Unlocking the Potential of Ethiopia’s Cocoa Sector: A Provisional Roadmap

Ethiopia is renowned worldwide for its exceptional coffee, but its agricultural potential goes beyond just one crop. With ideal growing conditions in the country’s western and southern regions, Ethiopia is poised to become a new origin for high-quality cocoa. The opportunities to develop a sustainable, commercial cocoa sector are vast, offering new economic opportunities for farmers, agribusinesses, and international markets. However, to unlock this potential, there are key bottlenecks that need to be addressed. TRAIDE is looking for partners in developing a sector transformation approach to address these challenges and build a robust cocoa sector that benefits everyone involved.

Opportunity for a New Origin

The global cocoa industry faces some of the most severe challenges to date: from climate change to disease pressure and declining yields from aging trees in traditional cocoa-producing countries like Ivory Coast and Ghana. This creates a strategic opportunity for Ethiopia to position itself as an alternative cocoa origin.

With over 4.5 million hectares of suitable land, Ethiopia has the potential to become a new player in the global cocoa market, especially in Europe and North America, where demand for sustainably sourced, traceable cocoa is on the rise. The commercial opportunity is clear: with a focus on high-quality, traceable cocoa production, and a unique new origin, Ethiopia can tap into premium markets that value sustainability and storytelling. Besides, there is growing domestic demand for chocolate, with the first bean-to-bar manufacturers supplying bars to the local market.

Leveraging Cocoa’s Impact Potential

There is strong impact case for developing a cocoa sector in Ethiopia. As the country is starting with a blank slate, there is an opportunity to ‘leapfrog’ into a production model that uses sustainable practices such as agroforestry, organic and regenerative farming, and traceability systems which track that cocoa is produced deforestation-free. A focus on sustainability, ethical sourcing, storytelling, unique origin and good quality will allow producers to target high-value cocoa markets while addressing poverty reduction, job creation, and environmental conservation. Engaging smallholder farmers in cocoa production can amplify the impact by creating new livelihood opportunities. Export revenues from cocoa will help to bring in foreign currency and reduce reliance on a few export commodities, in turn strengthening macroeconomic stability.

Bottlenecks in Ethiopia’s Cocoa Sector Development

The Ethiopian cocoa sector faces several challenges that need to be addressed to realize its full potential. The most immediate obstacle is the shortage of high-quality planting material. Despite the promising results from initial cocoa trials in the southwest regions, the lack of commercial-scale seedling production is a critical bottleneck.

In addition, there are knowledge gaps across the entire cocoa value chain. Agribusinesses and farmers in Ethiopia have limited experience in cocoa farming, including essential practices such as cocoa nursery management, good agricultural practices, and post-harvest handling. There is limited knowledge on agroforestry models that are viable in the local context and optimise cocoa production while generating environmental benefits. Without access to adequate knowledge, training, demonstration facilities, and service providers, the adoption of cocoa farming practices remains slow, particularly among smallholder farmers who require hands-on training to build confidence in growing a new crop.

Market access is another significant barrier. Ethiopian cocoa must meet quality and sustainability requirements set by international buyers. Without structured market linkages, quality improvement measures, and traceability systems (i.e., for EUDR compliance), Ethiopian cocoa producers face significant challenges in accessing high-value international markets.

Lastly, a supportive policy and regulatory framework is essential for creating a conducive environment for cocoa sector growth. The lack of clear regulations regarding cocoa production, processing, and exports presents uncertainty for potential investors and businesses. As Ethiopia develops its cocoa industry, the government must play a proactive role in establishing clear policies and incentives that encourage growth and attract investment.

How to Catalyse the Cocoa Sector in Ethiopia

To address these challenges and unlock the potential of Ethiopia’s cocoa sector, TRAIDE has identified 5 key intervention areas:

1. Develop a Cocoa Nursery System: A robust nursery system is needed to produce high-quality, locally adapted cocoa seedlings. This system should include both commercial and public providers focused on multiplying and experimenting with new cocoa varieties that have beneficial traits such as flavour, yield, and resilience to climate stress and diseases. Additionally, other complementary crops, such as shade trees and fruit trees, should be integrated into the nursery systems to enable intercropping in agroforestry systems.
2. Pilot Agroforestry-based Cocoa Production: Agroforestry-based production systems, which incorporate intercropping techniques, are crucial for ensuring the environmental sustainability and productivity of cocoa farms. Piloting and testing different agroforestry models will allow for the optimization of production while ensuring biodiversity and climate resilience.
3. Understand Cocoa Smallholder Farmer Livelihoods and Build Capacity: A comprehensive understanding of the smallholder cocoa farmer livelihood model is essential to develop interventions that meet their needs and ensure that cocoa farming is a viable option for them. Capacity-building efforts should focus on providing farmers with the necessary training in good agricultural practices, pest management, and post-harvest handling, alongside peer-to-peer learning and collaboration with agricultural extension services. Any effort to incorporate smallholder farmers into the cocoa sector should ensure clear market linkages.
4. Establish Market Linkages and Stimulate Export Readiness: Strong market linkages need to be established with both local and international buyers. Ethiopian cocoa must meet international quality and sustainability standards, which requires the development of traceability systems, certification, and investments in post-harvest practices. Building these market linkages and preparing the sector for export will enable Ethiopian cocoa to compete in high-value international markets.
5. Strengthen Ethiopian Government Policies and Regulatory Frameworks: The Ethiopian government must play an active role in supporting the development of the cocoa sector through the creation of clear, stable policies and regulatory frameworks. Establishing a national cocoa strategy can help coordinate the efforts of different value chain segments and stakeholders, ensuring that investments in infrastructure, research, and extension services align with the cocoa sector’s needs.

What Does TRAIDE Do

TRAIDE is committed to supporting the development of Ethiopia’s cocoa sector through the facilitation of partnerships between businesses, government organizations, development partners, knowledge institutes, and NGOs. Together with our partners we have developed a strong knowledge base by identifying suitable cocoa-growing areas, assessing market potential, mapping relevant stakeholders, and analysing the key sector bottlenecks. We have also helped build the investment case by developing a vision for the sector, highlighting entry points for investors and exploring partnerships with local and international agribusinesses.

Download Working Paper on Ethiopian Cocoa

TRAIDE wants to accelerate the Ethiopian cocoa sector development through the creation of a plan for sector transformation together with key stakeholders. We are supporting the development and implementation of (pilot) projects that contribute to implementation of this plan and address the key bottlenecks in the sector.

Are you interested to collaborate? Reach out to us at ethiopia@traide.org