Agricultural authorities have backpedalled on a decision to raise the minimum price threshold for horticultural products exported to Djibouti nearly fivefold.

It is the second trade policy reversal federal officials made last month. Trade Minister Gebremeskel Chala had also rescinded an earlier decision to double the minimum price threshold for khat exported to Somalia.

Sofia Kassa (PhD), a state minister for Agriculture, instructed the threshold for fruits and vegetable exports to the neighbouring country to return to its previous level of 0.22 dollars a kilo. Her decision came after Djiboutian authorities lodged complaints.

Djibouti is a major export destination for Ethiopia’s fruits and vegetables, accounting for over 70pc shipments. Close to 210,000tn of the horticultural products were sold last year, generating 87 million dollars. Tomato, strawberry, and cabbage are the top commodities.

The earnings constitute less than three percent of revenues generated from the export of agricultural commodities, which accounted for nearly three-quarters of 4.1billion dollars last year. Although revenues from the export of fruits and vegetables jumped by 43pc compared to the previous year, officials say the market is plagued with illicit practices such as over-invoicing.

Anticipating an increase in earnings, the authorities raised the minimum price threshold to close to a dollar last January. The decision came a month after a delegation comprising dozens of exporters led by Tewodros Zewdie, head of the Ethiopian Horticulture Producer Exporters Association (EHPEA), visited Djibouti to forge deals and boost export volumes.

Setting prices unilaterally without consulting buyers and exporters goes against international trade norms, argues Michael T. Sinshaw, international commerce expert and researcher.

“A price set through this approach doesn’t usually reflect the true price of the commodities buyers and sellers would agree on,” he said.

The expert advises the government to ease draconian price control measures, which are at odds with the free flow of goods and services.

Eshetu Abraham, a horticultural expert at the Ministry of Agriculture, says the decision to raise prices came after a study conducted in Dire Dawa to assess market and price trends. However, exporters argue raising prices puts more pressure on supply chains, which were already experiencing high price volatility due to the perishable nature of the products.

Based in Dire Dawa, S&D Plc has been selling fruits and vegetables to buyers in Djibouti for the last 10 years. Abdurahman Hassen, the general manager, believes more foreign currency could have been generated if the price threshold had not been increased. His company would export up to 20tn a week.

“We stopped shipping for two months after the price increase,” said Abdurahman. “Businesses [in Djibouti] stopped placing orders.”