Poor Farmer

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 expor...

The much anticipated ECX event, termed "ECX Specialty Coffee Event 2009" opened at 9 O'clock local time on October 21, 2009 (October 20, at 11:00 p.m. Pacific time) at the luxurious Sheraton Addis, in the capital city of Ethiopia. According to the program of activities flyer obtained today, the event lasts for four days (Oct 21-24) and includes speeches; plenary discussions; sessions to hear and discuss the findings of the ECX-SCAA Working Group; and visits to ECX trading floor, coffee washing stations, the coffee growing region of Yirgachefe, where ECX inaugurates a regional laboratory located in Dilla, and more. "The purpose of our Event is to highlight how we at ECX think Ethiopia’s producers, traders, and export community can work best with our international buyers to offer our best to the global market," reads ECX's invitation to the attendees. The most valued guests of the event are members of the Specialty Coffee Association of America (SCAA)....

The government controlled Ethiopia Commodity Exchange (ECX) has just added for the first time a representative from a farmers' cooperative to its Board of Directors. The organization's website was updated early last week to include Yehualashet Aschenaki, General Manager of Southern Region Farmers Cooperative Federation as the 11th Director. The following is the complete list of ECX's Board of Directors (Source: ECX's website): 1. H.E. MEKONNEN MANYAZEWAL, CHAIRMAN and State Minister, Ministry of Finance and Economic Development 2. H.E. ATO AHMED TUSSA, State Minister, Ministry of Trade and Industry 3. BEKALU ZELEKE, President, Commercial Bank of Ethiopia (CBE) 4. BEYENE G/MESKEL, Director General, Privatization and Public Enterprises Supervisory Agency 5. MESFIN LEMMA, Head, Legal Affairs Bureau Prime Minister Office 6. ABDELLA BAGERSH, General Manager, S.A. BAGRESH PLC 7. BERHANE HAILU, General Manager, Ethiopia Grain Trade Enterprise 8. CAPTAIN FEKADE MAMO,...

Update ~ Since this write-up appeared on Ethiopian related websites early this week, I received many comments from readers with a spectrum of views. I appreciate those who took the time to write as well as those of you all who read my blog. Whenever possible, I try to reach out to readers especially with differing opinions as I respond to direct emails. The following comment is what I posted on Nazret Blog in response to multiple readers that commented with a specific question directed towards me: "What is your point?" I reposted my response here to validate the post that bears my name: Hi all, Thanks for taking the time to read and comment on the piece. Asking intelligent questions and listening to others with varying views is important and should be encouraged. That's why I'm compelled to respond to those of you who asked me to clarify my point. My points in this particular article are: 1. The change that ECX is going make to the way Specialty coffee is t...

"Many exporters are returning their licenses. We, the remaining ones, are in trouble too. The local price is higher than the international price. Ethiopia's share in the global market share is not more than 3 percent; we cannot influence the international market. The price that we quote is unacceptable to some customers. We are unable to go along with the market fluctuation. ... Previously, when the New York market fluctuated, our prices also fluctuated. But now, this is history. You are expected to buy on the basis of the daily high selling price." - Emebet Taffesse Kidanemariam, vice-president of the Ethiopian Women Exporters Association (EWEA) and the Ethiopian Coffee Exporters Association On the other hand: On October 03, 2009, the Ethiopian Grain Trade Enterprise (EGTE) said it plans to purchase 10,000 tons of coffee "for local and foreign markets during the current fiscal year." - Ethiopia News Agency, October 03, 2009 Guna Trading had already annou...

T he government of Ethiopia is tightening its grip on the coffee sector. In a latest development in the saga of the Ethiopia Commodity Exchange (ECX) and what appears to be the government's well orchestrated plan to control the sector, a government official warns, "individuals found dealing coffee out of the [newly established coffee trading] centers will receive a 20 year prison term and up to 50,000 birr fine." This new development explicitly reveals the government's interests in the exchange from the get go. The ECX, a trading system meant primarily for grains and pulse, commenced trading operation in May, 2008. In August 2008, the government passed the new coffee law that requires all coffee trade to be conducted at the ECX. The exchange, which claims to be independent and a free marketing system established to help eliminate famine, began trading coffee in December 2008. On March 25, 2009, the government confiscated 17,000 tons of coffee beans from p...

By Wondwossen Mezlekia September 21, 2009 The Economist magazine describes the Ethiopian government as "one of the most economically illiterate in the modern world." This portrayal, albeit contentious, is not without truth. But, the government's recent meddling in the coffee trade has to do more with the government's socialist-inspired economic policies than economics per se. As if to prove this, Venezuela's Chavez, another diehard socialist, just took actions similar to what Prime Minister Meles Zenawi did earlier this year. Last week, President Hugo Chavez accused the country's largest coffee producers, Fama de America and Cafe Madrid, of smuggling coffee out of Venezuela to circumvent government coffee controls and vowed to nationalize they refuse to heed. Chavez was quoted as saying "if they give me an excuse, I'll nationalize them." This must be why some critics questioned the viability of a free commodity exchange in Ethiopia. But, te...