Capital Ethiopia Newspaper

Coffee exporters pensive as big changes loom

(L) Sani Redi, Director General of ECTDMA and Arkebe Oqubay (PhD), advisor to the Prime Minister

New changes in the coffee sector are on the horizon but there have been some differences of opinion observed during the latest meeting held at the Prime Minister’s Office, Capital learnt.

Most aspects of the coffee industry, from farming to export, have been under stress since the sector suffered from lack of attention over previous years, despite the fact that it is a major source of hard currency for Ethiopia.

During the  past budget year, when the government reformed the exclusive body, Ethiopian Coffee and Tea Development and Marketing Authority (ECTDMA), changes were prepared by the authority.

Recently, Capital reported that the coffee sector would see new changes starting this month.

Sources told Capital that in the middle of this week, stakeholders in the coffee industry talked about the upcoming changes in the sector during a meeting chaired by Arkebe Oqubay (PhD), advisor to the Prime Minister.

During the evaluation and discussion process with stakeholders over the past year, when the authority identified some shortcomings they came up with short term and long term goals to make things better.

Recently Sani Redi, Director General of ECTDMA, told Capital that massive changes would take place within a short period and in the long term policies and regulations would be restructured.

During the latest meeting government officials disclosed that there would be some changes to coffee exports to improve the quality of the sector and remove misdemeanors observed in the previous period.

Experts indicated that there are over 400 coffee exporters in the country. According to source, the government plans to significantly reduce the number of exporters based on their clean sheet or track record.

Sources say the government plans to dramatically restructure the coffee industry.

One of the major problems observed recently is that more coffee exporters were asking for preferential treatment to access hard currency because some hard currency was set aside for the coffee industry to support it, according exporters who worked in the coffee business for several decades.

They claimed that the sector was severely affected by hit and run business people.

“The new exporters who were just looking for hard currency contributed to an artificial price hike both in Ethiopia and internationally,” a source said.

However new exporters that Capital interviewed disagreed with those exporters who had been in the business a long time. They said that there are a lot of exporters that are genuine who have been helped by the availability of hard currency.

According to sources, one of the controversial points that came up during the meeting at the PM office was the standard for determining which exporters were ‘genuine’.

The exporters would be selected based on capacity and experience, according to sources. Some at the meeting countered that it would be difficult to determine how qualified the exporters were because a lot of them are able to conduct business because they get loans or public money.

The companies who roast coffee and export it also brought up issues during the meeting. Under the new plan roasted coffee exporters would be allowed to buy the bean from the export market at the Ethiopian Commodity Exchange (ECX).

This is a change because right now businesses who export roasted coffee are not allowed to buy export quality coffee and as a result they processed the product that had been rejected and used to supply the local market.  Roasted coffee exporters claimed that this made it difficult for them to conduct business on the international market.

The investor’s links to out growers were also mentioned during discussions, according to a source. Until ECX was established in 2008 investors were allowed to use out sourced farmers for their exports. Even though coffee investors have a right to export their coffee directly like farmer unions do, they were not allowed to use coffee from out sourced farmers.

With the new restructuring, however, they will be allowed to use this product. Experts said that it will increase the export of traceable coffee beans since the investors and farmers are located in the same area.

“The ongoing restructuring will produce marvelous changes but there will be less coffee exporters,” a source told Capital.

The issue was one of the major topics on the National Exchange Actors Association board of directors meeting held Saturday March 11, Capital was not able to obtain details about the board meeting by the time it went to print.

Capital’s effort to meet Sani via his cell phone on Friday was unfruitful. Ermias Eshatu, CEO of ECX, told Capital that big changes in the coffee sector will occur but that it is still early in the process to discuss them.

About 25 percent of Ethiopia’s livelihood is connected with coffee sector. Even though the coffee sector has been the major hard currency source for the country for about 70 years not enough attention was given to marketing and production.

Thirteen percent of coffee exports are undertaken by unions and investors, who are allowed to bypass the trading floor. From this amount the exporter’s share is five percent. The government has also a plan to include capable suppliers in exporting coffee in hopes of reducing contraband trade.