The Ministry of Trade and Industry (MoTI) warns that it will start taking action against those who attempt to export agricultural products under the price of the local market.
The ministry issued a directive on October 18 with the goal of controlling the export of agricultural products mainly traded at the Ethiopian Commodity Exchange (ECX).
In the past couple of years the price of products like sesame seeds and pulses traded at ECX has been hiking against the international price on the aim that exporters that are at the same time engaged on the import business focus on the hard currency earnings for the import of the products that they trade here.
Due to the price hike on the local market companies that focuses on the export business forced to leave their activity.
To tackle the challenge the MoTI has issued the ‘export contract registration and administration directive no.21 2019’ that targets control the export of products against international price. In the past exporters who export products except coffee only process their export via banks, while documents related with coffee should pass not only banks but the National Bank of Ethiopia.
In the directive that MoTI issued exporters should get permit from the directorate that was recently formed to control the export.
Based on the new directive exporters should get the permit for export and the directorate is responsible to look the price of the product in accordance with the international market.
According to Mesfin Abebe, Director of the Crop Products Marketing Directorate at MoTI, despite most of the traders started buying products as per the international price some illegal actors are still trying to go against the directive.
He told Capital that some are trying to get a permit, while they bought the products against the international price.
“We refused to give them the permit that will be a lesson to correct their illegal acts,” he said.
“The previous trend has also contributed for the inflation since traders compensate their loss on the products they import. Due to their illegal way the price of import products shraply hiked,” Mesfin explained.
“Since the directive become effective, export products price has declined at ECX; for instance the price of sesame seeds has declined from over 7,000 birr to 4,600 birr per quintal,” he added.
The directive has given the right for MoTI to penalize exporters that buy products over the international price. The penalty includes being suspended from trading to revoking the business license besides applying other legal processes.
Sources told Capital that relevant officers from MoTI and members of Ethiopian Pulses, Oilseeds and Spices Processors – Exporters Association (EPOSPEA) discussed about the issue to start taking measures on illegal actors.
The ministry also announced that it will start taking action.
“Since the directive become effective for the last almost one month we preferred to give advice for traders that buy products against international price and come to get permit from us to follow the rules that is stated on the directive,” Mesfin said. “Now we will start taking measures,” he added.
Sources said that few weeks ago EPOSPEA wrote a letter for members saying that they should follow the proper way before the ministry starts taking legal action.
Sources said that the issue was also raised on the meeting that was held this week between stakeholders from the ministry, export actors and regional representatives.
The main meeting for this week was to get on consensus about preventing hording, contraband and insure the smooth supply of products to the electronic trading centre, ECX.
Mesfin said that the export sector is totally changed and is now considered as a subsidiary business for import business than profitable business.
“We have to make the export sector a profitable business as the past and we are working on it,” he added.