By Natnael Fite @NatieFit
Addis Abeba – Kahat farmers and traders in Hararghe, Oromia complained that they are being forced to leave the export market as the government has entered the export market through its own agencies. Traders who spoke to Addis Standard said the traders who were organized under an association called Biftu Baha Oromia two years ago are being tactically pushed out from the market as the illegal controllers and the government have put their own people in the market.
An anonymous source told Addis Standard that farmers and traders under the Biftu Baha Oromia Association are being taken out of the market due to pressure from illegal traders, supported by people in government structures. “From the very beginning, farmers are not benefiting from the khat business. Now, organized farmers who have entered the khat trade are facing various pressures. The illegal traders who are controlling the khat market are tactically reducing the price of one kilo of khat that was previously exported at ten dollars to five dollars and destroying the farmers’ benefits. These guys make the price of khat drop to $5, they sell it for $20 and $30 after it leaves the country and report back to the government as if they sold it for $5 and get the rest of the money illegally. It is only the farmer who is suffering because of this,” he said.
The Biftu Baha Oromia Association (literally translating into the Eastern Sunshine of Oromia Association) was established two years ago by more than 500 traders, including farmers, with a capital of 24 million ETB, however, it is currently being pushed out of the market due to various pressures, the traders have said.
Kebede [name changed for security concern], a trader and member of the Biftu Baha Oromia association, told Addis Standard, “The khat trade is the basis of livelihood of millions of people in Hararghe but the farmers have not benefited from its production, as it has been controlled by military generals for many years. At that time, the demand raised by the people was to become the owner of the khat trade. After the change of government, the Oromia Regional State government provided opportunities for farmers to enter the khat trade. And our association was the only one that met the required conditions and entered the market,” he said.
However, while the association was making efforts to export khat products to Somalia after air transportation resumed following the outbreak of Covid-19 stabilizing, it was affected by the entry of traders called ‘Surah’, who had been the sole controller of the market in Somaliland for many years, he said. “Previously, farmers had no other options and would sell their produce at low prices to powerful traders who would take it out of the country and sell it at higher prices. We entered the market to spare it and help our farmers to be able to benefit from its product by becoming the owner of the market. We went to Somalia and spoke to former President Mohamed Abdullahi (Farmaajo) and agreed with him to export khat products to Somalia. And we got a customer who would work with us but we could not get permission from the current Somali government after the first $400,000 was deposited into our bank account from our customer. The Surah traders began to obstruct us. Later, we asked the current Somali government and they told us that only Somaliland traders called ‘Surah’ can export khat to Somalia and we should work with them,” Kebede added.
“Yet they sell 1.2 kilograms of khat for fifteen dollars and report to the government as they sold it for five dollars and the rest goes out of the country illegally. We have been announcing that this will also harm the government. When the government increased the price to $10, they pressured the khat production to be smuggled out of the country to Somalia and Djibouti illegally and forced it to be sold back at five dollars. We continued to supply them khat because they are the sole controllers of the khat market and we have no other option,” he said, adding that on the second day of the return of the export price of khat to five dollars, a letter of suspension was written from the ‘Surah’ traders to them and they were replaced by a government company called Biftu Adugna, which is under the auspices of the Oromia Development Association.
He said that although they are currently focused on the Puntland market after being “pushed” out of the Mogadishu (Somalia) market, they still face other obstacles. “Immediately after we entered the Puntland market, there was another trader who was not in the khat business before and now the Oromia Regional State government has introduced him to the business, intentionally dropped the khat price which was previously being exported for $28 per 1.2 kilograms in Puntland to $4. He has his own plane, and so he transports the product by his own plane. But how can we continue to pay $5 per kilogram for khat to be airlifted and sold for $4? khat is being sold below the cost of production in Puntland to push those traders like us out of the market. We urge the government to immediately retract its hand from the khat trade and prosecute those who are illegally collecting money, at the expense of farmers,” he said.
Previously, the Ethiopian government announced that many improvements are being made in the marketing process to ensure that khat production generates good revenue. Among the changes made was an increase in the price of exported khat to Somalia from $5 to $10 per kilogram starting from January 15 this year.
Furthermore, the President of the Oromia Regional State, Shimelis Abdisa, told the Capital newspaper a few months ago, “We are working to improve the khat market which was being occupied by smugglers and reducing the benefits of the producers. We are working to push out those who operate illegally,” he said. He also said that the region is working hard to change the market and production of khat and is establishing khat marketing centers to modernize the market.
In a statement issued last May, the Ministry of Trade and Regional Integration announced the revocation of business licenses of 830 khat exporters for “illegal activities” including failure to renew business licenses and misuse of services. The action includes companies that are engaged in exporting khat products without renewing their export market business licenses and those that illegally transfer their khat export business licenses to third parties.
In addition, at a forum organized by the Ministry of Trade and Regional Integration to address the problems in the khat trade sector, it was stated that more than 30 million ETB worth of khat was seized while smuggling it out of the country in July this year alone. This was stated by Belay Hagos, head of the agriculture and products export trade desk, who said that from 2009 to 2013 (ALI) alone, more than 77 kilograms of Jima were seized while being smuggled out. AS