Ethiopia: Trade Ministry Bans 16 Coffee Exporters from Exchange Floor

Ban brings total prohibited from trading in coffee to 57 in the last month

By Elleni Araya

Addis Fortune

November 20, 2011

The Ministry of Trade has banned 16 coffee exporters from trading on the trading floor of the Ethiopian Commodity Exchange (ECX) on Wednesday, November 8, 2011, for failure to have their stocks audited by it.

The banned individuals and companies include Terefe Hailu (PhD), Kaf International, AbdulKedir Mohammad Ali, and Abdu Ali. Most of the banned traders are known for registering a high volume of trade in the exchange, according to officials from MOT. 

A letter was sent to the Ethiopian Commodity Exchange Authority (ECEA), with the list of the banned traders, not to allow them from buying or selling on the trading floor for unspecified time. The ban only prevents the traders from buying coffee on the trading floor. It does not stop them from either buying or selling other commodities.

This ban brings the total of banned exporters in the past month to 57.  Previously the ministry had banned 41 traders on October 17, 2011. Out of these 17 were banned for six months and another 24 banned for three months. Hoarding was gives as the reason for their ban.

“Traders make an agreement with ECX to export the coffee they buy on the floor within two months’ time,” Abdurrahman Seid, assistant public relations Manager at the Trade Ministry, told Fortune. “The Ministry take actions when they fail to do that.”

The same year ECX opened its trading floors in April 2008, the coffee quality control and marketing proclamation was passed that essentially mandates almost all coffee export transactions to be conducted through the exchange.

The Ministry, frustrated by exporters that do not comply with the proclamation and hoard coffee, issued a directive in May 2011, that would fine those that keep coffee for a long duration or those that have more stock than they enter contracts for.

 According to the directive, exporters who store more than 500tn of coffee for more than two months without foreign supply contracts will be banned from buying coffee from ECX for three months.

Coffee accounts for the largest amount and value traded on the floor. It made up 47pc of the traded volume and 74pc of the traded value during 2010/2011,, according to the exchange’s performance report.

Ethiopia had exported 196,118tn of coffee worth 841.7 million dollars in 2010/2011. The amount exported is more than half of the 370,569 tonnes total production in the country. The government aims to export more than 600,000tn of coffee annually by the end of 2014/15.