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Global commodity chains, financial markets, and local market structures – Price risks in the coffee sector in Ethiopia

Bernhard Tröster

Wien, Dezember 2015

Ethiopia is known to be the origin of coffee, and still today coffee is of crucial importance for the country with regard to exports, domestic consumption and income of millions of smallholder farmers. Global prices of coffee, as of other commodities, are notoriously volatile with leads to large price risk, particularly for farmers in coffee producing countries with strong developmental and distributional implications. In this paper, the actors along the coffee commodity chain are analysed with respect to their exposure to price risks and their ability to mitigate these risks. The vulnerable position of local actors in Ethiopia is in contrast to lead firms in the coffee industry – international traders and roasters - which possess various ways to deal with and also profit from price volatility, mainly associated with financial derivative markets.

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