Sunday, May 19, 2024
BusinessMinistry considers diplomacy for stranded exports to China

Ministry considers diplomacy for stranded exports to China

Only 10 percent of Ethiopia’s agricultural commodity exporters were deemed legitimate for China’s newly introduced stringent requirements.

Officials at the Ministry of Agriculture requested the Ministry of Foreign Affairs (MoFA) to solve the issue diplomatically.

The General Administration of Customs of China (GACC) had introduced the new requirements since January 3, 2022. China’s order for agricultural commodities since then has shrunk.

However, exporters who have already dispatched their shipments to China before the requirements were introduced are currently stranded at Chinese ports.

“I have sent several coffee containers to China before the notification came. But the containers arrived at China port after the enforcement came into effect. My buyers in China are now unable to receive the coffee,” said Tameru Tadesse, a coffee exporter, who particularly exports to the Chinese market.

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The new requirement demands a documented information on the commodities starting from cultivation, processing and up to shipments. Agricultural commodities exporters are required to have their own processing machines, warehouses and other facilities, among others. The requirement demands warehouses to have above 500 sq. m of area.

The documentations must also be attached to a newly introduced online platform accessed by the Ethiopian Ministry of Agriculture and China’s customs authorities. The document also needs to have videos of each of the processing facilities of exporters.

The Chinese authorities are expected to send officials to crosscheck if the requirements are being followed.

However, according to Mekdes Degife, who is leading the taskforce at Ministry, only 10 percent of Ethiopian agricultural exporters have their own processing facilities. The Ministry has the mandate to authenticate the exporters and communicate with their counterparts.

A month ago, a new task force was formed at the Ministry to assess exporters against the list of requirements. Groups of experts pooled from the Ministry, Ethiopian Coffee and Tea Authority, and exporters association, are undertaking the assessments.

So far, close to 50 exporters have met the requirements and have been approved by Chinese authorities.

“We are assessing and authenticating exporters which have their own warehouses and processing facilities. However, more than 90 percent of exporters use rented processing facilities. This is beyond our capacity and needs government direction,” said Mekdes.

Building a coffee processing plant and a warehouse costs 200 to 300 million birr, according to exporters The Reporter talked to. The cheapest processing machine costs USD 500,000.

“Accessing land for warehouse is very difficult even if we want to build our own,” said Tameru, adding, “Currently we are searching alternative export markets. We already stopped exporting to China.”

To find the way out of the quagmire the 90 percent finds itself in, the Ministry lately wrote a letter to the MoFA, suggesting a diplomatic solution for the deadlock.

“We are waiting for MoFA’s response,” added Mekdes.

There are only close to 100 coffee processing facilities in the country, despite their being close to 1,000 exporters in the business. Particularly, most coffee exporters rely on rentals, instead of installing their own processing facilities.

“The Chinese authorities enforced the new requirements without prior formal communication with the Ethiopian Ministry of Agriculture,” said Tatek Desta, a coffee exporter and member of the taskforce.

Ethiopia exported commodities worth 3.7 billion birr (USD74.6 million) in 2020/21, down from the historic record high of 7.6 billion birr (USD152 million) registered back in 2013/14, according to the National Bank of Ethiopia.

According to experts, if the new requirements reduce Ethiopian exports to China; it is likely to affect Ethiopia’s debt payment to the country. However, it is expected that the government can solve these issues by diplomatic efforts, since the two countries have good relations.

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