Ethiopian Coffee and Tea Authority (ECTA) says it is working with the Ministry of Revenue (MoR) to introduce a scheme for assimilating coffee trading.
The authority that is registering tangible changes on the coffee market and export earnings since vertical integration’s commencement as an alternative for Ethiopian Commodity Exchange (ECX) platform, said that it is working with the revenue authority to harmonize the new trading scheme.
Adugna Debela (PhD), Director General of ECTA, said that under the new scheme which commenced about a year and half ago empowered farmers, suppliers and exporters to trade the bean directly which also benefited other stakeholders. Moreover it has boosted the volume and the value of the coffee export.
Despite visible success there are also claims that the trading price under the vertical integration is higher than the range that is given by the regulatory body and trading floor at ECX.
However, ECTA argues that the contract between the buyers and sellers is approved by the authority prior to export.
Experts said that the authority only evaluated the contract of the two parties, suppliers and exporters, and not the receipt of the trading, “the good thing is that suppliers issue the receipt for exporters. If ECTA wants to know the case it has to ask for the transaction receipt in addition to the contract agreement,” experts remarked.
Adugna told Capital that there might be different under table negotiations. He said that the way out as mentioned by experts is an alternative to solve the possible challenge.
“We are currently working with MoR to regulate the transaction,” the authority stated indicating that it is working with MoR to assimilate activities with the revenue authority.
“We have crosschecked transaction samples randomly and the result will be seen,” the Director General said, adding that it helps to maximize revenue collection.
In the current budget year, ECTA has targeted to trade 280,000 metric tons of coffee that is the biggest volume ever in the sector trade for the country.
The vertical integration scheme is expected to take the major share of the export.
In the first three months of the 2021/22 budget year the country has earned additional USD 120 million or over half of the target from the coffee export against the amount that ECTA set to attain.
In the stated period a total of USD 330 million was secured from coffee, which is the major hard currency source for the country.
The global coffee price is surging in the past few months because the biggest producer and exporter of the bean, Brazil is being affected this season.
Due to that the performance of Ethiopia registered marvelous achievement in the past budget year from coffee export which has continued to maintain newer records this year.
For instance in the first month of the budget year that started July 8, the authority had projected to export 21,340 tons of coffee but actually it attained to ship 31,146 tons and earn USD 115.5 million that surpass the target by 146 percent and 161 percent in volume and value respectively.
Similarly, the July performance has shown increment of 64 percent and 81 percent in volume and earning respectively compared with the same period of last year.
The authority is aggressively working to expand the high quality coffee, which is the major hard currency source of the country and well known by its quality and flavor, output ranging up to grade 3 than commercial coffee. In this regard in the 2019/20 budget year, high amount of quality coffee was exported than commercial coffee, which took the lion’s share in the past experience.