By Jason McLure
Bloomberg
October 23, 2009
The Ethiopia Commodity Exchange said it’s taking measures to prevent exporters from tampering with coffee beans in order to sell them on the domestic market, where prices are higher than some types of export coffee.
“We’ve seen people try to get their coffee under-graded as local,” Eleni Gabre-Madhin, chief executive officer of the Addis Ababa-based exchange, said in a telephone interview on Oct. 22. “We’ve seen export coffee come in with purposely mixed in impurities.”
In one case earlier this year, 30 truckloads of export- grade coffee had low-grade beans dumped into them, she said. Sanctions imposed by the exchange include suspending traders’ membership, while some graders at the exchange have been fired, she said.
Ethiopia, Africa’s largest coffee producer, grows about 300,000 metric tons of the beans annually and consumes about half that amount domestically. Government regulations require that the highest-quality beans be exported to generate foreign currency.
This year, domestic prices for some grades of coffee have risen above those of lower-quality beans for shipment abroad. Export prices in Ethiopia often move in tandem with arabica prices on ICE Futures U.S. in New York, while domestic prices are influenced by local factors.
In trading yesterday on the Ethiopian exchange, so-called Local Use By Product Grade 3 coffee for the domestic market closed at $2,248.45 per ton, while Unwashed Forest Under Grade beans, an export coffee, closed at $2,117.83 per ton.
Coffee is Ethiopia’s largest export. Earnings from the crop fell 28 percent to $376 million in the year to July 7 due to a drought in southern Ethiopia and lower world prices.
Arabica-coffee futures for December delivery rose 2.5 cents, or 1.8 percent, to $1.443 a pound on ICE Futures yesterday, the highest settlement since Sept. 4, 2008.
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To contact the reporter on this story: Jason McLure in Addis Ababa via Johannesburg at pmrichardson@bloomberg.net.
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