Saturday, July 13, 2024

Government condemns coffee traders for defaulting on vertical trading platform

Photo by Anteneh Aklilu


By our staff reporter

The Ethiopian government strongly criticizes coffee suppliers and exporters who fail to fulfill their obligations on the vertical trading platform, citing mistreatment of farmers and suppliers.
Adugna Debela, Director General of the Ethiopian Coffee and Tea Authority (ECTA), expressed concerns about traders’ lack of trust and dishonest practices, emphasizing that these issues hinder the success of the vertical integration scheme. He highlighted credit trading and defaults as significant challenges facing the industry.
Debela stated, “Some suppliers are selling green beans to exporters while receiving advance payments from others, which goes against our directive.” He emphasized the need for direct payment transactions as per the authority’s guidelines.
During a meeting on Friday, March 8th, farmers and suppliers shared their grievances, particularly regarding individuals who disappeared without making payments, causing significant losses.

Agriculture Minister Girma Amente emphasized that the nation’s key commodity, coffee, should not be subjected to mistreatment. The vertical integration scheme serves as a trade platform directly connecting farmers or suppliers with exporters.
Implemented in the 2018/19 budget year as an alternative to trading at the Ethiopian Commodity Exchange (ECX), the vertical integration program has witnessed substantial growth over the past five years. In the 2021/22 budget year, it accounted for the majority of coffee exports, handling 240,000 metric tons out of 300,000 metric tons shipped.

The coffee sector experienced its peak in the stated budget year, generating a record hard currency of USD 1.4 billion, with USD 1.1 billion attributed to coffee processed through vertical integration. The government aims to increase coffee exports to USD 1.7 billion in the current budget year, up from USD 1.3 billion in 2022/2023.
Despite achieving 65 percent of the revenue target in the first seven months of the fiscal year, Girma noted that the volume remained unchanged compared to the previous year.

Read more