Authority Raises Minimum Capital Requirements For Coffee Exporters

The Ethiopian Coffee and Tea Authority has raised minimum capital thresholds for individuals and businesses looking to get involved in the coffee export business.

Private exporters are required to have at least 15 million Birr in capital, according to the ‘Coffee Marketing and Quality Control Directive,’ while the floor is 20 million Birr for share and private limited companies.

This is the second time the Authority is changing the minimum requirements this year, with the previous amendment seeing the capital threshold jump to 10 million Birr from 1.5 million.

Both private and company exporters are required to present bank statements and disclose ownership structure in order to attain a certificate of competency from the Authority, according to the directive.

Officials say the capital thresholds were amended to “better reflect the current state of the coffee market.”

The directive also stipulates that exporters must operate laboratories used to test the quality of coffee, with the laboratories subject to inspection and certification by the Authority. Only coffee farmers who double as exporters are exempt from the laboratory requirement.

The Authority has introduced education requirements for individuals hired to carry out quality testing, while prohibiting a coffee quality testing professional from working for more than one exporter.

Failure to meet the standards set out in the directive will lead to a suspension with a three-day window to rectify any shortcomings. Failure to do so could lead to the permanent revocation of the export permit, according to the directive.

“Coffee prices have surged exponentially since the Birr was floated last year. Coffee exporters need a lot of money to buy coffee locally and export. Another reason for the amendment is to discourage one-and-done exporters. There are many opportunistic businesses who are not genuine coffee exporters. They buy coffee from local suppliers, and they might export it if they are looking for forex for their import business. But usually they sell the coffee in the domestic market at a high price, because export coffee is highly sought after in the domestic market. Then those opportunistic businesses disappear after making a big profit. The Authority has raised the capital requirement to avoid this kind of misconduct,” said an official at the Authority.