Draft Bill Axes-out Brokers’ Role From Exportable Livestock Supply Chain

A directive on the desk of Trade Minister Gebremeskel Challa proposes to bar the participation of any brokers or intermediaries in a livestock export industry beleaguered by widespread contraband trade.

The draft from experts at the Ministry of Trade and Regional Integration seeks to limit the sources for exportable livestock to farmers, fatteners (ranch owners), and cooperatives. It also stipulates exporters must hold valid contracts with suppliers. The contracts must be signed in the presence of at least three witnesses, one of whom must be a representative of the Ministry, according to the draft.

Farmers are exempt from rules mandating licensing but ranches and cooperatives will always require a permit and necessary documents to enter into an agreement with an exporter. Prices stipulated in a contract can be amended based on concrete evidence.

The directive calls for the establishment of local technical committees to oversee livestock trade. These committees will be responsible for granting approval for the transportation of livestock.

If more than six percent of the livestock slated for export under a contract fail to meet standards, the supplier can pay due taxes and sell the animals in the domestic market instead. The exporter is obliged to slaughter livestock within 48 hours of receiving from suppliers. An exporter processing meat within a leased slaughterhouse must also deposit 10 percent of the animal’s value in a blocked account.

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Livestock export prices are to be determined weekly based on updates from the Central Statistics Service, export data, data from international market centers, and weekly updates from local livestock centers.

Local committees and task forces are charged with accommodating complaints related to contracts, exports, and quality control. Fraud will be punished with license suspension, according to the directive.

Exporters, Agriculture Ministry officials, and experts from the Livestock Development Institute held discussions on the draft this week.

Asrat Tera (PhD), director of the Institute, noted that despite having the largest livestock population in Africa, Ethiopia has been unable to benefit from livestock exports due to the lack of a standardized domestic market chain.

The livestock sector contributes four percent to GDP, and 26 percent to the agriculture sector, according to government data. Ethiopia’s export revenues from livestock have been meager despite the availability of abattoirs and processing facilities with a capacity to accommodate more than 200,000 tons a year. Many of these facilities are either closed or operating at minimal capacity.

Officials hope to see the directive play a role in straightening up a market dominated by illicit trade and scavenger brokers. But exporters fear the new rules will worsen the situation. They say it could exacerbate the problems in a market already plagued by alleged artificial price inflation which is already forcing them to export meat at a loss.

“We fear the directive will force suppliers to cease selling export animals t

“we fear the directive will force the suppliers to stop supplying export animals to legal exporters, and instead, supply to people who smuggle out live animals through borders to neighbor countries,” said an exporter, who spoke to The Reporter on the condition of anonymity. “The brokers, intermediaries and smugglers calculate the livestock price based on the unofficial exchange rate of dollar. They get higher price by smuggling out the export animals to neighbor countries. Therefore, if the Ethiopian government start determining the export livestock animal prices reasonably, we suspect the local suppliers might prefer the underground market.” According to the exporters, government must also close all routes and means of livestock contraband, if the directive has to be effective.

Some assessments indicate neighbor countries generate more revenue by exporting livestock animals smuggled out of Ethiopia, than Ethiopia.