Now that’s what I call Tea Trading….Somalia

August 17, 2005

Now that’s what I call Tea Trading….Somalia

(this is a tea grind I got really sucked into writing - long but it gets there in the end)

I went to the weekly auction yesterday - quiet markets and the main buyer took 50% of offerings as usual - I marked my prices - got my quantities when required - shook some hands and sorted some private company business here and there between catalogues.

Time slipped by, midday rolled around then it was back to the office to do the reporting - traffic was a complete bitch as usual - you don’t want to watch but you can’t take your eyes off it - I wasn’t driving - but you see things happen ahead and worry that the driver, Hendro, hasn’t registered the same - far too ancient cars pulling out of nowhere, vicious undercutting death buses, stuntmen wannabe motorbikes trying to make the gap and always the little men pulling along food carts or just piles of unwanted crap holding up traffic going up a hill - we get back in the end - not so much pressure on speed - with the time difference to most of the places begging for the auction results, they’re just starting work by the time we get back anyway.

That’s a quality thing about working in Asia - quiet mornings - the people wanting to buy what we are selling are all in bed when I start work - Russia is brewing around 11ish, just before lunch the Middle East and Pakistan are buzzing, just after lunch Europe comes online and our office in Toronto works while we sleep - you get a head start to take the day in - drink your tea - surf the net - read the news - send friends some emails - do a bit of blogging - mess about with the fantasy league football team - Hanh usually comes on yahoo for a bit:

Hanh: you said you would send CD’s and Harry Potter by the 15th

Me: what day is it?

Hanh: 15th! stupid man - always forget dates - why can you not remember?

Me: I just figure if it is important enough someone will remind me

Hanh: I am reminding you

Me: yeah thanks - but I don’t think I have enough time to honour my promise now its actually the 15th

Hanh: you cannot tell time either

Me: I’ve always said that digital clocks were evolution, I don’t know why they aren’t the standard

Hanh: lazy man

Me: that’s rich coming from the incredible sleeping woman

Hanh: rich? means wealth?

Me: Too early for lingo exchange… maybe later

Hanh: Drunk man last night again

Me: guilty

Then the tasting of a few batches (40 cups of tea at a time), make a few blends (mix samples in proportion to actual stocks), chase some freight rates (selling C+F making 3-4cts per kilo means best freight rates and accurate packing are very important), argue with producers about price and then for buyers we make up excuses - or rather elaborate lies - to explain why things haven’t happened as they should - so often the case working in such countries as this:

The bags didn’t arrive because no one got the fax as the producers machine is broken and no one noticed = we were not satisfied with the quality of the packing so ordered it to be redone with better material to ensure no damage occurred to your tea during shipment.

The rates changed and the guy quoting the original won’t take responsibility for his verbal agreement so we have to delay while finding the original price elsewhere = we decided to go with another shipper as we saw the original container had holes in the roof - we have now found a more reliable shipper but the better quality comes at a different price - we will bear this cost and apologise for the delay.

The truck was delayed because the driver got drunk, slept in the next day and the prostitute stole his wallet so he had to go and find her to get it back so then the container missed the connecting vessel = Truck crashed - I wasn’t driving damn it - these things happen - live with it - it’s only tea.

In Vietnam I was working on my own as far as my company went - get the job done and expand the business - make some money while doing it - set things up basically.

This allowed for a lot of elaborate bending of the truth when you are the only one that really knows the situation - it was very entertaining if stressful work at times - we would sell a certain standard and then the producer would either try and change the contract, sell elsewhere at a higher price or simply fail to deliver what was agreed - we’d already made promises to our buyer that we had things under control - they have schedules in place - so we would just go out and find something similar from another producer and ship that instead, telling them it was the same producer they agreed on.

You’d think they’d notice a different company on the doc’s but Vietnamese names are absoloute goobledigook when it comes down to it - they tend to blend into each other unless you pay attention.

Of course you couldn’t always get the replacement tea at the same price as the original producer was selling - market changes, sellers sense when you are in a fix and they can squeeze a few cents per kilo more, plus you may’ve just struck lucky the first time out and found a guy who didn’t realise the quality of what he had - so he sold at too cheap a price - this is where the trading side really kicks in and can be a rush when working in countries that don’t really have access to info on markets elsewhere in the world - of course when your little secret goldmine collapses and they fail to deliver you’re a bit fucked after agreeing a price with your buyer already - so you do juggling deals with the new replacement guy.

Tri and I loved Juggling deals - its when the replacement producer agrees to sell you the std at the price of the guy that bailed beforehand, but you have to then sign contracts for quantities of other grades at higher than market prices to make up for the loss he is taking on the std you really need. Problem is that you haven’t sold these other grades yet - so then the chase starts to get rid of this extra quantity you’ve committed to but at least you’ve rescued the first deal as now the invoice reads right:

For example - we buy 24000kgs of a std from Ha Hoa Ngyuen @49cts per kilo- they realise they can sell for higher at time of delivery so sell to another buyer - our buyer wants their delivery @49cts - we buy similar std to replace from anothe producer called Thai Bach Trung but their price is @55cts - we agree to buy two more conatiners at higher prices than market from them if Thai Bach Trung reduces price from 55cts to 49cts - we ship the replacement @49cts and buyer is none the wiser - we then have to sell two containers of tea we haven’t actually sold yet before anyone finds out.

(we would predominantly sell to our own offices who would pay against the invoice from the producer direct - we didn’t have an official office in Vietnam - we had a partnership with another commodity trading rep office - in fact if anyone was to ask why I was there it was due to studying purposes as I wasn’t on the books of the rep office we worked with - I was an undercover tea trader)

Working on your own you jump around on hot coals juggling all these different missions and tangling yourself up in a web of lies - then boom goes the dynamite - you catch a break and find a sucker who pays too much for the grades you aren’t supposed to be carrying and the stressful seas are calm once again.

Whole time the people back in the head office don’t know any of this is happening - as far as they are concerned you shipped the original standard and then later on sold some more tea - little idea that at one time or another they were actually committed to all this unsold tea at inflated prices that came around because we got fucked by some little guy who promised the moon and gave us cheese - so we had to beg elsewhere and the man who helped us had conditions of rescue.

But this pales into comparison to tea trading in Somalia.

Somalia has always fascinated me since reading Black Hawk Down by Mark Bowden - a book that grabbed me by the throat from the first page and proceeded to drag me through to its finish while my eyes bulged, my heart raced and I gasped for breath - it was a rush reading that book - they did their best to catch it on film, but it the book still paper-cuts like a literary ninja who has a much sharper blade than the average movie bear.

A lawless country with no government run by warlords and no intl banking system - but people still do business - they still drink tea - and they don’t grow it - so someone’s gotta sell it to them. God damn it. (for the movie poster soundbite)

After the auction I talked with another trader about the business they do in that forgotten part of the world - he works for a company that sells teabags and loose leaf blended and packed in Sri Lanka and then sold throughout the Middle East and Africa - His company does business with Somali entrepreneurs who live on the sharp edge of trading and operate for 2-3 month periods, make a bundle of cash and then move onto something else. They buy Indonesian fluff and ship to Africa.

The Somali tea market more or less is based around the cheap, light, easy to transport fluff and fibre that is a by-product of the actual tea making malarky - if you look at the veins of a tea leaf then once processed that comes out as fibre - and this can be extracted and sold. The two advantages of this type of tea are that:

1) It is very easy to carry - once purchased at the markets pp/pe bags containing 30kgs can be carted off on donkeys or on folks walking back to their villages (the average sack of black tea contains 60kgs and sells for triple the price)

2) Due to the absorbing nature of the fluff it goes a long way when brewed - like if you had a tea filled sponge and gave it a squeeze every time you needed a cup.

Of course Fibre is also cheaper than main grade tea and therefore very popular in the local markets of tea producing countries like Indonesia, India and countries in Southern and Eastern parts of Africa whose populations generally don’t have two coins to rub together. This means despite being cheap there isn’t an abundance of availability (I do like that word “abundance")

So this means Somali traders duck and dive around the globe doing their best to get quantity and push deals to conclusion - usually doing it via the back door - meaning that who ever deals with them won’t just get a great sales record for their company, they may very well end up with surprise new car on the sly.

Also doing business is hassle free apart from the money issue - quality of product and packing is not a problem - they are just pleasesd to see something drinkable turn up - also there is no complicated documentation or testing process to undergo - just ship it (my mantra in Vietnam).

To do business internationally the Somali traders have to accept 100% bank transfers before shipment (or, after a while, 30% and then the rest to get the documents of ownership) - but of course its not like you can go to your local HSBC branch in Somalia - there aren’t any international banks - so Somali traders have to make CASH deposits at a recognised bank in neighbouring Djibouti - and then the teas will be shipped to the port city of the same name and transported into Somalia.

But of course for the trader to get the cash to the bank across the border and then the tea back from the port to home, they are going to need some serious back up to make sure they make it in one piece - back up with big fuck off guns rather than simple harsh language and disconcerting stares - the kind of money being carried would see you right in Africa for a califragafuckinglistically long time - so the traders hire themselves armed security and make the journey to the border and back - the average 40ft HC container of Indonesian Fluff would probably cost somewhere in the region of $15-18000 - and if you are going to go through all this you don’t buy just one container - so chances are these guys are taking a fairly hazardous journey in a permanant nervous disposition - especially if they are coming from Mogadishu, the ramshackle dangerfuelled capital which is about 2000km from Djibouti.

When I was in Malawi I ended up trucking to the port of Beira in the Mozambique adventure - Lewis, the truck driver, would not travel at night in case of robbers hiding in the bushes at the bottom of hills who would then jumping on the struggling truck as it made its way up the slope - they would be after the documents of ownership for the container on board. Can only imagine what goes on in Somalia when word gets about a man with a suitcase of $50,000 is on his way to the border.

In the city of Mombassa, Kenya, these Somali traders make the journey and turn up in tea traders offices with suitcases full of cash to make the deals for documents of ownership of teas arrived at port - like something out of a Mafia movie, the guards come with them - except there’s no cocaine or knocked off fur coats being bought - just tea - plain old tea.

The best part for these guys must be the buzz at the end of it - the truck arrives home - sacks of tea distributed to local sellers - money will be counted in good time - but that exhale of breath - all the travel to foreign countries, set the deals up, the orgainising of the cash, the security, the journey to the border, the bank desposit, the clearing of doc’s and then trucking the tea back along the same trail - getting to the end and knowing you are a lot richer and nothing went wrong - and you did it with no safety net at all - no laws, no insurance, no police, no customs - all your own gig.

What a rush that’s gotta be.

Somalia profile

Somalia time line

BBC world: Holidays in the danger zone

Spo | August 17, 2005