Exporters are expressing their frustration with the Ministry of Trade and Industry (MoTI), for failing to correct mistakes with marketing sesame seeds and white pea beans.
Even though, MoTI was expected to take actions against illegal activity regarding sesame seeds and white pea beans, businesses have complained that the ministry has not taken any steps, and that this has affected the health of their trading.
Early in December 2018 the ministry wrote a letter warning those trading the two crops illegally. Officials of MoTI met twice with the crop traders a few days before the official letter and the second time about three weeks ago.
Initially the ministry accused the illegal traders of trying to export sesame seeds under the price of purchase listed at the Ethiopian Commodity Exchange (ECX). Others are being accused of buying white pea beans at the primary market when it is supposed to only be traded at ECX.
The ministry says that the illegal activity affects the sector’s activity, other legal business and the country’s hard currency revenue in addition to affecting people exporting the crops at the price set at ECX.
Exporters were expecting big changes because MoTI often said it would prosecute those trading the crops illegally. However, the ministry has not taken any action to improve the situation. As a result, the illegal activity is continuing and their businesses and reputations with international clients are suffering.
They say that the warnings issued by the ministry are insufficient and that tangible action must be taken to improve the sector.
Three weeks ago, 95 people suspected of illegal trading met with Misganu Arega (Amb), State Minister of MoTI. He told them the ministry would begin taking legal action. They responded by begging for more time to turn the situation around.
“We have frequently insisted you stop the mal-operation but you haven’t so, now we have decided to take action against you,” Misganu told exporters at a meeting held December 28, according to attendees.
“We assumed the case would be solved after that meeting on December 28 at the ministry hall, but so far we have not seen any changes,” exporters that Capital interviewed said.
In November before the official warning letter 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 the Ethiopian Pulses, Oilseeds and the Spices Processors and Exporters Association (EPOSPEA) to consult and warn about illegal trading against ECX.
Sources who attended the November meeting 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 or defaulted the contract of 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 pulses 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 a lower price than the rate that they paid at ECX. “This has confused the market,” he added.
The officials 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 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.
Association sources recently told Capital 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.
In a letter issued on Monday December 3, and signed by Mesfin Abebe, Crops Marketing Director at MoTI, stated that the ministry has been made aware of the latest illegal practices and that it would take action against those engaged in illegal activity, while exporters are expressing their frustration because the delay of the legal measure.
Sesame seeds are the second largest export earner after coffee, while white pea beans are also the other major export product in Ethiopia, which is still highly dependent on agricultural commodity exports. Ethiopia is considered one of the two of big sesame producers and exporters in Africa and up to fifth in the international market until recently but some African countries are now expanding their production and market.