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The Government of Ethiopia took a non-existing flower sector and developed it into a USD 200 million export sector, creating more than 85,000 jobs. It now plans to do the same with the fruits and vegetables sector. Taking one step in that direction ‘The Ethiopian Fruits and Vegetables Investment Summit’, which will be held on July 19th 2012 at the Hilton Hotel is organized by the Ethiopian Horticulture Development Agency (EHDA), Ethiopia Horticulture Producer Exporters Association (EHPEA), the Embassy of Netherlands and Precise Consult International PLC (PCI). Capital’s Elias Gebreselassie talked to Haileselassie Tekie, director general of the Ethiopian Horticulture Development Agency about the significance of the sector to the Ethiopian economy and what is to be expected from it. Excerpts:
Capital: What do you see as a major challenge to the growth of the fruit and vegetable sector?
Haileselassie Tekie: The major challenges in initiating the fruit and vegetable investment in Ethiopia are, number one the logistical aspect of it, as you know we have a very serious logistical problem; number two the supply of planting materials. We’re importing planting materials and seeds from abroad, so these planting materials and seeds could be expensive and there are times that we can’t get the type of planting materials which have high value in the market. Another challenge is the linkage of commercial farmers regarding both development and markets. As you know we currently have very limited commercial investors particularly in vegetables and fruits areas. Those we have are concentrated very close to Addis, while we have a big potential in the other part of the country. Another challenge is, in the past we were not in the position to identify and delineate clear areas for the development of vegetables and fruits.
Capital: What results do you expect from the Ethiopian fruits and vegetables summit to be held next week?
Hailselassie: Because from the government side we have taken a series of measure to at least improve the challenges I stated, today we’re in a better position than before. To alleviate the problems we have worked hard on better logistics, especially in sea transport. There’s today a better arrangement that pushed the cost of transportation to a manageable level, subsidized by the government. The government also supported the cargo facility to capacitate Ethiopian Airlines. We are on our way to deploy additional Boeing 777 cargo flights which will be fully engaged in the transportation of vegetables and fruits to the international market. And concerning the land, which as I stated earlier was a challenge, we have very recently identified 50,000 hectares which will be allotted for the development of vegetables and fruits. This identified potential land is in the five development corridors and will have the opportunity to create better linkages with outgrowers and commercial farms. So having alleviated the challenges we have had in the past, from the aspect of logistics and transport facilities and also initiating the seed suppliers to have extra incentive packages in the country, we’re now expecting this international summit will clarify to the investors both local and international that the government is in a better situation today to support the vegetables and fruits sector. The message is: it is high time that foreign and local investors engage in vegetables and fruits sectors.
Where these investors will have extra advantage comparatively and competitively vis-à-vis the other countries investors? We can cite as an example our neighboring country Kenya where they don’t have a better investment policy like Ethiopia, where they don’t provide land for free like what we do. We’re expecting this international summit to be a good opportunity for the country and also for the investors, to be engaged in a time that the government is fully prepared with less bureaucracy and with good hospitality that will create all accessibilities to the investment.
Capital: How many companies do you expect to attend the summit, and what do you think is the need to have such summits?
Hailselassie: Basically, this is a unique type of arrangement that we have exercised in Ethiopia. We’re expecting over 150 companies both from abroad and relevant companies locally will be attending the summit. Most of the attendants are those involved in the market of agri-business of vegetables and fruits from the Middle East and Europe. We’re expecting that this will be a better showcase which will really demonstrate how far the government is prepared so far. There is conducive environment in Ethiopia today, for those wishing to invest.
Capital: The fruits and vegetables sector in Ethiopia still lags behind in exports compared with other items like Khat and livestock. What measures has your organization taken to alleviate the underperformance of this sector compared to other sectors?
Hailselassie: Yes, you’re right, the performance of the vegetable and fruits sector exports is not as such very significant, but it has recorded a significant change in the past two years, reaching annual exports of USD 45 million. This is over 100 percent achievement compared to the past but in comparison to Khat and exportable commodities, you are right, the performance of vegetables and fruits is still at a minimum level. This is because of the technology we’ve been using to boost the development of the sector and there was no delineated area identified by cluster with full facilities of infrastructures like roads, power supply and cool chain management and other things. Now since the establishment of the Ethiopian Horticulture Development Agency, we have been working hard to really support the development of the sector and the basic facilities coming with it are today in a better situation. That’s why you can see the sector is growing year by year although we’re not reaching the level of Khat and other commodities. There’s still a significant increment in revenue year by year. With this international summit we are expecting that additional potential investors will join the sector and in the years to come we’re expecting that the progress of the vegetables and fruits business will be faster.
Capital: How do you see the fruits and vegetables investment sector potential playing so far? And its potential vis-à-vis its practice?
Hailselassie: Basically, we have both comparative and competitive advantages for the development of the fruits and vegetables sector in Ethiopia, which has not yet been tapped fully. We have diverse agro-climatic situation for the development of a range of vegetables and fruits including those that can’t grow in other parts of the world because of suitable agro-climatic situation, we also have an advantage of proximity to the big market centers of the Middle East and Europe where we can transport our produces easily. We also have ample supply of underground and over ground waters, adequate labor supply, trainable, highly disciplined and less expensive. I would say that the entire arrangement, the favorable situation for development of vegetables and fruits that is improving year after year encourages the local investors, out growers and Foreign Direct Investment (FDI) as well. So I’m comfortable with the development trend and the attention that the government and other actors are paying to this sector which is improving year after year.
Capital: In terms of innovation with regards to high yield and disease resisting seeds, what’s your organization been doing?
Haileselassie : We believe that Ethiopian investors can be competitive in the international market if they can do the business in a right way. So we’ve been providing capacity building programs, referring international benchmarks where we had a thorough study of this business. Based on how neighboring countries are doing this, we’ve formulated a capacity building program with the benchmark approach. With this support, we’ve been providing continuous training, continuous support and innovation of different working styles to the private sector especially to the Ethiopian growers to use the technology in the right way. By doing this we noticed that in the past two years alone, the level of productivity and quality has improved significantly. There has been improvement of 30-40 percent than the baseline performance of the past, so this is one thing.
Another thing is as you know vegetables and fruits could be grown in two aspects either in greenhouse or in open field. In a green house production, natural calamities could be controlled or minimized. But in the case of open field, well, there is a risk where the development can be affected. So we’ve been advising the private sector on what type of commodities should be produced under greenhouse or in open field and most of the plants that could tolerate external hazards were advised to be produced in open fields, and those that are easily perishable and could be easily affected by external calamities were advised to be produced under the green house. In the meantime, in minimizing the risk of diseases, pests and insects we’ve already introduced various mechanisms apart from spraying chemicals. We introduced a biological method of control without the use of chemicals and other aspects which also have an advantage of minimizing cost of production and also the market demand of the product because it’s fully organic than artificial type of production. So there are a lot of exercises we’ve been introducing jointly with foreign experts. Our internal agencies’ experts have learned a lot by working together with the expatriates in this area.
Capital: In terms of the domestic market, there is always a problem with the supply side; there is also a question of price volatility of these products. In terms of controlling both problems, what steps have you taken or what measures have you advised should be taken in order to help the Ethiopian consumers?
Haileselassie: Basically, the price is a function of demand and supply. Naturally vegetables and fruits are perishable commodities, and although we have a lot of produce in different parts of the country, due to the lack of logistical arrangements, cool chain, proper packing and handling practices, many of these produces are spoiled before reaching the market. So as a result, we can conclude that the supply side of the sector is not adequately coming to the market except some fruits like mangoes and bananas that have better shelf life than other vegetables and fruits. So to reverse this challenge we’re thinking that we have to support the small growers as well, the small farmers’ out growers and others in many ways. Number one we have to assist them by providing better planting materials so that they can have adequate productivity. And again in the post-harvest practices, in the handling aspect of it, we have to establish different facilities at a nearby place whereby small growers can keep their produce without spoiling them. Because the vegetables and fruits have to be kept in a certain degree of temperature in order to strengthen and elongate their base life.
We’re hence trying to introduce different facilities like warehouse facilities, and side by side we’re also trying, in collaboration with the local administrations, to teach the farmers on how they can handle the packaging and other things. Side by side we’re also engaging the commercial farmers especially from abroad who have good knowledge in the technology, a good foothold in the international market and who’ve also an adequate resource to manage this sector. So our final aim is to create a linkage whereby the small growers can make a contract with the big commercial farmers to work together, where the commercial farmers can assist small farms in supplying high quality seeds by providing technologies and other things and assisting them in minimizing waste in handling and delivering the produce in a proper way to the market both locally and internationally. We’re thinking that in the coming few years there will be adequate supply for the local market as well.
The purchasing power of the local market is also increasing from time to time. If people in Addis Ababa can afford paying like for example in the Middle East, places like Dubai, there is no way that the private investor will take his produce to the international market. So the problem is that the supply side is not working in a proper way from not only the technology side, but also the post-harvest side, the push management style, and from all facilities like cool chain facilities, transportation and others that aren’t established in a proper manner today. Although we have a lot of produce in the countryside, our problem is that these perishable commodities aren’t handled and transported in a proper way. So we have to strengthen this attempt. I’m hoping that the recently launched railway transportation may also help in minimizing the problem because if you have a railway transportation with a speed of 300-400Km/hour, that means produces from Dire Dawa, Harar will have a chance to reach Addis with one hour. So all these things will really contribute to minimize wastage and create better market transaction. This better market transaction will have an impact in creating a better situation, earnings of the small farmers and others which will also encourage them to go further in the development of that area.