Coffee export still maintains a top position in earning foreign currency to Ethiopia. In addition to ensuring the volume and quality of coffee export, it is important to properly manage the practice of coffee contracts by exporters. Many exporters assist the economy by supplying adequate and quality coffee to the international market and receive incentives and recognition for their effort.
However, the government is also taking strict actions against those who fail to perform according to their contracts to supply coffee for foreign buyers. Accordingly some 81 coffee exporters have been recently banned from trading with the Ethiopian Commodity Exchange (ECX) because they broke their contracts and failed to export coffee in a timely manner, according to the Ethiopian Coffee and Tea Authority.
Shafi Umer, Deputy Director and Marketing Department Head at the Authority told The Ethiopian Herald that after the breech of their contracts, the action has been taken as part of the Authority’s reform to maintain the quality of Ethiopian coffee by establishing a sustainable international coffee market. According to Shafi, the major target of the ban is to harness the provision of coffee quality and generate high national revenue from coffee market.
It is also important to speeding up competitive advantages of the export sector as well as safeguarding the legal coffee market. As to Director, over 190 coffee exporters couldn’t responsibly export coffee beans through ECX in the stated period. Of which, 116 of them brought their cases with answer to the Authority.
Examining the reasons seriously, the Authority has lifted the restrictions for some 35 coffee exporters who have brought valid reasons, and suspended the cases of other exporters until now. ‘’Violating the contract agreement and expiry of export license were the major reasons to ban coffee exporters during the last year,’’ he also said.
The Director stated that the authority has carried out inspection over exporters to solve coffee related problems, and widen the market landscape through application of modern technology among others. To unravel coffee purchaser’s problem, the authority has been working with the Ministry of Foreign Affairs in extending new coffee market destination like China and Russia via diplomatic and business relations.
Asnake Kassa, Quality and Marketing Head at Kerchannshe Trading PLC, said that his company has exported fine Ethiopian Arabica Coffee for more than six years; it also covers nearly 15 percent of the total coffee export of the country. According to Asnake, his company is currently exporting coffee to more than 20 countries, Japan, Europe, USA, and Britain among others.
On the other hand, this trading company was urged to bring evidence for the reasons it does not export coffee based on the contract agreement in the past few months. As to Asnake, the instability occurred in some parts of the country is the major serious factor that hinders to provide adequate amount of coffee production. Understanding the fact, the Authority accepted the explanations of the exporters, and allowed them to start their coffee exporting business.
On the other hand, this trading PLC also carried out discussion with pertinent purchasers and agreed to suspend coffee export period until the political stability ensured the regions. ‘’Safeguarding the implementation of the contract is the issue of being loyal; and the symbol of civilization and the manifestation of cultivating responsible businesses.
Moreover, keeping the legal framework of the contract is crucial to provide quality coffee in a sustainable manner. However, some times, the contract is canceled or postponed when the situation is beyond your power,’’ Asnake explained. Although his company started exporting coffee since a few years ago, his parent used to export coffee for century in this country, Asnake recalled.
Adem Kedir, Owner and Manager of Hora Trading Company, explained that his company exports coffee to Japan, Europe, Germany, and Saudi Arabia, he said adding, the contract agreement has decisive role for exporting quality coffee and creating good relation with the purchasers. But, according to Adem, his company was one of among those unprotected businesses because of the fluctuation of international coffee price and the prevalence of inadequate coffee production in the market in the last few years.
Due to these and other reasons, the authority urged to reissue his coffee exporting license. He further stated that his company lost almost 25 million USD due to exporting coffee violating the contract agreement. It has also put negative impact on the national revenue.
If the authority applies the ‘first in, first out’ (FIFO) system, it would have played vital role to minimize rent cost, in which it helps to store more package of coffee productions in a small warehouse; as well as it is also useful for the export of coffee crop in time, he added.
According to the authority, Ethiopia has currently, more than 400 coffee exporters, 400 coffee farmers who directly export coffee; it has over 20 import-export companies. The country secured 422 million USD from exporting 130 million tons of coffee within eight months alone, which accounts about 78 percent of the annual target of 607 million USD from the export of 168,000 tons of coffee in the fiscal year.
The Ethiopian Herald, March 30/2019
BY MESERET BEHAILU
