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Ethiopia’s flagship export item, coffee, has fallen
into a troubling state of affairs after the nation’s
exporters have failed to pack out even one fourth of
the quantity expected to be sold in this fiscal
year.
Only a little over 20pc of the 270,000tn of coffee
that federal authorities had planned for export in
the current fiscal year has been shipped out,
despite two quarters’ time already having passed,
industry sources disclosed to Fortune.
Alarmed by such a drastic shortfall compared to the
export target, Kebede Chane, minister of Trade (MoT),
and Yacob Yala, state minister, called an urgent
meeting with leaders of the Ethiopian Coffee
Exporters Association on Thursday afternoon, January
26, 2012, held inside the Ministry’s meeting hall on
Tito street, also attended by Elleni G. Madhin
(PhD), chief executive officer of the Ethiopia
Commodity Exchange (ECX).
“The meeting aimed to smooth the process of coffee
exports as well as suppliers,” Abdurrahman Seid,
assistant public relations manager at the Trade
Ministry, confirmed to Fortune.
Two deputy directors from the Ethiopian Commodities
Authority and National Bank of Ethiopia (NBE) as
well as heads of trade bureaus from Oromia and
Southern regional states were in attendance at the
meeting, which was concluded with no deal reached
with exporters, sources disclosed to Fortune.
It was a meeting compounded by tense conversation
and heated argument between federal government
officials and leaders of the coffee industry,
according to those who attended the meeting. They
could not reach an agreement over the real reason
behind the momentous drop in export volumes.
Recent developments in the industry are blamed by
industry observers for the decline in exports.
Turmoil in the industry, following an allegation by
federal authorities, last year, that some exporters
were storing more than 500tn of coffee for more than
two months without supplying foreign contracts,
thus, banning them from buying coffee at the ECX,
heralded a rather troubling year.
The Ministry had banned a total of 41 exporters in
October 2011 for allegedly hoarding coffee meant for
export, followed by an additional 57 exporters, who
were suspended from trade for three to six months.
Another decision by the Ministry to compel exporters
to ship coffee in a containerised fashion had caused
more commotion in the industry. The Ministry took
such an unexpected decision, in the absence of silo
facilities to handle the transfer of coffee from the
containers, both at the Port of Djibouti and at
ports in countries where buyers are located, several
exporters alleged.
“You can do that with exporters in Kenya or Rwanda,
where there are few varieties of coffee,” said a
major coffee exporter. “In Ethiopia, with over two
dozen coffee varieties, trying to tell buyers to set
up silos for all of these [varieties] is either too
naïve or simply being stubborn.”
Officials at the Ministry of Trade were forced to
retreat from their imposition, thus allowing
exporters to ship their coffee in the previous
fashion.
The latest controversy, however, has something to do
with price disparities between what the
international market offers in New York (2.20
dollars per kilogram) and what exporters are asked
for at the ECX (over 2.40 dollars).
“Who would be crazy enough to buy at a higher price
here and export at a loss?” wondered an exporter.
A state-owned enterprise with its own coffee estate
at Lemu has been exporting for 2.40 dollars per
kilogram but without being required to buy coffee
from the Exchange whose trading floor is inside
Alsam Cheleleka Building, on Chad Street, near
Mexico Square.
Officials of the Ministry have blamed leaders of the
industry for fuelling controversies through private
newspapers, an allegation that angered those who
regrouped for an informal chat at the Hilton,
immediately after the end of the meeting with the
ministers at 6:00pm.
The meeting with the authorities, where a 20
plus-page white paper was distributed on how to
expedite coffee exports, took almost four hours.
“We have not agreed on the causes of the drop in
exports or what should be done to change the
situation,” a board member of the association told
Fortune.
Coffee accounts for the largest quantity and value
of any traded commodity on the Exchange floor. It
made up 47pc of the volume and 74pc of the value,
during 2010/11, the Exchange’s performance report
disclosed.
Having no deal in sight will no doubt harm the
nation’s effort to meet its total export revenue
target of four billion dollars for the current
fiscal year. Coffee is expected to cover 30pc of
this target.
Ethiopia earned 314 million dollars in the past six
months from exporting coffee, lower by 6.28 per cent
then the same period last year, according to the
six-month report by the Ethiopian Revenues & Customs
Authority (ERCA).
Ethiopia exported 196,118tn of coffee worth 841.7
million dollars in 2010/11, representing more than
half of the 370,569tn of total production in the
country. |
