Authorities Deploy Coffee Tracking System to Fight Theft

Authorities Deploy Coffee Tracking System to Fight Theft

May 7 , 2022. By BERSABEH GEBRE ( FORTUNE STAFF WRITER )

Officials of the Ethiopian Coffee & Tea Authority (ECTA) have deployed a tracking system to monitor the transport of coffee through the increasingly popular vertical integration scheme. They hope the measure can effectively deter what industry insiders say is growing theft, causing a five-million-dollar annual loss.

The tracking system allows the Authority's administrators to follow up on shipments from beans at the primary coffee transaction posts to processing centres. It registers and monitors the volume and type of coffee, the exporter, and the truck's plate number transporting the cash crop to the ports. Officials say the system is designed to combat the pilfering of coffee, known as "Kisheba", an illegal practice where beans are taken off of trucks while in transit.

The Authority experimented with the tracking system beginning last September before launching it two months ago.

“It's designed to track the coffee's footprints from primary coffee transaction centres to the final export destinations,” said Shafi Umer, deputy director-general of the Authority.

The German cooperative agency, GIZ, has financially supported the initiative while the Authority contributed 700,000 Br. GIZ has been engaged in the coffee industry under its Partnerships for Forests (P4F) project with a total budget of 1.82 million dollars.

In 2017, the Authority introduced a system that enables exporters to buy coffee directly from suppliers outside the Ethiopian Commodity Exchange (ECX) floors, a system industry insiders call vertical integration. The scheme took off three years later, accounting for half of the 248,000tn Ethiopia exported last year. Under vertical integration, the coffee bought from farmers is stored at first-level transaction centres before transported to coffee processing facilities. The beans go to quality inspection and certification centres before shipment.

The system has thus far been integrated into primary transaction centres in 13 major towns and cities. Centre supervisors are compelled to provide reports on any coffee they receive for processing, including details such as volume and type, through email.

“This allows officials at the headquarters to verify whether the shipment has been tampered with,” said Shafi, whose office is on Ras Mekonnen Avenue (near Mexico Square).

Over 100 coffee processing centres have yet to see the tracking system deployed.

“They'll be integrated in the coming months,” said Shafi.

The Authority monitors cargo trucks through six checkpoints selected based on prominence along major trade corridors. Its officials do this using 100 electronic tablets provided by the Ministry of Agriculture. The tracking system grants officials access to real-time information across the complex value chain, which involves smallholder farmers, suppliers, processors, cooperatives unions, transporters, exporters, and various government institutions such as the ECX and the Authority.

Industry insiders fear the involvement of many actors leaving the coffee trade vulnerable to risks that could compromise quality, reduce margins, and even spoil the carefully-tended image of Ethiopia's coffee in overseas markets. Theft is among the most severe risks, often occurring while the coffee is in transit. Previous experiences demonstrate that disruptions can have far-reaching consequences. In 2008, Japan, one of the largest buyers of coffee from Ethiopia, banned shipments for two years over quality issues.

Coffee exports generated a little over 900 million dollars last year, the highest ever.

Sewale Abate (PhD), lecturer of finance and investment at Addis Abeba University, argues the recent success is not the result of high performance on Ethiopia's side.

"Rather, the supply shortage from major producing countries observed in the international market is driving demand for Ethiopia's coffee," Sewale said.

Over the last nine months, 210,000tn of the cash crop was shipped abroad, generating 894 million dollars.

"Unless Ethiopia improves the quality of coffee quickly, the country will lose big when the global market returns to normalcy," said Sewale.

Theft has been a growing concern for officials.

“We've apprehended drivers tampering with coffee shipments,” said Shafi. “Law enforcement agencies are investigating the cases."

Industry players attest that the practice has been intensifying since 2018. Major exporters such as Testi, Tracon, Abahawa, and the Sidama Coffee Farmers Cooperative Union are among the exporters that have reported incidences of coffee theft in recent years.

“There's always a loss when coffee is transported from primary transaction centres to processing facilities,” said Bereket Reese, general manager of Civet Coffee International Trading Enterprise. Incorporated 15 years ago, the Enterprise exports 1.5 million dollars worth of coffee abroad annually.

Bereket says that exporters' inability to provide evidence of the crimes has encouraged more theft. Officials disclosed to Fortune that cases involving stolen coffee worth more than five million dollars are reported to authorities each year.

Gizat Worku, general manager of the Ethiopian Coffee Exporters Association, says the quality of coffee exported from Ethiopia is becoming a major concern.

“It's a serious problem that needs government attention," he said.

Experts observe the country has not been able to capitalise effectively on the coffee export trade due to a lack of mechanisms to ensure the traceability of beans. In the coffee export business, lost identity means lost value. A study conducted by a Canadian University in 2016 revealed that diminished traceability reduces coffee export prices by at least 12pc.

PUBLISHED ON May 07,2022 [ VOL 23 , NO 1149]

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