ABSTRACT: The specialty coffee sector represents opportunities for coffee farmers and other actors due to increased value within the supply chain, driven by elevated consumer purchase prices. We investigated these relationships up to the export stage, as well as the potential for specialty coffee to improve stakeholder participation in biodiversity conservation. Household data was collected from a sample of 272 coffee farmers belonging to five primary cooperatives, in the heavily forested area of Yayu, in the Illubabor administrative zone of Oromia regional state in south-western Ethiopia, for the 2017/2018 harvest season. Qualitative and quantitative data, gathered between 2015 and 2019, from focus group discussions, was used to supplement the survey and to explain the empirical findings. We show that the income from coffee (and thus household income) can be increased, in some cases substantially, via participation in the specialty coffee market. The unit price for coffee was much higher than standard market prices and those including certification premiums. Whilst quality is a key factor for specialty coffee, income increases via the specialty market are caveat bound. In particular, there is a critical requirement for efficient and effective cooperative management, and we provide suggestions for improvements. In the long-term, more focus is needed to increase the financial and human capacities of Ethiopian coffee cooperatives, to make them more effective partners in the specialty coffee value chain. The high conversion rates from harvested to clean exportable specialty coffee (8:1, or higher) is identified as a major constraint on profitability. We show that specialty coffee can bring about positive environmental benefits. Elevating coffee prices and farm profitability to bring household income levels to around or above the global poverty line may ensure the continuation of forest coffee production, and thus the retention of forest. The increases in income via specialty coffee production, reported in the study, were achieved without increasing land use or the application of environmentally costly inputs. Moreover, analysis of satellite data shows that a large proportion of the coffee farms surveyed retain a level of forest cover and quality approaching primary (undisturbed) forest, and that the coffee production area at Yayu has not experienced any significant deforestation (since 2000). We recommend that coffee premiums linked to environmental benefit should demonstrate clearly defined and appropriate metrics, as we have demonstrated here for forest (canopy) quality and coverage (area).
