Govt. rejects bill to reform coffee marketing

ETHIOPIA – The Office of the Attorney General has rejected the bill of the Ethiopian Coffee & Tea Development & Marketing Authority establishment, which mainly paralyses the Ethiopia Commodity Exchange (ECX) and entirely reforms the value chain of coffee.

The Office specified 18 points against the amendment of the proclamation. One of the assertions listed by the Office is not being convinced by the need for the amendment.

“Proclamations will be amended when they are found difficult to operate,” reads the letter sent to the Authority from the Office.

“The Office does not have a problem with the current legal framework.”

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The proclamation, entitled Coffee Quality Control and Marketing Proclamation, was issued in 2008. The Authority amended and delivered it to the Office recently.

It took eight months for the Authority to modify it. And a month and a half ago it was sent to the Office for final retouches, additions and approval from the Office in the areas of laws, which finally turned out with rejection, according to a source close to the case.

The amendment came to the scene following the continuous demand of the people involved in the production and trading of coffee, seeking for the reform of its market value chain.

Currently, 40pc of the revenues goes into the pockets of intermediaries’, while it should go in the farmers’ pockets, according to the claims of the farmers.

The new draft bill allows farmers to sell coffee before it reaches the warehouses of ECX, which was established seven years ago and has been mainly trading coffee since then. This, it is believed, according to the draft bill, would have an impact in reducing the middlemen in the value chain.

Before reaching the decision of amending the Proclamation, Prime Minister Hailemariam Desalegn consecutively had meetings with coffee exporters, who raised challenges in the sector.

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In addition, research done by different stakeholders forced the Authority to reform the system.

The National Export Coordination Committee, which was established to boost the export performance of the country, also identified the major bottlenecks of the coffee market and pointed out 11 core challenges of the coffee value chain.

The Committee also suggested solutions, which were incorporated in the draft bills.

The challenges mentioned by the Committee include minimal incentives for the coffee growers and exporters, access to finance, extended value chain, widespread illegal trading and bottlenecks concerning the current legal framework.

Reducing the value chain in the coffee market is also among the main points included in the draft bill. It would enable coffee to be sold out before reaching the floor of the ECX during consignment within three days.

Coffee can also be sold at processing plants, where the coffee is washed and processed.

Buying or selling coffee outside the ECX or at a transaction centre established by the Ministry of Trade (MoT) or the appropriate regional body was illegal, according to the current proclamation. Those involved in such trading are subjected to fines and imprisonment.

The introduction of the bill was also targeted to help in tracing the source of the coffee.

Currently, exporters claim that coffees are mixed at the warehouses of the ECX that finally raised concerns on the traceability of the coffee.

In the current law, companies engaged in exporting processed coffee were not allowed to use export standard coffee, but the draft bill proposed to enable them to use the export standard as an input.

Before sending it to the Office of the Attorney General, the Authority took the bill out to discuss it with stakeholders in eight regional coffee grower towns.

And it was expecting to table the proclamation and get approval before the end of the current fiscal year.

Along with the rejection, in the written letter sent to the Authority from the Office, it requested the Authority to have further discussion on the issue.

The discussion will be a group consultation with the Authority and the Office to sort out the issues, according to a source close to the case.

June 13, 2017: Addis Fortune

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