Growing coffee isn’t among the fortes of the toast of the United Arab Emirate, Dubai, yet the Dubai Multi Commodity Centre (DMCC) handles about 20,000 tons of green beans annually with an estimated annual trade value of $100 million.
Building on the capacity of its functional trading framework, the Middle East’s love of coffee and the region’s historic trade links, the city is jostling for a seat right at the centre of the world’s leading coffee supply chains.
It’s not expending excessive energy on racing with Brazil, Mexico, China or Ethiopia for a slice of global production of green beans; but it’s rooting for markets in roasting and extraction. And the structure of the DMCC enables this.
The DMCC Coffee Centre parades a world-class infrastructure and services for green bean storage, processing and delivery to precise specifications, bringing fully dedicated, temperature-controlled coffee storage to the Middle East region for the first time.
Coffee farmers, exporters, traders, roasters and retailers are no doubt beneficiaries of how the frameworks to facilitate trade links between the local market and the international community.
In 2016, for instance, the DMCC signed a major agreement with Yunnan State Farms, which produces 90 percent of all coffee grown in China – and its trading partner Mega Capital Halal Group.
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It was a win-win. The trade and processing of green coffee in Dubai got boost, while opening a major new trade route to bring China’s coffee.
Apart from the legal and regulatory frameworks entrenched, the Dubai authority led centre concerns itself with processing details of providing entrepreneurs with facilities with green coffee processing equipment for cleaning, de-stoning, blending and re-bagging of coffee.
In terms of speciality and commercial roasting, its facility currently houses two Brambati production roasters to accommodate the volume. Coffee members have access to sample and small batch roasters to create profiles of coffees in small batches of 50 grams to one kilogram. Members can equally access support for both inbound and outbound shipping of coffee to and from the United Arab Emirates.
Like coffee, the DMCC is doing the same with tea, gold and diamond exchange, acting as a midway between producers and consumers.
With a 60 percent share of the global market, the UAE is the world’s largest re-exporter of tea. The Dubai Gold and Commodity Exchange is the region’s largest and leading derivatives exchange, allowing global participants to trade, clear and settle transactions within the Gulf region.
Relying on its strong ties with producers in Africa, cutting centres in Asia and consumers in Europe, the Dubai Diamond Exchange trades seamlessly in diamond and coloured stones.
“That is a very interesting story because obviously we don’t grow a single kilogramme of coffee but we are the world’s largest re-exporter,” Sanjeev Dutta, executive director of Commodities and Financial Services, DMCC told BusinessDay during a recent visit to Dubai.
“We have recently inaugurated our coffee centre in February of this year. It is the largest green bean facility in the region and we anticipate will handle over 20 million kilogrammes of coffee in the first few years of operation.”
Nigeria has a handful of agricultural commodities which it has comparative advantage to produce but the government is yet to wake up to the reality of the greater value that could be tapped from devoting resources to develop processing and commercial trading centres.
Sesame seeds, cashew nuts, fermented cocoa beans and superior quality raw cocoa beans had a combined total export value of N210.2 billion in 2018, marking 69.5 percent of total agriculture exports in 2018, according to PricewaterhouseCoopers analysis.
Nigeria is the third largest producer of sesame seeds in the world after India and China and the largest in Africa with production capacity in excess of 1 500,000 metric tonnes as of 2017.
According to the National Cashew Association of Nigeria (NCAN), Nigeria ranks as the sixth largest producer of cashew nuts in the world with an average production capacity of 120,000 metric tons per annum.
Yet, the country has no centre dedicated to the trading of any of these commodities in particular. Whereas Dubai on the other is taking shots at commodities it does not even produce, building infrastructure for trade.
The findings of the Nigeria Export Promotion Council report in July 2018 further underscores how the country appears comfortable losing out on opportunities. The report highlighted top 10 markets with the highest untapped potential for exports of cashew kernels from Nigeria. The largest potential was found in Germany, the Netherlands and the United Kingdom among others. The total amount of estimated untapped potential up to 2021 for Nigerian exports towards these countries reaches $3.4 million.
For a government driving diversification of the economy away from oil to agriculture and other non-oil sectors, growing an efficient commodity exchange is crucial. The Dubai government established the DMCC in 2002, just a year after Nigeria’s Commodity Exchange came on stream.
The DMCC’s example shows the government has a business with ease of doing business and that developing specialised centres for its commodities can significantly raise agricultural exports above less than two percent of the total exports and 25 percent of the gross domestic product (GDP) for Nigeria. Also the DMCC’s position as the world’s largest re-exporter of tea points to the fact importation is not entirely negative if the focus is on production for greater value.
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