Ethiopia Faces Coffee Crisis: Between Declining Exports & Rising Illegal Trade – CoffeeTalk

Coffee is a crucial agricultural product and the backbone of Ethiopia’s economy. However, the export market is experiencing a downward trend that requires urgent attention. This situation has led to a loss of revenue and a decline in the number of productive farmers. Issues such as illegal trade and questionable coffee quality further complicate the sector. Coffee marketing, price instability, and limited market access have long been significant bottlenecks for the industry.

In an interview with Capital, Cheru Koru, CEO of Market Intelligence at the Ethiopia Coffee and Tea Authority, discussed the increase in coffee production driven by microeconomic transformation and the government’s crackdown on illegal trade. Another pressing concern in the country is the illegal distribution of unregulated drugs. Over 80 percent of pharmaceutical products must be imported at high prices. The sector has been urged to focus on the fact that it is not being adequately monitored and inspected.

The Ethiopian government is collaborating with various agencies in the sector to prevent illegal immigrants from originating in legal destinations. One strategy is to enhance the profitability of the coffee sector and bring illegal operations into compliance. The control system that was previously managed manually has now been automated and integrated with new software. The Authority is actively monitoring the legality of coffee from its source to its destination and taking appropriate action according to established regulations. In this approach, a percentage of the product involved in illegal transportation will be allocated to those who helped prevent it.

The quality of Ethiopian coffee is non-negotiable, and there are ongoing efforts to promote coffee production in the country. Historically, no more than 25% of specialty coffee was exported, but this figure has increased year on year to 46% of all coffee exports.

The supply chain faces challenges regarding the export of goods and services in the country. It is challenging to determine the exact amount of coffee stock currently available in the country because coffee transactions occur daily, making verification difficult. This year, the Ethiopian government expects to export about 400,000 tonnes of coffee, projecting around $2 billion in revenue.

One reason for the increase in domestic coffee production is a recent economic reform that nearly doubled the profits for exporters. Previously, the price of coffee was 57 birr, but it has now soared to 120 birr. Exporters are reluctant to let any product go to waste, so they quickly send the coffee abroad. This shift means that coffee previously designated for domestic consumption is now being exported at lower quality levels, resulting in domestic production declining and driving up prices in the market.

Ethiopia’s drug supply and movement are significantly impacted by the country’s lack of production and export of drugs, with 8-12% of the market coming from imports. This leads to billions of dollars lost to smugglers trafficking drugs, which are often low-quality and pose serious health risks. The impact on public health could be severe, potentially leading to unprecedented deaths.

The causes of the illicit drug trade include the identification of prevalent health issues in the country and the widespread use of illegal malaria drugs. The Ethiopian Food and Drug Authority recently announced seven types of illegal drugs, indicating that these products are almost infiltrating households. The responsibility for the illicit drug trade likely falls on both the regulatory body and manufacturing companies.

The Federal Police and Customs Commission play significant roles in prevention, but they have repeatedly stated that this issue is beyond their control due to disproportionate power and influence involved. The Food and Drug Authority of Ethiopia closely monitors the situation, making it difficult to control the drugs released from government facilities. To combat the issue, the first step must be to enhance efforts and establish a strict regulatory system, particularly to manage critical medications taken from government facilities into private homes.

However, the regulatory framework at both federal and state levels is problematic, as the Federal Food and Drug Authority lacks direct communication with state authorities, creating a significant gap. Establishing a single unified federal agency for the drug control system could lead to meaningful change.

Read More @ Capital Ethiopia