Page last updated at 17:33 GMT, Wednesday, 25 March 2009

Ethiopia revokes coffee licences

Coffee beans
Coffee earns Ethiopia more than half a billion dollars annually in exports

The Ethiopian government has revoked the licences of six of the country's main coffee exporters, accusing them of hoarding supplies.

It also confiscated 17,000 tonnes of stock of around 80 other traders, saying it would auction the coffee.

The government has been concerned about low foreign sales of coffee, which is Ethiopia's most valuable export crop.

The BBC's Elizabeth Blunt, in Addis Ababa, says hoarding is only one of the factors affecting the coffee trade.

The market has also been affected by poor harvests and reduced demand from overseas because of the global financial crisis.

Agriculture Minister Tefera Derebew told the BBC: "They're expected to export the coffee that has been produced the last harvesting period, but they still halt the production of such harvest.

"They have been advised by the government to do so but they didn't react so it's the time to take action."

'Cut off hands'

In January, Prime Minister Meles Zenawi threatened - presumably in jest, our correspondent says - to cut off exporters' hands if they continued hoarding stocks in the hope of better prices.

Some exporters have been reluctant to sell stocks through the new electronic Ethiopian Commodity Exchange, which began trading coffee in December.

The system is unpopular with traders as it does not yet allow the separation of speciality and organic coffees.

These have to be mixed in with the rest and can no longer be sold to top-end buyers for premium prices.

Coffee is Ethiopia's largest source of foreign exchange and it earns more than half a billion dollars annually from exports of arabica beans.

It is Africa's biggest coffee producer and prides itself as the birthplace of the bean.

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