10 July 2018

Ethiopia: Nation Tackling to Improve Coffee Export

This year, Ethiopia is striving to establish a coffee processing development institute to increase finished product and compete on international market. The institute would support both private owners and associations organized to provide processed coffee product. The establishment of the institute believed the ease shortage of trained professionals in producing processed coffee. This would also help to save the money that has been spent to send professionals abroad for training on the sector development. However, the supply of sufficient and quality input remain under question mark as the quality and input supply of the coffee is reducing through time.

Aman Kebede is a Quality Assurance Supervisor at the Dire Dawa Ethiopian Commodities Exchange branch office. He believed that the coffee that passed through the laboratory he is working has seen significant reduction in quality. From a long experience, he pointed out that the major problem for the low quality of coffee emanated from land cleaning, cultivating, harvesting, storing and transporting process. His team has been reporting the factors and recommending possible solutions while the mechanisms are not taken by intended bodies which cause no improvement in the quality of the product.

Similarly, the supply of coffee product is also declining through time. Low economic beneficiary and absence of compensation are instigating the farmer to replace its cropland by other crop species. This problem may happen in various areas of the country but the Eastern Harerghe could be mentioned as best example. Farmers in the area are shifting from producing coffee to chat. According to Abdela Abdu,Trading Manager of the Eastern Hararghe Coffee and Tea Authority, price fluctuation and illegal trade are the major factors that obliged farmers to shift to produce chat more than coffee.The zone has about more than 300,000 chat producing farmers than that of the 200,000s who produce coffee.

"Today, the country's local market favors chat than coffee with respective maximum pricing of 2,000 and 80 ETB per kilo. And the highest local consumption is also encouraged producers to give emphasis to chat more than coffee.There must be marketing amendment to save coffee from misplacement," said Mume Hibro, Authority Marketing Group Leader.

The other problem related to marketing is that most of the coffee exchange is takes place in the capital and the farmers are not able to sell their product traveling to the capital. However, the market for their chat product is found in the nearby town. To curb the problem, the Ethiopian Commodity Exchange is working to make marketing easy. It has been organizing various electronic marketing centers in major cities. The electronic marketing system is meeting up both buyer and sellers regardless of time and place gap.

Similarly, the ECX is also working to combat contraband through working with Ethiopian Revenue and Customs Authority and the Federal Police and Road Transport Authority. It is striving to save coffee and bean products from illegal trade. Contraband has been hurting the country to achieve better earning from export. It has been reducing through time and this year the branch ECX has registered no contraband commodity controlled by the ECX. This year the commodity exchanged via contraband in Dire Dawa city goes zero, said Birehanu Tefera Dire Dawa branch ECX Manager. It was difficult to the government to collect the intended tax and unable the country to improve export earnings. His branch works in providing standardization and warehouse services to various coffee, sesame and soybean producers from East, and West Hararghe and Arsi zones. They faced infrastructural problems related to shortage of advanced warehouses, materials and buildings.

The country's incapability in exporting process in not limited in warehousing services, it also related to shortage of capable private companies who has the finance and experience of exporting processed product. The country's coffee exporters association incorporated about 31 members that are working in providing coffee for domestic consumption and export purpose. However all the 200 coffee roaster industries engaging across the country are at micro level. on the other hand, over 50 percent of country's total coffee product is spending for local consumption which is another factor for low exportation side by side to the reduction in the production. Today the country is working to export branded roasted Ethiopian coffee from next year in collaboration with JICA aimed at increasing forex.

According to Typica Specialty Coffee Exporter Managing Director Minilik Habtu, the country has low capacity to export a wide range of processed coffee product. And the shortcomings are lack of domestic companies' international experience and market competition. His organization is working to promote the processing industries in the sector in the emerging markets. Today, the country already set and new law in coffee processing and trying for the implementation. The institute which is under establishment by the Ethiopian Coffee and Tea Development Authority and UNIDO is underway.All the design and structure of the institute is already finalized and it would be functional within three months, he noted.

Over the past six months, the country has exported some 68,354 and 68328 tons of oilseeds and pulses respectively that have a 50 and 35 percent increase than last year's similar period, the information from the Ministry of Trade indicated. The pulses, oilseeds and spices are significant export products that help the country to secure over 600 million USD per annum.

Therefore, improving the quality and volume of coffee product is significant as it is among the major cash crops that enable the country to generate significant amount of foreign currency. To this end, implementing the professional's recommendation from cultivation to storing process is important. Participating experienced and financially strengthened companies is also valuable to scale up exporting finished product. Moreover, building the capacity of farmers ought to be the prime duty of the sector practitioners to save the country form the loss of coffee product from its market.

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