Ethiopian Review

Six individuals with top managerial positions in coffee export companies were sent to the Maekelawi detention centre on Wednesday June 10, 2009, for allegedly hoarding export coffee, sources disclosed. The six coffee exporters: Mullege Plc, S. Sara Coffee Exporter, Legesse Sherefa, Kemal Abdulla International, Seid Yassin Ali Coffee Exporter and Arsede, and other 88 suppliers have been out of action when the government revoked their licences and shutdown their warehouses, accusing them of hoarding the countries principal export commodity and foreign currency earner. Their stock coffee was taken over by the government.

Two months after the government revoked their licenses, closed down their warehouses and took over their coffee stock; the exporters were called to the Forensics Department under the Federal Police, also known as Maekelawi, on Dejazmach Belay Zeleke Street for investigation into alleged coffee hoarding.

“We spent one night there,” Seid Yassin, general manager of Seid Yassin Coffee Export Enterprise said confirming that he was taken to Maekelawi.

The coffee which the government took over from these exporters has gone through normal procedures at the Ethiopian Commodity Exchange (ECX). The Ethiopian Grain Trade Enterprise (EGTE) bought most of the coffee.

The government received 21 million dollars from exporting the 180,000tn of coffee owned by the alleged hoarders.

“The Gaverment has bought and exported the coffee through EGTE,” Tefera Derbew, minister of Agriculture and Rural Development (MoARD) – a government agency responsible for matters of agricultural produces – told Fortune.

“The cases of the exporters are now being dealt with by the mandated body that handles legal matters,” Tefera said. “It is in the hands of the law”.

He was referring to the Federal Police who are investigating the exporters.

The individuals, except for the general manager for Mullege who did not stay the night at Maekelawi, were released the next day.

ECX commenced the system to trade more than 25 agricultural commodities (mainly grains), with an “open outcry” method of price bidding through formal rules and procedures. They began trading in 2007 and added coffee as a commodity in December 2008.

The procedure at ECX includes sampling, grading and certification of the quality and quantity of coffee. Issuing warehouse receipts and clearing payments between buyers and sellers, through closed bank accounts, making the settlement of payments trouble-free are also part of process in the transactions at ECX.

It has rented three warehouses from the EGTE adding another warehouse in Dire Dawa, which is used to store coffee varieties from Harar. It has four warehouses in the capital, of which three are located around Saris area.

Coffee transactions through ECX from the beginning of December 2008 up to the end of January 2009, where 238,248tn of coffee have been processed, generated around 35 million dollars. From December 9, 2008, to January 8, 2009, the period the exchange was operated through ECX alone, the foreign currency earned was 11 million dollars.

However, a problem was created for buyers when they entered into a contract with the exporter, only to see the exporter become unable to fill the order when their business was suspended by the government. For example, Legesse Sherefa has already sold 27 million Br worth of coffee to Italian customers. These people have now travelled to the country to find out what happened to the coffee they bought.

This is not an individual case, Tefera said.

“We will fulfil the contracts at whatever cost,” the minister promised. “We are telling the clients to transfer their contracts to other private exporters or ETGE.”

The six major coffee exporters who are said to take 70pc share of the export are still not active because their licenses still revoked.

This news comes at a rough time for Ethiopia’s coffee industry.

The global economic downturn has cut world coffee prices and reduced demand for Ethiopia’s Arabica beans. The price has dropped by 19pc over the past year. Ethiopian coffee shipments have declined by more than 10pc to 76,674tn in the first eight months of the current fiscal year, compared to the same period a year earlier, according to the Trade and Industry Ministry.

- By HILINA ALEMU | Addis Fortune