"; _gaq.push(['_trackPageview']);(function() { var ga = document.createElement('script'); ga.type = 'text/javascript'; ga.async = true; ga.src = ('https:' == document.location.protocol ? 'https://ssl' : 'http://www') + '.google-analytics.com/ga.js'; var s = document.getElementsByTagName('script')[0]; s.parentNode.insertBefore(ga, s); })();

Ethiopia May Ban Coffee Exporters Caught Hoarding, Defaulting on Contracts

Ethiopia, Africa’s biggest coffee grower, has threatened to ban exporters and producers caught hoarding beans or defaulting on contracts from trading on the domestic commodity exchange. Those found holding surplus stocks in the hope of future price rises and therefore delaying deliveries are “stopping the country from getting the foreign exchange it could earn, making [...]

Ethiopia, Africa’s biggest coffee grower, has threatened to ban exporters and producers caught hoarding beans or defaulting on contracts from trading on the domestic commodity exchange.

Those found holding surplus stocks in the hope of future price rises and therefore delaying deliveries are “stopping the country from getting the foreign exchange it could earn, making foreign buyers lose trust, and spoiling the country’s image,” Yakob Yala, state minister of trade, said in an April 29 letter to the Ethiopian Coffee Exporters’ Association. The directive, which was handed to Bloomberg News by an industry official, was confirmed by Amakele Yilma, a spokesman for the Trade Ministry.

Hoarding by traders is “harming the wide-ranging efforts of the government to grow the coffee sector,” Yakob said.

Ethiopia earned $528 million from its most valuable export in the year to July 7 and the Horn of Africa country plans to almost double revenue this year. Shipments totaled 3.64 million 60-kilogram (132-pound) bags of coffee between April 2010 and March 2011, ranking the country as the world’s eighth-largest exporter, according to the International Coffee Organization’s website.

To read more click here

2 Responses to “Ethiopia May Ban Coffee Exporters Caught Hoarding, Defaulting on Contracts”

  1. Threatening and baning coffee exporters is not a solution at all. The government should deeply look in to its economic policy failures particularly local inflation and exchange rate.
    Some seven years ago coffee sourcing, processing (picking,cleaning, washing…) and exporting was a profitable busines and the sector exhbited relative stability. Coffee buying prices and other related costs were not volatile that much. In addition the exchange rates were swinging with in a norrower band. The main risk to coffee exporters were drop in international coffee prices. If I am not mistaken, most of coffee exporters suffered a huge loss 10 or 11 years ago due to drop in international coffee prices.
    Due to soaring inflation in last six years local coffee purchasing prices and other associated costs sky rocketed. But the international coffee prices haven’t increased sufficiently to compensate the local inflation, and coffee exporters had to hoard their coffees two years ago waiting better prices.Then the government accusation followed-threatening them to cut off their hands, license revoking…..
    In September 2010 government devalued Birr by 17% to encourage exporters(mind you coffee is our main export)and every one was worried about the inevitable inflation which would touch every thing including coffee purchasing and associated costs. Inflation has soared again reaching nearly 30% and the price of reject coffee (It is illegal to sell export standard coffee locally)increased to Birr 120 (which is retailers price). The average price of coffee at ECX stands at Birr 80. To reach final cost we need to add processing, exporting and admin expenses ( From my experience they could be over 30% of the coffee price).According to ICO, the average international coffee price was USD 5.80 in April,aproximately Birr 98. So, to export coffee at the moment is loss making business.The solution is to contain the inflation at bay so that exporter able to make reasonable profits not devaluation then inflation cycle.

  2. That was great Mike

Leave a Reply

You must be to post a comment.

Bad Behavior has blocked 3151 access attempts in the last 7 days.