The Ministry of Trade and Industry (MoTI) is accusing oilseed and pulses exporters of illegal activities associated with foreign trade because they allegedly traded sesame seeds and white pea beans outside the Ethiopian Commodity Exchange (ECX).
Two weeks ago officials at the ministry called a meeting of 95 business people involved in exporting sesame and white pea beans including the board of directors of Ethiopian Pulses, Oilseeds and the Spices Processors and Exporters Association (EPOSPEA) to consult and warn about the illegal activity in illegal trading against ECX.
Sources in the sector told Capital that the officials have clearly indicated that the export price of sesame seeds are lower than the value that exporters purchased them from ECX and some of the exporters have suspended their export. This is happening at a time when other exporting countries like Sudan and Nigeria are expanding their exports and boosting their production, according to sources who attended the meeting. The source adds that, MoTI officials say Ethiopia is losing its major sesame seed market in China, which consumes 70 percent of Ethiopia’s production.
The sector experts said that even though it is the peak season for sesame seed production like other export items traded at ECX the price has sharply increased every day. A pulse and oilseed trading consultant, who requested anonymity also said that even though the price has gone up at ECX some of those exporters are exporting the seeds at lower price than the rate that they paid at ECX. “This has confused the market,” he added.
“For instance, even though the exporter paid USD 1,750 per ton of sesame seeds during trading at ECX it will sell it for USD 1,500. This trend has affected the export oriented businesses,” he explained.
Ministry officials are warning the illegal traders that they are only harming themselves. “Both your business and the country are losing due to your practices,” the officials said. They have told the exporters that they consider this to be under invoicing, which is illegal.
Experts said that some new exporters are joining the export business in order to access hard currency, which is severely scarce, for their other business.
The latest trend is also seen by some of the manufacturers who are unable to get foreign currency from banks unless they are engaged in export business. According to experts they are told by banks to engage in an export business to access foreign currency which affects the export business.
“Manufacturers are engaging in the export to get relief from their daily work and settlement of bank loans and labor costs since it is their ultimate goal, but it has affected the country’s hard currency earning and business owners,” experts said.
In the meeting at MoTI, the officials also stated that there are exporters buying white pea beans outside of the trading floor. Sources said that some of the exporters are engaged in buying the bean from primary markets like Adama.
Sources said that even though MoTI officials warned those illegal actors nothing has changed so the ministry has written a warning letter to exporters via their association.
Association sources said that the current move from the government is the right decision otherwise the sector will be crushed in the coming few weeks since most of the regular exporters are buying and selling the products in connection with a loan scheme from banks.
The letter issued on Monday December 3, and signed by Mesfin Abebe, Crops Marketing Directorate Director at MoTI, stated that the ministry has been made aware of the latest illegal practices at the sector.
The letter that Capital obtained stated that the ministry will take action against those engaged in illegal activity.
According to the sector actors, engaging in exporting sesame seeds, which is the second largest hard currency source after coffee, is not difficult for new comers since the seeds are well accepted by major destinations in Asia. A few years ago Ethiopia was one of the top sesame seed exporters in Africa and listed as one of the top five in the seed production and trade in the world. The latest data indicated that new countries like Tanzania and Nigeria have expanded their production more than Ethiopia. China, India and Myanmar are major producers but they are also large consumers.