Ethiopia’s government imposes coffee shipment regulation

By Wondwossen Mezlekia

December 5, 2011

The Government of Ethiopia has recently issued yet another directive that is filled with ambiguity and disregard to proper implementation of trade policies that affect everyone in the logistics supply chain.

The story was first broken by Sprudge last week in the article “An End to Lot Separation In Ethiopia?“

The directive is difficult to comprehend in more ways than one. First, the letter uses “bulk container” and “loose container” interchangeably and without distinction. Technically, these terms represent two distinct means of cargo shipment and the directive could have serious implications depending on which term is intended to go into effect. “Bulk container” often refers to the movement of coffee in bulk, using normal dry containers fitted with a liner, whereas shipping coffee in a “loose container” (also known as, Loose Container Load or LCL) implies to the practice where coffee is transported to the dock where the shipping line stuffs the container with coffee (and other commodities where there is room for additional weight).

Secondly, the directive indicates the possibility of granting a special permit when approved by the Ministry of Trade, but does not disclose the requirements and procedures for requesting or granting exceptions to the coffees that can be exempted from the rule. It seems that exporters or buyers will need to visit someone at the Ministry of Trade before deciding to buy a given coffee stock as it may or may not qualify for exemption.

Finally, judging from the reactions of international trade partners to the directive, the policy change was not discussed with or publicized enough to reach most of the small and medium-sized coffee roasters in North America and Europe.

These types of vague directives are not only confusing to the market, but also open opportunities for corruption behind closed doors. Unfortunately, such practices are becoming the hallmarks of government offices in Ethiopia.

This time around, let’s hope the government will hear the voices of Specialty coffee buyers across the world and introduce the semblance of transparency to the way business done in that country.

Below is a rush translation of the letter which is written in Amharic, one of the official languages of the land, and signed by Yakob Yala, State Minister of Trade.

—

Date: November 14, 2011

Ref. No.: 01-1-35/889

To Ministry of Agriculture

Addis Ababa

Subject: Regarding the export of coffee in loose container

While the shipment of coffee in a bulk container is beneficial in various ways, it will primarily modernize our country’s export packaging and shipment standards. Besides, it ensures that coffee is exported while its quality is maintained;  minimizes the possibility of coffee theft en route; reduces the cost burden on our coffee buyers of disposing sacks; eliminates the cost that coffee exporters pay for sacks; benefits exporters  as coffee buyers pay better prices when their coffee is shipped as loose loads; increases fleet turn-around; and enables performing tasks which would otherwise take time and cost in Djibouti within our country.

In order to properly take advantage of the aforesaid benefits, a clear direction was set out by the government and a mutual understanding reached with stakeholders regarding the export of coffee in a loose container, and it was planned to complete the preparation in 2010/11 and implement the plan in 2011/12.

Accordingly, several preparations have been made during the 2010/2011 budget year; primarily, exporters have been able to import additional blower machines that are used to load bulk containers. Awareness [about this directive] has been created among exporters and stakeholders. As a result,  it has been confirmed, the conditions necessary for shipping coffee in loose container load are in place.

However, the practice of exporting coffee in loose container load has been slow due to lack of proper handling. It has thus become necessary to take enforcement measures that will ensure a proper handling.  Therefore, effective November 11, 2011, we notify you to make sure any coffee that passes through your office’s Coffee Quality Inspection Center is exported in loose container load only, unless granted a special permit by our Ministry office.

With salutation,

signed

Yakob Yala

State Minister of Trade

cc:-

To Ethiopia Coffee Exporters’ Association