December
5, 2011
The
Government of Ethiopia has recently issued yet another directive that is filled
with ambiguity and disregard to proper implementation of trade policies that affect
everyone in the logistics supply chain.
The
story was first broken by Sprudge last week in the article "An End to Lot Separation In Ethiopia?"
The
directive is difficult to comprehend in more ways than one. First, the letter
uses "bulk container" and "loose container" interchangeably
and without distinction. Technically, these terms represent two distinct means
of cargo shipment and the directive could have serious implications depending
on which term is intended to go into effect. "Bulk container" often
refers to the movement of coffee in bulk, using normal dry containers fitted
with a liner, whereas shipping coffee in a "loose container" (also
known as, Loose Container Load or LCL) implies to the practice where coffee is
transported to the dock where the shipping line stuffs the container with
coffee (and other commodities where there is room for additional weight).
Secondly,
the directive indicates the possibility of granting a special permit when
approved by the Ministry of Trade, but does not disclose the requirements and
procedures for requesting or granting exceptions to the coffees that can be
exempted from the rule. It seems that exporters or buyers will need to visit someone
at the Ministry of Trade before deciding to buy a given coffee stock as it may
or may not qualify for exemption.
Finally,
judging from the reactions of international trade partners to the directive, the
policy change was not discussed with or publicized enough to reach most of the small
and medium-sized coffee roasters in North America and Europe.
These
types of vague directives are not only confusing to the market, but also open
opportunities for corruption behind closed doors. Unfortunately, such practices
are becoming the hallmarks of government offices in Ethiopia.
This
time around, let's hope the government will hear the voices of Specialty coffee
buyers across the world and introduce the semblance of transparency to the way
business done in that country.
Below
is a rush translation of the letter which is written in Amharic, one of the official
languages of the land, and signed by Yakob Yala, State Minister of Trade.
---
Ref.
No.: 01-1-35/889
To Ministry
of Agriculture
Addis
Ababa
Subject:
Regarding the export of coffee in loose container
While the
shipment of coffee in a bulk container is beneficial in various ways, it will primarily
modernize our country's export packaging and shipment standards. Besides, it ensures
that coffee is exported while its quality is maintained; minimizes the possibility of coffee theft en
route; reduces the cost burden on our coffee buyers of disposing sacks; eliminates
the cost that coffee exporters pay for sacks; benefits exporters as coffee buyers pay better prices when their
coffee is shipped as loose loads; increases fleet turn-around; and enables performing
tasks which would otherwise take time and cost in Djibouti within our country.
In
order to properly take advantage of the aforesaid benefits, a clear direction
was set out by the government and a mutual understanding reached with
stakeholders regarding the export of coffee in a loose container, and it was
planned to complete the preparation in 2010/11 and implement the plan in
2011/12.
Accordingly,
several preparations have been made during the 2010/2011 budget year; primarily,
exporters have been able to import additional blower machines that are used to
load bulk containers. Awareness [about this directive] has been created among
exporters and stakeholders. As a result, it has been confirmed, the conditions necessary
for shipping coffee in loose container load are in place.
However,
the practice of exporting coffee in loose container load has been slow due to lack
of proper handling. It has thus become necessary to take enforcement measures that
will ensure a proper handling. Therefore,
effective November 11, 2011, we notify you to make sure any coffee that passes
through your office's Coffee Quality Inspection Center is exported in loose
container load only, unless granted a special permit by our Ministry office.
With
salutation,
signed
Yakob Yala
State
Minister of Trade
cc:-
To
Ethiopia Coffee Exporters' Association
Addis
Ababa