he body of literature and research related to the value chain analysis has increased in recentrnyears. This research attempted to analyze value chain of coffee in Dale Woreda (SouthernrnEthiopia) by using the value chain approach, focusing on constraints and opportunities ofrnupgrading and governance structure along the chain. In order to attain the above objectives, thernstudy followed a mixed-method approach which combined qualitative and quantitative analysis.rnThe respondents such as farmers, cooperatives, processors, and exporters were selected byrnmultistage sampling techniques. The study involved; survey with 214 coffee producers, in-depthrninterviews with 28 actors and stakeholders and focus group discussions with two farmers groups,rneach comprising of five people. Both primary and secondary sources of data were used for thernstudy. Descriptive statistics and thematic analysis were used for analyzing the result. Value chainrnactors; producers, cooperatives, processors, exporters, importers and supporters/facilitators werernidentified with their role and function. The study revealed that local producers, in their interactionrnwith buyers have the possibility to acquire new skills, knowledge and incentive. In addition, thernimplementation and compliance with standards provide opportunities for farmers to invest on theirrnproduct. Focusing on this kind of interaction, the study indicates that local producers werernengaged in upgrading to improve their benefits from the sector. The majority of the producers inrnthe study area upgraded their product and internal processes. A limited number of producersrnengaged in functional and channel upgrading. Local institutions and producersâ€™ cooperatives haverncreated programs to help small-scale coffee farmers adapt to the changes in the globalrnmarketplace and assist them in increasing their competitiveness but they have limited capacity.rnThe result shows that the governance structure in the coffee market is often buyer-driven, mostlyrngoverned by international buyers. There is also a range of mechanisms of coordination at play inrnthe chain between different stakeholders and segments of the chain. Captive forms of governancernin this case study have fostered some degree of product and process upgrading. Therefore, a policyrnaimed to accelerate the coffee sector in the area could be successful if these opportunities andrnconstraints are taken into consideration to improve the information flow through horizontal andrnvertical coordination of actors.rnKeywords: Governance, value chain analysis, Coffee farmers