Ethiopia has experienced a drop in exports — estimated to be as much as 40 percent — and its foreign exchange reserves have dwindled.
“The coffee that was being exported, significantly it has been lessened this year, and in many warehouses we believe coffee is being stored,” said Meles.
“Those who are not providing their coffee to the market, according to the laws we have in this country . . . the government is going to sell the coffee. They have been given warning,” the premier said.
Ethiopia’s economy is coffee-dependent, with coffee accounting for about a third of exports. Last year, the country exported about $525 million worth of coffee.
Agricultural officials have said droughts in coffee-producing areas in 2008 reduced the crop, but did not say by how much.
Last week, the lack of foreign currency forced Coca-Cola bottler, East Africa Bottling Share Company, to suspend production for the first time since it was established in 1959.
Ethiopia is thought to be the place where coffee was first discovered, and the country has long been Africa’s biggest coffee producer, although Uganda threatens to overtake it.
Ethiopia threatens to sell exporters’ coffee stocks
ADDIS ABABA (Reuters) – Ethiopian Prime Minister Meles Zenawi threatened on Thursday to seize and sell coffee stocks being held by exporters who he accuses of hoarding.
Some exporters have been reluctant to sell their beans through the country’s new electronic commodity exchange, which began trading coffee in December, Meles told parliament.
“As a result, coffee export are significantly lower this year,” he said. “The government may be forced to take over stocks held in private warehouses and provide it to the market.”
Ethiopia prides itself as the birthplace of coffee. Some 15 million smallholder farmers grow the beans, mostly in the misty forested highlands of its western and southwestern regions.
The country is Africa’s biggest coffee producer.
The Ethiopian Commodity Exchange (ECX) was set up to replace a murky auction system that was often abused by market players.
In January, Meles issued a stern warning to exporters, threatening to “cut off their hands” if they did not sell stocks they were holding in the hope of better prices.
Coffee accounted for about 60 percent of the Horn of Africa nation’s foreign exchange revenue in the 2007/2008 (June/July) season, when it earned more than $525 million from exports of 170,888 tonnes of mostly high quality arabica beans.
In parliament on Thursday, Meles warned that the prices of other important Ethiopian export commodities — including sesame seeds and leather goods — had also fallen sharply in recent months.
He said the country’s foreign exchange reserves now stood at $850 million compared with a target of at least $1.2 billion. He said another reason for the reduction was increasing demand for hard currency to import goods like cement, steel and machinery.
