Sustainability Strategies and Profitability of Small-Scale Coffee Enterprises in Ethiopia; A Case of Southern People’s Regional State, Gedeo Zone
Abstract
This study examined the effect of sustainability strategies on the profitability of small-scale coffee enterprises in Ethiopia, a case of southern people's regional state, Gedeo Zone. The study's specific objectives were to examine the effect of coffee value addition, coffee quality inspection system, human resource development and product diversification on the profitability of small-scale coffee enterprises in southern people's regional state, Gedeo zone in Ethiopia. The study was anchored on five theories: value chain analysis, attribute theory, human capital theory, resource-based view and agency theory. A descriptive research design was utilized in the study. The target population was 28 small scale coffee enterprises. The unit of analysis were Kochere, Yirgachafe, Gedebe and Dila Zuria. The unit of observation was Leaders (board) of SSEs, Heads of Finance SSEs, SSEs Credits committees, Coffee and Tea Authorities officials and Woreda cooperatives Agency from woreda coffee and tea in four woreda of Gedeo Zone. Census was conducted in which all the 28 small-scale coffee enterprises were included in the study. Besides, the researcher used purposive sampling to select 5 leaders of the SSEs, 1 head of finance, 1 Credits committee, 1 Woreda Cooperative agency and 1 Coffee and Tea Authority official from each of the four woreda. The researcher administered questionnaires to the respondents. The correlation results showed that coffee value addition, coffee quality inspection, human resource development and Product diversification were positively and significantly associated. The regression results showed that coffee value addition was positively and significantly related to net earnings (B=.0.217 p=0.036). Also, it was found that coffee quality inspection was positively and significantly related to net earnings (B=.421p=0.000). Moreover, human resource development and net earnings was positively and significantly related (B=.206, p=0.032). Product diversification and net earnings was positively and significantly related (B=.315p=0.002). The study recommended that enterprises need to emphasize much on coffee value addition to increase profitability. The enterprises can enhance coffee value addition through coffee, brandings and bagging. The study also recommended a coffee quality inspection system such as a quality management system for recognition of coffee quality and quality inspection centers to monitor the production and exportation of all coffee through the system. Further, it was recommended that enterprises invest heavily in the employees' training for effective dry processing. Further, it was recommended that the enterprise needs to be involved in the product (coffee) diversification. There should be different coffee qualities for internal consumption and export markets and the enterprises should also deal with more than one coffee brand.
Keyword: Coffee value addition, coffee quality inspection system, human resource development, coffee diversification, sustainability strategies, profitability, small-scale coffee enterprises, Gedeo Zone, Ethiopia
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