In a bid to accelerate shipments and push exporters to ship, the Ministry of Trade is introducing a new 15% Tax on coffee that is held for over 12 months unshipped. Additionally, there will be penalties for “hoarding” coffee rather than shipping. This move is the latest attempt by the Government to increase exports and attract foreign exchange to sure up the local currency. For the last 6 months+ coffee shipments have fallen below expectations and potential, due to poor quality (of Natural Grade 5 Coffee) and high asking prices (particularly for Washed Coffee). Will this latest Government intervention have the desired effect? We somehow see this as a desperate move that may not have any tangible results, taxes do not improve quality!
May shipments will be published soon, our feeling is that these will once again disappoint; stocks in Addis continue high, warehouses are full of coffee that is stuck due to poor quality or priced out of the market. Coffee is not moving from upcountry to Addis due to the heavy rain that has been battering the country since March. This is a very atypical season, this time of the year is normally peak season for processing and shipping, however this year is far from normal!
Birr 54.33 = USD 1
Have a good weekend.