During the era of Derg, there had Deen state monopoly inrnthe coffee trade. the state coffee markecing parastatalrn(Ethiopian Coffee Marketing Corporation ) wa s ope rating based onrnfixed price arrangements . Once the state parastatal is in placernentry t o the coffee trade was difficult . The system has alsornreduced competition among traders. The long term effect of suchrna move was .suppression of producer incentive and production.rnHence it was apparent to the transitional government ofrnEthiopia to liberalize the coffee market at all levels.rnThe main objectives of this study are: i ) to describe therncoffee marketing system in illubabor and Jimma zones, ii} tornassess the structure of coffee marketing in the study area ,rniii} to measure the efficiency of the coffee marketing system,rnand iv} to assess the effect of the reform on performance ofrncoffee marketing and to provide basic information which assistrnpolicy analysis. The analysis was carried out by using S-C-Prnapproach.rnThe results show that the liberalization policy adoptedrnhas achieved certain improvements in the structure andrnefficiency of the coffee trade. The reform have lifted thernlicensing barrier and reduced tax levied on coffee trade andrnlicense issuance fees. It has also abounded the restrictionsrnimposed on licensing. The reform have also resulted in the freernmovement of prices. The bivariate correlation analyses showsrnthat prices in the selected markets are highly integrated withrnthe central market. The Timer's indices and the co integrationrntest also show the same result.rnThere are, however, a lot of shortcomings in the structurernand inefficiencies in the coffee marketing . There are highrnmarket concentration, lack of capital and credit, andrnrestrictions on areas of operation. In some markets there isrnalso poor market information flow among traders. In view of thernefficiency, there appears to be significant seasonality andrninter - temporal price inefficiency.