and export sustainability,” says Netsanet Nega, Export Manager at Bench Maji Coffee Farmers Cooperative Union.
A second pilot in Ethiopia will match the Oromia Coffee Farmers’ Cooperative Union with tech company AgUnity to develop co-op manager systems that also targets compliance with EU legislations. The GPS coordinates of 3,000 farmers from four primary cooperatives have been registered. GPS is a key tool to comply with the EU’s regulation on deforestation-free products. “The collective effort towards supporting Ethiopian producers and European buyers in navigating the next steps of sustainability regulations is powerful,” says AgUnity. “We are proud to be working alongside these organizations and individuals striving for a solution that bridges the digital divide.”
ITC works with a host of local tech companies in Ethiopia, notably under the tech component of the NTFV programme. A similar matchmaking strategy is applied across sectors – not just agriculture. Community network building, events and workshops, and publicly available learning resources are some of the approaches engaged.
“As we observe the proliferation of digital solutions and platforms, our role is important to help them navigate this confusing landscape, which is also an environment that is becoming very competitive,” says Giulia Macola, Associate Programme Officer for ITC’s Alliances for Action. “Helping them identify the needs, and also the right solutions is the goal. We see ourselves as facilitators rather than implementers.”
ITC's visit in Ethiopia of its tech sector development programme - Credits ITC
A tailored approach and local solutions for success
The trouble with digital tools is often that they are conceived in one place and applied in another. This means they are often ill-adapted to local needs and contexts, resulting in low adoption rates and failure. For digital tools to work, they need to be adapted to local needs – and that means using a participatory approach of co-creation with experts and stakeholders in the countries and sectors these tools will be used in.
ITC’s matchmaking strategy serves to bridge that gap. By matching Ethiopian coffee cooperatives with the right local tech service provider based on a needs assessment, this ensures both that they select the right tool and the right partner, to ensure success. Once they facilitated the matchmaking, there was an adaptation period to tailor processes to the specific needs of the cooperatives. “What’s unique about these tools and their development processes is the fact that they were the result of co-creation – requested first by cooperatives and bridging the gap between agribusiness and digital,” says Giulia. “They worked together to develop tailored solutions, good for both agribusiness stakeholders and local tech solutions – two sectors usually far from one another.”
The businesses will also have access to a directory of digital tools created in Ethiopia – a groundbreaking initiative that ITC aims to replicate across other countries.
The pilots are conceived to be sustainable beyond the life of the project as they benefit from co-funding from the beneficiaries. They are part of capacity building to business service organizations to ensure transfer of know-how and tools at the national level in support of digital transformation of the agribusiness sector. This connects to the NTF V programme’s overall objectives to improve the livelihoods and competitiveness of Ethiopian coffee farmers, and also links to ITC’s work with a wide range of partners on mandatory due diligence compliance accompanying measures in various countries and value chains.
Adopting digital solutions is a transformative step towards optimizing agricultural practices, enhancing market connections, and fostering economic empowerment in the coffee sector. By integrating digital technologies, agribusinesses and smallholder farmers can boost productivity, improve traceability, and gain better market access, ensuring a more efficient and resilient agricultural system that meets future challenges. This digital shift not only drives economic growth and raises incomes but also prepares farmers for new regulatory environments, ultimately supporting sustainable development in Ethiopia's coffee industry.
Sarah Charles
Sarah leads communications for the International Trade Centre’s sustainable agribusiness programme and is principal co-author of the ITC Coffee Guide, 4th Ed. She is also Digital Editor at Coffee Intelligence and has 15 years of experience in international development and an MSc in Sustainable Development from SOAS.