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Commercial Reports
Source: U. S. Department of Commerce - National Trade Data Bank, March 1, 2000 1. Favorable climatic conditions in Ethiopia permit the growth of a wide variety of horticultural products. Although most of Ethiopia's fruits and vegetables are grown for local consumption, there are three categories of exports as well. Low value fruits and vegetables grown on small private farms in eastern Ethiopia are exported directly to Djibouti through Dire Dawa by train. These fruits include oranges, mangoes, lemons, guava, papaya, grapefruit, pineapple and banana. Local vegetables exported to Djibouti include beans, asparagus, sweet pepper, okra, garlic, avocado, and green chilly. 2. Ethiopia also sells some processed fruits and vegetables to Yemen, Saudi Arabia, and other middle east countries. The two most important products are oranges (as canned and bottled orange juice) and tomatoes (as ketchup, tomato paste, and tomato concentrate). The inadequate and irregular supply of imported packaging materials is a major constraint in this area. The most important fruit and vegetable exports from Ethiopia, however, are the high value fresh produce grown on mainly state plantations and sold primarily to Europe. ------------------------------------- 3. Most of these fresh products are sold to Europe through the government-owned Ethiopian fruit and vegetable marketing enterprise -- ETFRUIT. ETFRUIT collects the fruits and vegetables from several state plantations and large private farms, transports it to the airport in refrigerated trucks, and ships it by air to Germany, the Netherlands, and Italy. The major exports are green beans, tomatoes, mangoes, and papayas. 4. According to acting general manager Tewolde Teklu, the primary supplier of fresh fruits and processed products for ETFRUIT is the Upper Awash Agro-Industrial Enterprise. Eestablished in 1980, Upper Awash was the first modern commercial horticulture farm in the country. It consists of 7,500 hectares and is by far the largest producer of citrus fruit in the country. Over one-third of all the exports marketed through ETFRUIT originate from this plantation. In addition, ETFRUIT sells vegetables, fruit and flowers from the state-owned Horticulture Development Enterprise (HDE), which consists of several farms in Ziway, Gibe, Dire Dawa, and Holeta. ETFRUIT is the principle agent for one large private plantation as well -- Ethio Flora. ------------------------ 5. ETFRUIT has 282 permanent workers but hires an additional 200-400 casual laborers during certain harvesting seasons. The company has outlets in most large towns, including Dessie, Dire Dawa, Nazaret, Bahr Dar, Mekele, Asela, Shashemene, and Debre Zeit. In Addis Ababa ETFRUIT has three main branch offices, twenty-one retail outlets, and more than thirty mobile stands selling its fruits and vegetables. The enterprise owns a small fleet of refrigerated and non-refrigerated trucks, several warehouses, and its own supply of packing materials. Tewolde said the privatization agency is conducting a study to determine whether to sell ETFRUIT. According to Tewolde, the company has been profitable every year since its establishment except for a small operating loss in 1998. --------------- 6. Ethiopia's exports of fruits and vegetables have been growing slowly over the last 15 years. From 1984 to 1998, the quantity of exports increased from 9,881 metric tons to 17,011 metric tons and the value of exports from just over 6 million birr to 31.5 million birr (the current exchange rate is 8.13 birr per dollar.) Of this amount, 19.1 million birr was exported to the Netherlands, 6.8 million to Germany, and 4.6 million to Italy. ETFRUIT increased its domestic sales from 19,374 metric tons in 1980 to 49,526 metric tons in 1998, an increase in value from 12.8 million birr to 106.6 million birr. - Fruit and Vegetable Exports - 1984/85-1997/98 Year Quantity Value -- (in tons) (in '000 birr) ------------------------------------------- 1984/85 9881 n/a 1985/86 9228 6,027 1986/87 12,075 12,847 1987/88 l0,895 11,787 1988/89 10,187 8,999 1989/90 8645 4,068 1990/91 12,960 12,001 1991/92 7,194 6,399 1992/93 6,051 2,729 1993/94 15,844 6,109 1994/95 19,485 18,370 1995/96 18,906 21,029 1996/97 21,834 45,793 1997/98 17,011 31,479 7. Tsegaye Abebe, general manager of Ethio Flora, the foremost private producer of export-quality fruits and vegetables in Ethiopia, told econ/com officer that his company exported strawberries, papaya, mangoes, and carnations this year for the first time. Tsegaye is pleased to hire ETFRUIT as his distribution agent because it transports the goods in refrigerated trucks and handles all customs and phyto-sanitary clearance procedures on his behalf. As marketing agent, ETFRUIT helps introduce Ethio Flora products to new European firms. on several occasions, ETFRUIT has paid the freight costs for Ethio Flora up front to ensure an uninterrupted sales flow. By working through ETFRUIT, Tsegaye said he avoids the extensive paperwork and can concentrate on running the farm. In return, Ethio Flora pays ETFRUIT 2.2pct of gross sales for its services. --------------------------------- 8. Tsegaye said it was preferable to use charter flights to transport the produce to Europe when possible. Even though they are more expensive, the cargo space on a charter flight is larger than on a passenger plane and can be reserved solely for company use. When necessary, Ethio Flora will buy space on Lufthansa (which flies to Frankfurt three times a week). He said Lufthansa is reliable and will provide the 6-8 tons of contracted cargo space whereas Ethiopian Airlines (EAL) may take less cargo than promised if required by their passengers. As a result, horticulture exporters leave EAL cargo holds on passenger planes to Meskel Flowers, which leases permanent space for three tons on each flight (reftel). 9. The number of charter flights to Europe has risen from once a week several years ago to 7-8 per week at present. ETFRUIT charters 1-2 flights a week to Frankfurt and 3-4 flights a week to Ostend (EAL is not allowed to fly to Amsterdam because Ethiopia denies permission for KLM to fly into Addis Ababa). Zewai Farm, established jointly with an Italian firm, flies mainly to Rome on Alitalia. Tsegaye noted that EAL's Boeing 757 cargo planes hold only 34-36 tons so the amount of produce that can be flown to market is limited. Ethiopia needs greater capacity and more frequent flights. (note: for this purpose, embassy is encouraging the purchase of additional Boeing aircraft.) 10. Tsegaye also complained about the expense of chartering an aircraft. When exporters tried to negotiate a lower rate from Ethiopian Airlines because of the increasing volume, EAL actually raised the price last year from $41,000 per charter flight to $53,280. Transport charges consume 80% of the entire cost of growing and exporting fruits and vegetables in Ethiopia, Tsegaye said. Ethiopia should loosen regulations prohibiting private investment in aircraft with cargo capacity over 2700 kilograms. Competition in freight transport will improve service and frequency of flights and lower the price. The cargo business is also hampered by the inability of a Boeing 747 or the larger airbus to utilize Ethiopia's high elevation airport, he noted. (note: The completion of a new, longer runway at Bole International Airport in the next year should allow these heavier planes to take off from Addis Ababa.) --------------------------------------- 11. In recent years, new private growers have started exporting vegetables to the middle east and Europe outside of ETFRUIT's marketing channels. The share of these private exports is still quite low -- less than ten percent of the total value of Ethiopia's fruit and vegetable exports. One company, Meskel Flowers, began exporting green beans to Europe to complement its sale of roses. Among the over 300 investment licenses acquired for commercial farming in the last five years are a dozen projects in fruit and vegetable production. One large firm, Dinsho Agro-Industries, is growing green beans on a 125-hectare farm near Debre Zeit and plans to sell 940 metric tons to the Netherlands this year. The company will be expanding this farm to 500 hectares soon and joining an Israeli firm to produce tomatoes, green peppers, and eggplant on a new farm in Zewai. Transport problems and expense have taken a toll on the export plans of other firms, however. Several companies that exported vegetables in 1997 -- Tepo, Valley, Abuna, Kabi -- produced only for the domestic market in 1999. These companies would be prepared to re-enter the export market with a reduction in cargo costs. 12. With the variety of altitudes and microclimates, and the long growing season and accessible irrigation sources in Ethiopia, anything can grow well here. In fact, nearly every fruit and vegetable is already available locally. The mystery is why there is not more fresh fruit and vegetable processing. Embassy encourages U.S. companies with experience in agro-processing to consider investing in this sector. |