Trade officials have added six commodities under the contract farming scheme, hoping to fight what they say is “rampant” under-invoicing and hoarding practices. Officials hope to boost export revenues through the reclassification.

The addition includes niger seeds, groundnut and chickpeas. Gemechis Melaku, executive director of export trade at the Ministry of Trade & Regional Integration (MoTRI), believes the decision will encourage farmers to expand a demand-driven farming system.

“It’ll help the government control under-invoicing and hoarding,” he toldFortune.

A few commodities, such as oilseeds, sugarcane, and barley, were eligible for contract farming. However, trade officials suspended contract farming for sesame (part of the scheme since 2019) last year, alleging widespread illicit activities. Authorities claimed to have seized a 60,000tns of cash crops stashed in warehouses belonging to 105 exporters, who had to ship them in a month. The Trade Ministry regulates the domestic trade and export of sesame and pulses.

The oilseeds and pulses exports generated 477 million dollars last year. Trade Minister Gebremeskel Chala and his deputies have forecasted revenues of close to 600 million dollars this year.

Sourcing export commodities from the domestic market has challenged agro-processing industries and exporters. They are forced to buy the commodities at higher prices or default on their contracts.

Incorporated seven years ago with a registered capital of four million Birr, Hamam Commercial & Industrial Plc has been exporting cereals and oilseeds. It sources most export items from farmers in the Amhara and Gambela regional states.

“We buy from farmers at prices higher than those offered at the Ethiopian Commodity Exchange,” said Abebaw Tadesse, the general manager.

Hamam Commercial earned seven million dollars last year, shipping 7,000tns to China, Japan, and Europe.

Other exporters have chosen to cut down shipments to get by.

Ademe Mekonnen Export Plc annually ships up to 1,500tns of cereal and oilseeds to Israel and China. Established in 2009 with four million Birr capital, the company used to source cash crops from the Ethiopian Commodity Exchange (ECX). However, it has been unable to receive sufficient quantities, disclosed Mehatemie Memhir, export manager.

Shortages in the domestic market have reduced the company’s export volumes by more than a quarter. Last year, it shipped 1,500tns of cereals and oilseeds, generating nearly three million dollars. Mehatemie says the company stopped exporting niger seed two years ago.