DMCC to Trade China’s Arabica
DMCC c.e.o. Gautam Sashittal, right
By Dan Bolton
In October China coffee producers in Yunnan signed a deal that will send 90% of their annual crop to Dubai for worldwide distribution.
The DMCC (Dubai Multi Commodities Center) agreement with Hong Kong-based Mega Capital Halal (MCH) will see exports of up to 140,000 metric tons of Chinese arabica beans from the Yunnan State Farms Group. DMCC is constructing a temperature-controlled 48,000 sq. ft. (4,500 m2) storage and warehousing facility with offices and co-location space.
The coffee center will be based on the highly successful DMCC Tea Center, which has enabled the UAE to become the largest re-exporter of tea in the world.
The agreement, signed by Timothy Chong, director, Mega Capital, Zhongua-Chi, general manager of Yunnan State Farms Group, and Gautam Sashittal, c.e.o. at DMCC, “is evidence of the deep links between China and Dubai, and the growing role the Dubai trade has in bringing our worlds closer.”
In prepared remarks Sashittal said that “China is Dubai’s number one trading partner… The relationships that we have cemented here will further underpin the role that DMCC is playing in boosting the commodities trade along the West to East corridor - connecting directly into China’s One Belt and One Road Initiative.”
In May Sultan Bin Saeed Al Mansouri, minister of economy, pledged his country’s support for expanded trade relations. “We are, and consider ourselves to be, one of the best positioned countries when it comes to the implementation of the Silk Road and Belt concept, simply because we have invested a lot in infrastructure; whether it’s in ports, airports, and road networks,” said Al Mansouri.
Chi Zhonghua said the agreement will ease access to the much-desired Middle Eastern market. The Middle East spends $6.5 billion annually on coffee, much of which is grown in Africa.
Ahmed Bin Sulayem, executive chairman of DMCC, said last spring that the distribution of African coffee presented trade opportunities.
“Market participants in Ethiopia were certainly receptive when we discussed it. They offered a lot of recommendations and suggestions,” he told STiR. “I feel that DMCC has gained enough confidence and trust from the market that people are confident this will progress into something more than where we are today in the coffee business,” he said.
DMCC may eventually apply to become an ICE licensed coffee port. There are no licensed ports in Africa, the nearest is Barcelona, Spain. “Dubai is a strong trading center, and it is a big magnet for commodity businesses. If we could do it for tea, we can definitely do it for coffee,” Bin Sulayem told STiR.
The UAE is a major consumer but has modest manufacturing capability. The country spent $545 million on coffee in 2015. There are 90 commercial coffee roasters serving 2,200 retail outlets. Coffee Planet, a chain of coffee shops and Dubai’s largest roaster, was founded in 2008. The company last year opened UAE’s largest roasting facility and now produces about 100 metric tons of coffee a month using beans from 22 countries. Shops are principally in the UAE but also Abu Dhabi and Pakistan.
In addition to coffee, trade agreements were signed with the Shanghai Gold Exchange and Agricultural Bank of China at the “Made for Trade. Together” forum in Shanghai.