Ethiopia: Coffee - a Troubled Sector

The who is who of the policymaking circle are gathered at the Office of the Prime Minister. A total of 25 ministers and high-ranking officials are there for a serious business; business that requires urgent attention of the government.

That is, understanding why export revenue has been going from bad to worse over the past three years. Of course, the Prime Minister himself was chairing this meeting. Ushered by the National Export Coordination Committee, the high level meeting went on for five hours straight. High on the agenda was export commodities; more specifically coffee export. Coffee falls under the Ministry of Trade (MoT) supervision. And hence, the Trade Minister Kebede Chane had a lot of questions to answer. The questions were a bit tough to tackle since the performance of the coffee sub sector has been on the decline for close to three years now. In fact, part of the tough questions asked were how the direction set by the export coordinating committee in the previous year did not bear fruit. This was a meeting that was held in mid-February, right at the mid-year mark of the current budget year. However, the Trade Minister faced another group of high-ranking officials in May where he had to defend the performance of his ministry and those commodities under his ministry's supervision. This time around it was the lawmakers. This group was not as friendly as those officials at the executive branch. For the most part the parliamentarians were not restricted to issues covered by Kebede's ten-month performance report. Nevertheless, Kebede's own report conceded to the difficulties in the coffee sub sector in the ten months that it covered. Coffee export revenue failed to meet even half of the target set for the period, not to mention it showing marked decline from its level last year. Problems faced by the coffee sector are not new to begin with. Coffee export started to show signs of staggering back when the cash crop was first decided to be traded via the Ethiopia Commodity Exchange (ECX), a relatively new trading system where agricultural commodities such as coffee, sesame, chickpeas and the like are traded. At the time, even the decision to dismantle the old auction system and push coffee to the floor of the young ECX was highly debated. Eleni Geberemedhin (Ph.D.) founding CEO of the ECX, called it (the moment) one of the testing times in her professional life. It is not like she did not have the support of the government to annex coffee trade into her new ECX. As a matter of fact, she did. But, coffee is not that simple of a product to fundamentally go through restructuring and remain intact. A slight vibration in this sub sector has far more reaching consequences with the lives of close of to 30 million Ethiopians touched by this very sector. One problem was obviously the risk. The risk sector players has to take until coffee assimilates with the trading system and started to operate normally. This was a mere wish to say the least. For instance, the export intake in that same year when it joined the trading floor of the ECX was dangerously low. In the year 2008/2009 alone, coffee export intake declined to USD 351 million, one of lowest figures in six years. This came as a shock for the embattled sub sector but soon reversed as the export revenue rebounded the next year. In 2009/10, the figure rose to USD 528 million and progressed well in the years after that.

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