Roasted coffee exporters suspended due to contradictory proclamation

Suspended coffee traders await further action by Ministry of Trade

By Snetsehay Assefa

Addis Fortune

July 6, 2015

Coffee-roasting exporters have been put on hold until the contradictory proclamation is amended

Three months after the Ministry of Trade (MoT) suspended four coffee-roasting and grinding companies from purchasing export standard coffee; it is yet to take any further measures.

Aster Bunna, Jalanera Coffee Export & Farm Plc, Safu Trading and Tar Trading are the four companies that MoT found trading export standard coffee in its investigation in January, 2015, Getahun Bikara, director of Coffee Marketing at MoT disclosed. But the ban applies to all companies involved in a similar business.

MoT has restricted the companies from purchasing export standard coffee based on, Proclamation No 602/2008, A Proclamation to Provide for Coffee Quality Control & Marketing, Getahun stated. Article 2:24, which defined "coffee roaster", is the article that led to the Ministry's taking this measure. The Amharic version refers to those who buy coffee from "domestic wholesalers", while the English version of the same articles goes further to give details including "auction centers, Ethiopian Commodity Exchange (ECX), and domestic consumption coffee wholesalers".

The directive issued for the enforcement of the proclamation has been in effect since 2008, but it was only in January 2015 that the Ministry started checking for compliance, Tatek Girma, coffee marketing team coordinator at MoT, told Fortune. The Ministry, based on the Amharic version, insists that the roasters can buy only coffee destined for domestic consumption, even if they are going to export the roasted or ground coffee, he stated. That the English version mentioned the ECX, only shows that an amendment is required, he added.

However, the decision has put the companies out of the roasted coffee export business as they cannot use domestic consumption coffee for their process by the restriction not to do so on the same proclamation, according to Minilik Hamtu director of Ethiopian Coffee Roasters Association. The article defines domestic coffee as coffee that has deteriorated in quality and is not fit for export.

A manager of one of the suspended companies said that they cannot use coffee designated for domestic consumption for their export market, as it will be a violation of the proclamation as well.

The Ministry called the four roasters to tell them in person to stop using export standard coffee, and the roasters were in agreement with what the Ministry said, Tatek explained.

The government was so focused on boosting coffee exports that the violation of the proclamation was missed for the past year, Tatek claimed; it was also only a year ago that the directorate was created, he added.

In 2013, Ethiopia exported 6.6 million kilograms of roasted coffee to countries such as Turkey, Germany and South Africa but that amount has been reduced to 8,314 Kg in the current fiscal year. Though the quantity of exported coffee is very small, it could contribute to a whole lot of revenue if encouraged, argued Minilik, as roasted coffee is sold for 10 dollars per kilogram, as compared to three dollars for the raw beans.

Tatek said that the export contribution of these companies was minimal, hence the decision to suspend them until the proclamation is clear on the subject. Currently the Ministry is trying to assess the economic benefit of the business as well as other legal implications. According to Getahun, the assessment is expected to be completed in October, 2015, and forwarded to the Ministry's higher officials.