According to the industry players, the international price surge impacted the local market to push the price of coffee at the ECX to escalate. Hence, some of the contractual agreements signed before the price surge could not be honored as it entail loss to the exporters.
Some of the foreign buyers appear to be shocked by the news as most of the companies in the list were among the prominent and most active in the industry.
Ministry of Trade to ban 3/4
of the active coffee exporters
(In print, October 29, 2011)
Following up the Coffee Export Regulatory Directive that was issued on May 2011, the Ministry of Trade (MoT) has decided to ban some 50 to 55 operators on the basis of failure to comply with the directive. According to Yacob Yala, state minister for Trade, the directive was issued to supervise the coffee export sector that was on verge of ruins back in May due to serious export contract execution issues.
The directive, hence, restricted the level of stock that an exporter can hold at a time. “Any one exporter found with coffee storage in excess of the level stipulated at the directive will be considered to be deliberately hording and receive severe punishment,” MoT warned.
According to some operators that talked to The Reporter, the MoT has drawn up a list that comprises most of the active coffee exporters in the country. According to the directive, holding large amounts of coffee stock without a commitment of an export contract deposited at the National Bank of Ethiopia (NBE) and delay in execution of shipments stipulated in the export contracts will result in severe punishments.
“If an exporter was found storing 500 tons and above without legal shipment contract singed for it, the company would be banned from the Ethiopian Commodity Exchange (ECX) for three consecutive months, while for a volume ranging from 54 to 500 tons a two month penalty would be applicable,” the directive states.
According to sources, the ministry discovered that the exporters did not fulfill the terms of the directive and in some cases forged contractual agreements were used to circumvent the rules.
On the other hand, some of the foreign buyers appear to be shocked by the news as most of the companies in the list were among the prominent and most active in the industry, sources explain.
However, Ethiopian Coffee Exporters’ Association is also shifting sand to resolve the problem, sources told The Reporter. “The association’s officials had a meeting with members during the week to get on top of the matter” they explained.
The directive issuance followed the unprecedented surge in the world commodity price, hence coffee, which prompted the exporters in Ethiopia to not fulfill their pre-signed contractual obligations. According to the industry players, the international price surge impacted the local market to push the price of coffee at the ECX to escalate. Hence, some of the contractual agreements signed before the price surge could not be honored as it entail loss to the exporters.
Prime Minister, Meles Zenawi, as well acknowledged the problem at the time saying market credibility of the export giant was in danger. As consequence, the MoT was not going to leave it to the exporters to correct the problem; rather it issued the directive to enforce timely shipments and prevent hoarding and speculative behaviors.
The Reporter could not confirm that the ECX has received written order to ban the exporters from the trading floor as stated on the directive before press time.
Following up the Coffee Export Regulatory Directive that was issued on May 2011, the Ministry of Trade (MoT) has decided to ban some 50 to 55 operators on the basis of failure to comply with the directive. According to Yacob Yala, state minister for Trade, the directive was issued to supervise the coffee export sector that was on verge of ruins back in May due to serious export contract execution issues.
The directive, hence, restricted the level of stock that an exporter can hold at a time. “Any one exporter found with coffee storage in excess of the level stipulated at the directive will be considered to be deliberately hording and receive severe punishment,” MoT warned.
According to some operators that talked to The Reporter, the MoT has drawn up a list that comprises most of the active coffee exporters in the country. According to the directive, holding large amounts of coffee stock without a commitment of an export contract deposited at the National Bank of Ethiopia (NBE) and delay in execution of shipments stipulated in the export contracts will result in severe punishments.
“If an exporter was found storing 500 tons and above without legal shipment contract singed for it, the company would be banned from the Ethiopian Commodity Exchange (ECX) for three consecutive months, while for a volume ranging from 54 to 500 tons a two month penalty would be applicable,” the directive states.
According to sources, the ministry discovered that the exporters did not fulfill the terms of the directive and in some cases forged contractual agreements were used to circumvent the rules.
On the other hand, some of the foreign buyers appear to be shocked by the news as most of the companies in the list were among the prominent and most active in the industry, sources explain.
However, Ethiopian Coffee Exporters’ Association is also shifting sand to resolve the problem, sources told The Reporter. “The association’s officials had a meeting with members during the week to get on top of the matter” they explained.
The directive issuance followed the unprecedented surge in the world commodity price, hence coffee, which prompted the exporters in Ethiopia to not fulfill their pre-signed contractual obligations. According to the industry players, the international price surge impacted the local market to push the price of coffee at the ECX to escalate. Hence, some of the contractual agreements signed before the price surge could not be honored as it entail loss to the exporters.
Prime Minister, Meles Zenawi, as well acknowledged the problem at the time saying market credibility of the export giant was in danger. As consequence, the MoT was not going to leave it to the exporters to correct the problem; rather it issued the directive to enforce timely shipments and prevent hoarding and speculative behaviors.
The Reporter could not confirm that the ECX has received written order to ban the exporters from the trading floor as stated on the directive before press time.
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