Ethiopia may prosecute coffee exporters
By Jason McLure Bloomberg | April 14, 2009


Meles Zenawi
ADDIS ABABA (Bloomberg) -- Ethiopia may prosecute six of the country’s largest coffee exporters after the government said they have been hoarding beans bound for export, Prime Minister Meles Zenawi said.

The government shut the exporters’ warehouses last month and suspended their licenses after accusing them of illegally stockpiling coffee and selling export-grade coffee on domestic markets. Some exporters were holding beans in anticipation of a currency devaluation, Eleni Gabre-Madhin, chief executive officer of the Ethiopian Commodity Exchange, said last month.

“I would not be surprised if some of them were to be taken to court,” Meles said in a press conference yesterday in Addis Ababa.

Coffee is Ethiopia’s largest export, accounting for 35 percent of the country’s export earnings last year. Stockpiling by exporters has “put pressure on the country’s foreign currency reserves,” the agriculture ministry said in a statement March 30.

Ethiopia’s agriculture ministry warned on March 30 that it had also taken unspecified “similar measures” against 88 other coffee exporters, of about 120 in the country involved in the business.

The prime minister said the 88 exporters wouldn’t face prosecution “whatever shortcomings they have had” in the past and that he expected they would learn from the crackdown on the other six exporters.

State-Owned Enterprise

Following the seizures, state-owned Ethiopian Grain Trade Enterprise said earlier this month it would begin exporting coffee from the country, Africa’s largest producer of the beans.

Meles said yesterday that the state-run grain importer had entered the market because the remaining private coffee exporters might not have the capacity to export Ethiopia’s coffee crop.

“The preference will be to the private sector actors,” he said. “There is no intention to establish a public monopoly in any of the agricultural markets.”

Ethiopia’s coffee exports have declined more than 10 percent to 76,674 metric tons in the first eight months of the fiscal year that began in July, compared with the same period a year earlier, according to trade ministry statistics.

The nation’s coffee export income has fallen to half the government’s target amid a decline in world prices and a ban on Ethiopian beans in Japan. Japan, which purchased about 20 percent of Ethiopia’s coffee shipments in 2007, banned imports last year after finding elevated residues of pesticide in a shipment of the beans.

Auction System

Ethiopia’s trade minister said the residues probably came from bagging coffee in sacks that had previously held chemicals and that the government has corrected the problem. Gabre-Madhin also said a change this year from a state-run auction system to an open-pit commodity exchange for trading beans temporarily interrupted supplies.

The government devalued the birr against the dollar in January in an attempt to build foreign currency reserves. One dollar buys 11.18 birr, compared with about 9.5 a year ago.

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To contact the reporter on this story: Jason McLure in Addis Ababa via Johannesburg at pmrichardson@bloomberg.net

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