Moving Yemen Coffee Forward - USAID assessment

Yemen’s coffee is distinctive. In a world of increasing homogenization and commoditization, it stands out as a potent relic of uniqueness. This is at once both the source of its difficulties and the source of its success. Yemen is one of the most historic coffee-producing nations, having launched the trade of what has become one of the world’s most important agricultural commodities. Yemen’s coffee farmers still practice traditional natural methods—sometimes at very high altitudes up to 2,500 m—that result in low production yields and
distinctive flavors. Some of Yemen’s coffees are prized around the world and receive among the highest prices in the marketplace. Despite the high market price, most coffee farmers are poor. Low productivity is exacerbated by water shortage that, along with inadequate post-harvest methods, contributes to low quality in many areas and subsequent high levels of lost value.
Yemeni coffee is in many ways distinct and even mysterious. Its varietals are the subject of much discussion and could be among the oldest genotypes in existence. No one is certain if the many local names are the unique product of centuries of isolation or whether these are simply minor variations of a few major types. Its markets value an infusion beverage made from coffee husks (qesher), thereby transforming what is considered elsewhere a by-product or a nuisance into a product of value. Yemen is unique among producer countries in that it consumes about three-fourths of its total production.
Yemen faces a number of stark challenges and yet has significant opportunities to sustainably improve producer incomes and expand its trade. Most of all, water scarcity is the single pivotal factor that will ultimately determine the success of any efforts in the sector. The failure to adequately characterize the many coffee varieties has affected the growing and grading process as well as the marketing and exporting process. Farmers are consequently unable to select varieties that are most adequate to their needs (e.g., drought resistant) since it is not altogether clear what the characteristics of the varieties are and what variety a farmer is getting from government nurseries.
Inadequate coffee cultivation technology and largely ineffective extension leave the farmers unable to capture considerable additional value from their crops. Poor processing infrastructure, primarily for drying and hulling, tend to further reduce quality and diminish incomes. Farming in Yemen is not easy. Very few crops have an export value. Coffee, however, is quite unique and cannot only provide valuable income but also serve as a considerable and respected “ambassador” for the nation’s reputation worldwide.

Coffee is one of Yemen’s most important agricultural commodities. Most of Yemen’s nearly 100,000 coffee farming families have small coffee plots and live in mountainous regions where about 45% of the population is considered below the poverty line (US $2/day). Coffee is second only to the mildly narcotic qat plant in providing one of the few reliable sources of cash income. Sound data for coffee production and marketing is hard to come by, and even though a recent census improves the Ministry of Agriculture and Irrigation’s ability in this area, it still lacks up-to-date sampling for key variables such as yields to make more
accurate estimates.
Nevertheless, it is clear that production inefficiencies, low productivity, and market distortions have elevated the domestic price to such an extent that it is apparently quite viable to illegally import coffees from lower- cost origins (e.g., Brazil, Ethiopia, India) in order to fulfill a measure of the domestic demand. These illegal coffees can now be found even in small markets and remote towns.

The coffee sector cannot be indefinitely protected with import restrictions. However, there is ample opportunity to immediately implement targeted interventions and improve domestic policies in order to significantly increase the competitiveness of Yemen’s coffee sector. One of the most important ways is for
Yemen to protect the historic and hard-earned credibility of its coffee as a “brand” name. Yemen has already lost much of its connection to the popular "Mocha" or “Moka” term that identified Yemen’s unique coffees that were mostly shipped from its port of Al-Mokha.

Today a number of coffees call themselves Mocha and even some Yemeni exporters contribute to the erosion of its reputation by blending its coffee with inferior imported coffees and exporting it as Yemeni. However, there is considerable scope to recover this and other more proprietary terms that could have enormous value in the marketplace. This is especially timely in light of market developments over the last decade that has created a much larger demand for uniquely differentiated coffees such as those grown in Yemen. More than most countries, Yemen lends itself to differentiation based on unique flavors and corresponding agro-ecological zones. In light of recent events in both Europe and the US protecting the distinctive names and origins of developing countries, such Denominations of Origin can help Yemen to establish and take full advantage of its unique national and regional characteristics, such as those of Mattari, Harazi, or Ismaeli.

The current Yemeni market structure is neither well regulated nor transparent so that any newcomer wishing to trade faces serious risks. There is no coherent grading system and standards are loose and typically defined at the local level on an ad hoc basis. This increases transaction costs and distorts value throughout the supply chain. The result makes most foreign buyers wary of dealing with any but the few more established exporters.
One of the obvious consequences is a reduced willingness to invest in the marketing of Yemeni coffee.