Greedy traders extorting pea bean business

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(Photo: Anteneh Aklilu)

Traders at the Ethiopian Commodity Exchange (ECX) are saying that a monopoly leading to few players on the trading floor is harming their business.
The traders that Capital interviewed anonymously said that white pea beans are being supplied by only three companies and sent out of the country by one sole exporter.
These traders are buying the bean for export but they say that three suppliers have monopolized white peas. They have taken their supply chain and stretched it to primary marketsin local towns. “Via their brokers at the local markets they collect the product at an extraordinary price which forces other suppliers to leave the business,” they argued. “Currently the daily demand is about 1,100 quintals of white pea beans but the product available on the trading floor is insignificant,” one of the buyers that Capital interviewed said.
“Even though we don’t have information about the product at the ECX warehouse for white pea bean like coffee we are confident that there is a surplus of white peas at the ECX warehouse but the suppliers only make a small amount of product available during the daily session which inflates the prices unreasonably,” a source at the trading floor claimed. He added that on Friday November 8 there were only about 100 quintals of white pea beans available for trading.
They claimed that about four years ago the trading floor been applied a system allowing a single supplier to trade with 50 buyers and farmer unions to supply the product on the trading floor with favorable laws compared with single buyers or sellers. They argued that it was a good system which solved problems in the past. “But few traders organized the farmers under their network and supply the product for sellers as a single client. This is the way to control the primary market that few traders at ECX applied,” they claimed.
Recently the Ministry of Trade and Industry has issued a directive that it would revoke a trading license and sue those exporting agricultural products under the price they bought it at ECX.
“Even though the directive is correct to harmonize the trading and control the price escalation at ECX, at the same time the current monopoly affects our export business,” they claimed.
They said that before the effectiveness of the directive they bought the white pea bean for up to 2,500 birr and exported it for USD 650 per ton.
Currently the price is about 1,900 birr. Sources told Capital that some ECX traders have brought the case to the Ministry of Trade and Industry on Thursday November 7.
Representatives at Ministry of Trade and Industry (MoTI), confirmed that the traders went to the Ministry to express their concerns.
Mesfin Abebe, Director of the Crop Products Marketing Directorate atMoTI, argued that the period is a transitional time from the past season and upcoming harvest due to that the product might not come sufficiently.
He said that is not due to a monopoly by some group of individuals. However, traders claimed that the white pea bean has been sufficiently observed at the ECX warehouse, Mesfin argued that there is a controlling mechanism based on the ECX operation. “ECX has given a maximum period of storage for any product,” he added.
He said that MoTI has applied the controlling mechanism of export price based on the international rate as of October 18. It has shown the price of products at the exchange floor has been reduced.
The export contract registration and administration directive no.21.2019 forced exporters to export their product not lower than the price that they bought it from the local market. It has also ruled MoTI will also evaluate the export documents in addition to banks.
If the exporters move against the rule it will impose a penalty up to revoking the business license.
NetsanetTesfaye, Public Relations head at ECX, said that based on the performance of October the bean supply was very small. “When I looked at the monthly report in my opinion it declined since it is the last period of the past harvest season,” he added.
Mesfin said that in the coming week there is a discussion with regions about hording products against the rules. “We will also look the cases if hording continues in the regions but regarding hording so far there is no problem in this case,” he added.