Ethiopia’s claim as the birthplace of coffee is not mere trivia; it is the strategic asset on which a new national industrial policy must be built. Wild Coffea arabica in the Kafa highlands contains thousands of unique varieties and an irreplaceable gene pool. The United Nations Educational, Scientific and Cultural Organization (UNESCO) and botanical genomics alike confirm that Arabica arose in Ethiopia’s forests and that Kafa is a global biodiversity hotspot. Protecting that genetic capital while turning it into a competitive advantage should be the Ethiopian government’s immediate priority.

With a production forecast expected to top 288.2 billion Birr ($200.8 billion), Ethiopia faces a decisive choice: steward the world’s irreplaceable Arabica gene pool into a high-value national industry or remain a low-margin raw-bean supplier.

Coffee as a strategic national asset

The numbers underpinning that urgency are stark. Ethiopia is Africa’s largest coffee producer and, in the marketing year 2025/26, production is forecast to reach roughly 11.6 million 60-kg bags (~694,000 tonnes), with exports projected to climb to nearly 7.8 million bags as direct-export reforms take hold. 

Exports have already surged: in the first ten months of Fiscal Year (FY) 2024/25, Ethiopia shipped some 5.9 million bags and earned about $1.87 billion — an 87% revenue rise year-on-year — and if current trends continue, coffee exports will exceed $2 billion for the year. These are not just good headlines; they are the hard currency and rural incomes on which millions of households depend. 

Yet the sector’s remarkable potential coexists with systemic fragility. Most production is rainfed, smallholder-based and sold as green beans. The average yield is much lower than in Latin America, and there’s very little processing or added value done locally. The vast majority of farms (some 4–4.5 million households) operate on tiny plots and capture a low share of the final retail dollar, while around 40–50% of output is consumed domestically (a cultural boon that complicates export policy). 

Climate change, pests such as coffee leaf rust, aging trees and limited access to improved planting material depress productivity. Ethiopia’s current yield profile and infrastructure gaps mean the country risks becoming a growing raw material supplier rather than the coffee world’s arbiter of quality and price.

Another threat is regulatory: the global move towards “greening” supply chains is both inevitable and uneven. New EU rules and private-sector traceability demands create what ODI Global (a global affairs think tank) terms a “green squeeze”, where smallholders in least-developed countries are exposed to trade barriers they cannot meet unless receiving targeted support. 

If Ethiopia cannot demonstrate traceability and deforestation-free sourcing at scale, buyers may favor better-documented origins, which could lead to shrinking market access and harm rural livelihoods. This could leave Ethiopian smallholders excluded from key markets unless they receive targeted support to meet these new sustainability and traceability standards. 

This is a global policy problem, but it has a local remedy. There needs to be public action to meet international standards, not retreat from them. 

A “coffee lighthouse” strategy

If the challenge is threefold, then the policy response should be integrated and ambitious. Ethiopia needs a national “Coffee Lighthouse” strategy that combines conservation, science, value-addition and tourism under one institutional roof. The lighthouse is both literal and programmatic: a flagship Coffee Observatory and Cultural Centre, located near Kafa and linked to research hubs in Jimma and Addis Ababa, would host germplasm banks, cupping labs, processing demonstration units and visitor facilities. 

It would be a hub where new coffee varieties are developed and shared with farmers. Smallholders would get better seedlings, training and access to modern processing facilities. That model is already feasible. Ethiopia’s research institutions have released dozens of improved Arabica cultivars, and a World Coffee Research partnership signals scope for accelerated breeding and quality trials. 

Complementary measures must be policy-tight and financing-clear. First, policymakers need to scale up public research and development (R&D) efforts to at least match those of global peers. Ethiopia’s agricultural R&D intensity is currently low and must rise to support varietal improvement, pest resistance and post-harvest processing. Second, Ethiopia needs to expand access to processing and roasting through incentives, such as tax breaks, concessional loans and public-private co-investments. This is so that a larger share of exports leaves the country as high-value roasted and specialty products. 

Third, Ethiopia should pursue fast-track traceability and sustainability programs with donor support and market partners to meet the European Union Deforestation Regulation and buyer standards. International climate finance and trade facilitation funds should be explicitly harnessed to underwrite smallholder compliance. Fourth, the country needs to invest in rural tourism and coffee cultural branding. UNESCO’s current move to register the coffee ceremony creates an entry point for a coordinated coffee-tourism route that directs tourist dollars to producer communities. 

There is precedent for impact at scale. Ethiopia’s Commodity Exchange and reforms enabling direct exporters have shown that market architecture matters. Better market institutions link farmers to buyers and improve price transmission (though much remains to be done to ensure equity and access for remote micro-producers).

Learning from those institutional gains, the Coffee Lighthouse should coordinate across ministries, including the agriculture, trade, tourism, and education ministries, and mobilize international partners (World Coffee Research, International Food Policy Research Institute (IFPRI), UN agencies, donors and private roasters) into concrete workstreams. A coffee science faculty at Jimma University, tied to practical demonstration farms and an industry fellowship scheme, could produce the technical cadre Ethiopia needs. 

The Coffee Lighthouse should be governed by a multi-stakeholder steering committee chaired by the Ministry of Agriculture. It should include representatives from the Ethiopian Coffee & Tea Authority (ECTA), Jimma and Addis research centers, private exporters, cooperatives and donor partners. A dedicated technical secretariat would manage investments, monitor progress and support market linkages.

Finally, policy must respect coffee’s social meaning. Coffee ceremonies and the country’s unique flavor typologies are not marketing frippery; they are national capital. Packaging culture with science, such as UNESCO recognition, curated coffee routes, agritourism lodges and museum-grade visitor centers, will raise brand equity and extend tourist stays into rural Ethiopia. 

That cultural enhancement must be designed to channel revenues back to cooperatives and women-led enterprises, avoiding elite capture. The goal is structural: move Ethiopian coffee from being a vast raw basket to a diversified, resilient, high-value industry that employs, exports and teaches the world.

Momentum and the leadership imperative

Ethiopia’s window is open. Record exports, robust producer interest and growing specialty demand create favorable momentum. Global genomics research points to opportunities for breeding resilience into Arabica, and international development institutions are prepared to support transitions to greener markets. But momentum will dissipate without leadership.

Furthermore, a Coffee Lighthouse isn’t vanity.  It is a strategic tool to protect genetic heritage, support livelihoods, meet new market regulations and increase the share of the coffee dollar domestically. For a nation whose culture, ecology and economy are so closely connected to the bean, this is the policy mission of a generation.

[Patrick Bodovitz edited this piece.]

The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.