Wednesday, February 8, 2023
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Money TalksPremium coffee for local market, but with USD

Premium coffee for local market, but with USD

Mover and shaker of the coffee market, an executive organ that was established to solely administer the two highly caffeinated commodities – coffee and tea – introduced a draft bill concerning the sale of coffee last Tuesday, in order for the focal stakeholders to review it and forward their comments.

Top-quality and exportable coffee beans from Ethiopia have long been legally banned from being sold on the Ethiopian market, but that is now inching toward becoming a reality should the draft directive the Ethiopian Coffee and Tea Authority came up with be finalized.

Only prepared to govern the sale of value added export quality coffee to the Ethiopian market for those willing to buy with foreign currencies, the directive was shared with stakeholders this week to collect their comments for additional inputs in the next two weeks.

As implied in the draft document, the buyers are expected to be foreign tourists or travelers, embassies, international conference participants, and others with rights to buy commodities with foreign currencies. The export standard coffee will only be sold in USD or other currencies that the National Bank of Ethiopia (NBE) has approved for use in Ethiopia.

Buyers are able to make payment for the coffee with credit cards, electronic payment systems, or cash, with NBE controlling each transaction.

According to the draft bill, the market is only limited to four-star and higher hotels, international airports, and national parks, including Friendship Square, Entoto, and Unity parks. Additionally, it can also be sold at the compounds of the African Union (AU) and the United Nations Economic Commission for Africa (ECA).

Experts in the coffee industry like Minilik Habtu, president of the former Ethiopian Coffee Roasters Association and now member of the newly formed Ethiopian Coffee Association, have long been calling for the full implementation of the proclamation ratified six years ago.

The proclamation states that value added export quality coffee products shall be sold in foreign exchanges in the domestic market for the purpose of promoting the good taste of coffee. With the call from industry players like Minilik, the directive is coming to effect for executing this proclamation.

Nevertheless, what remains unclear is how this type of coffee will be accessible to tourists. Starred hotels as well as the listed parks in the directive are barely accessed by a large number of tourists, he believes. Minilik’s association is also preparing to raise this with the Authority as one of its concerns.

“What we want as a sector is for the coffee to be available at every destination the tourists access as long as the shops fulfill the requirements from NBE and the Authority,” he said.

Aster Solomon, owner of the Mosaic Hotel and chairperson of the Addis Ababa Hotel Owners Association, receives the news with excitement, describing how hotels are the best locations for such a market.

What makes the hotels suitable locations, according to Aster, is that they already serve tourists and conference goers, but more importantly, they have the facilities to make transactions in foreign currencies.

“The hotels were already selling locally consumed coffee, souvenirs, and other materials. Also, there is a high demand to get the best quality coffee from tourists,” she said.

The shops will need to get a license to sell the value-added coffee from the Authority, and they are also expected to be registered with NBE to sell commodities in foreign currencies, the directive says. Buyers should also have the right to legally make transactions in foreign currencies.

As per the draft directive, the value added export quality coffee to be sold in the local market must not exceed 10 percent of the valued added coffee exported to the international market. However, this can be revised by Authority based on the recommendation of the NBE, which may revise the rule based on the demand in the international market and the forex inflow.

The coffee export business has been attracting several businesses over the last few years, taking part in the struggle to get their share of foreign exchange. Aside from businesses already engaged in the export sector, over a thousand coffee farmers have received export permits from the Authority during the last three years alone, with the highest ever coffee export recorded last year at USD 1.4 billion.

In the five months since the beginning of the current fiscal year, Ethiopian exporters shipped 109,000 tons of coffee worth USD 615,000. However, the plan for the whole fiscal year is to sell 360,000 tons of coffee to the international market and earn USD two billion, over half a billion above last year’s performance.

One of the biggest advantages Minilik claims this directive will bring is tackling the parallel market, as this will be another form of earning export income, and trading the commodity illegally would be discouraged.

Building the positive image of the country is also another advantage he mentioned that the availability of coffee in the local market will bring. “Tourists are now consuming and taking home coffee that is of low quality, which can tarnish the country’s image on coffee quality,” Minilik said.

Tamiru Tadesse, founder and owner of a coffee export company, Alo Coffee Plc, who is also a winner of the second “Cup of Excellence” contest held in 2021, welcomes the decision. He believes there is a demand in Ethiopia for export-quality coffee.

He is of the opinion that the tourists weren’t experiencing the best quality of coffee from Ethiopia while they were visiting the country itself. This decision would provide a complete experience for visitors, should it be easily available to them, he believes.

“The demand, indeed, might not be as high as it is expected since few people would be able to pay in foreign currencies, but there are people with strong demand,” he said.

Regarding the locals consuming the best quality coffee, Tamiru said that there might be an illegal activity undergoing currently and availing the export quality coffee in the local market. “It would be good to try allowing the highest quality coffee to be sold in local currency here to fight the illegal market,” he said.

Several attempts to include comments from the Authority were unsuccessful.

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