Taking Ethiopian horticulture to the next level
Ethiopian Horticulture Producer Exporters Association (EHPEA), a business membership organization was established in 2002. It is an organization meant to promote the interest of its members who are engaged in the production and export of cut flowers, summer flowers, fruit, vegetables, herbs, cuttings as well as vegetable seeds. Currently, EHPEA has 120 members and it has been relentlessly contributing for the horticulture industry boom in Ethiopia and effectively representing the interests of its members locally and globally. The sector has been tested by the global Covid-19 pandemic. However, there’s an untapped potential that should be exploited. Tewodros Zewdie, Executive Director of the Ethiopian Horticulture Producer Exporters Association (EHPEA) speaks on the plans to further scale up productivity of the sector, among others. Yared Nigussie of Origins Business sat down to know more; excerpts;
When we try to assess the global context in a bird’s-eye view, Germany, the Netherlands, United Kingdom, Scandinavian Countries in Europe are the major export destinations of the products of EHPEA. Australia can be listed as other the major destinations. Far East nations such as China, Korea and Japan also are major importers of EHPEA’s products.
Canada and the United States, Saudi Arabia and the United Arab Emirates (UAE) are the export destinations in the Middle East.
The main target in terms of market destination is Europe as there’s a strong freighter capacity including cargo planes. The logistics chain is the main determinant factor to expand export markets.
For instance, activities have been underway to export avocado, which is a “hopeful starting” and it’s blossoming, according to Tewodros Zewdie, Executive Director of the Ethiopian Horticulture Producer Exporters Association (EHPEA).
Only in last year, close to 16 containers of Avocado of products were exported. “We hope registering encouraging results in this year,” says Tewodros.
The untapped potential in Ethiopia’s agriculture sector is enormous. The same holds true for horticulture, Tewodros says. Next to Coffee, horticulture generates second highest foreign exchange income. Last year, the sector took the third rank next to Coffee and Gold.
“That performance has been gained even with a scanty plot of land,” he said, adding, “We can take for example the flower product is operational on less than 1,700 hectare of land.
The sector has generated more than $500 million in each of the previous two years, accounting for over 15% of the total export of Ethiopia.
Despite the challenges posed by the Covid-19 pandemic, Ethiopia garnered $531 million in 2020/2021 fiscal year from horticultures. Ethiopian Airlines Group commitment to transport the export items unceasingly was among the major success ingredients, according to Tewodros.
“We can garner billions of dollars when we ease the challenges in the sector. Windfall opportunities are there to achieve that,” said Tewodros.
Globally, especially in Europe, gas energy cost is increasing and those growers in Europe cannot compete with companies in Africa for such a reason. Costs of labor and logistics have been skyrocketing there due to the impacts of the Covid-19 pandemic.
“Therefore, investors are keen to conduct business in Ethiopia,” he declares.
If lack of access to land is well-addressed, favorable support scheme put in place and infrastructural problems such as electric power outages fixed out, then we can generate billions of dollars, he believes.
Skilled and non-skilled labors are unemployed. We can take cut flower, 25 people can be hired for a hectare of land, Tewodros says.
The sector and its sub-sector can employ thousands of skilled and non-skilled labor.
Knowledge transfer is another prospect in the sector. It uses modern agricultural practices. After they garnered the skills and knowledge, staffs at any companies can do either by their own business or in other farms successfully.
Stunting is a major problem associated with deficiency of fruits and vegetables. If we increase fruits and vegetables productions nutritional problems would be eased, and exporting companies and smallholder famers will be benefited from it.
“Special attentions should be given to the horticulture sectors as it can solve lack of fruits and vegetables in the agricultural sector,” he said.
Covid-19 impacts in horticulture, recovery process
Acknowledging that the Covid-19 initially posed existential threats on the very existence of the industry, the Executive Director said his association has taken pragmatic measures, managing not to have any layoff caused by the pandemic. In April 2020 due to closure of borders and movement restrictions; price of horticultural products went down by 80% as the global demand dwindles due to the pandemic-induced lockdowns.
Kenya for instance cut 50 thousand jobs. “But, we didn’t evict a single staff from companies, which was a significant commitment,” he stressed.
We also provide two proposals to the government; the first is there shouldn’t be any logistics interruptions and secondly, injection of additional fund to curb shortages of finances. Both the recommendations received swift reaction when we compare to other countries, he explained.
The sector has been through tough times of eight weeks. “Those challenges started to be eased following the reopening of border and we can enter the Europe market,” said Tewodros.
“Turned challenges into opportunities the sector registered impressive performance in 2020, 2021 and we hope it will perform better this fiscal year, too,” he explained. Most of the companies performed well in those challenging times because of the fact that most people stayed at home and they consumed horticultural products.
In 2020/21, $530 million has been garnered from the sector. That figure show remarkable gains compared to $28 million in 2004.
The horticulture export sector is young, and it has shown quite an exponential growth in the last ten years. Currently, there are 126 investments in Ethiopia in the export of flower, fruits, vegetables, and herbs. Farm ownership is made up of 46 local investors, 76 Direct Foreign Investors, 3 joint venture partnership and Development Bank of Ethiopia, according to EHPEA.
Currently the flower, fruit, vegetable, and herb farms occupy 10,897.21 hectares of land. The horticulture sector employs 199,640 citizens and in 2017/18 fiscal year generated $307.04 million. In hard currency generation, the horticulture sector has stood at the fourth largest in export earnings.
Floriculture contributes much of the share in around 79% while the expanding vegetable, fruits, and herbs have 21% share of the revenue.
Ethiopia, with estimated population of over 110 million is the second most populous nation in Africa. Located in the Horn of Africa, it has a total land area of 1.14 million square kilometer with over 11 million hectares of irrigable land. The country has the vast surface and groundwater resource making it ‘The Water Tower of East Africa’ with a diverse of agro-ecological zones which are suitable for the production of a wide range of crops throughout the year.
Ethiopia’s comparative advantages in horticulture sector
Colombia, Ecuador, Kenya and the Netherlands are major global competitors in flower products and export trade.
New entrants such as Rwanda and Uganda are trying to be the major global competitors in the flower market. Comparing to these aspiring nations, our energy cost is lower; we have a considerable amount of labor, and geographic proximity of Ethiopia to Europe and Middle East makes it more competitive than the aspirants, Tewodros says.
The existence of sound policy frameworks such as investment incentives, agro ecology of Ethiopia; highland, midland and lowland is also a big plus for Ethiopia.
Cost of doing business is increasing in Colombia, Ecuador and the Netherlands. Capital is borderless; it will outflow wherever there’s better profit margin and stability.
Lack of security has been challenged the Ethiopian economy. Tewodros somewhat disagrees with this fact. “Despite the war that lasted for 15 months, there are considerable amount of fresh investment demands,” he said.
If we can solve the challenges of electric power outages, shortage of utility services, lack of appropriate land use system, and poor internet service, Ethiopia can generate billions of dollars, he told Origins Business.
Discharging Corporate Social Responsibility
Horticultural firms have been discharging their responsibilities. In one way or another, the companies create jobs for the surrounding community, companies staffs live with the surrounding community, and they also purchase consumable goods, which is called “trickle down effects”, among others.
Local administrators collect income tax from those companies. In addition, there are various activities to enhance discharging their Corporate Social Responsibility (CSR) in a structured way, he said.
Tewodros said: “We, as an association, have code of practice with Gold, Silver and Bronze ranks.” Gold incorporates social responsibility of what those companies did for the community, to mention a few.
Most of these companies have their own role in the construction of schools for the surrounding communities, provision of access to water, supporting orphans; they strive to facilitate preconditions for the community to have an electric power access.
They are working to solve problems in the society, he says. He mentions construction of bridges and roads as examples.
From the environmental point of view, efforts are there for the companies to use reudalable chemicals in horticulture, which will have no side-effects in the environment.
“Our Association is working to implement integrated pesticide management system,” he elaborated.
“We have companies that provide access to education in tuition free mechanisms even in a day care within their farms,” he said, adding, “There’re also farms with hospitals in their compound.”
Training team upgraded to EHPEA’s TVET College
EHPEA’s training team was established in 2007. The mission of the training department is to provide high quality, relevant and practical training to help horticulture farms meet production targets and relevant legal and market label requirements for Good Agriculture Practices. Protection of the Environment and the Employment and Welfare of all the farm employees, and facilitate the development performance by the provision of relevant training.
Ensuring international competitiveness and brining systems into practice are the major objectives behind the trainings. At first, trainings have been provided to agricultural experts “Gradually, the demand has been skyrocketing even trade unions and cooperatives have been part of it,” said the Director.
“When we upgraded it to the accredited TVET center one year and six months ago, we have been teaching staffs from Non-Governmental Organizations, agricultural experts, university lecturers and researchers, among others.”
Safe use of pesticide, pesticide store keeping, supervision skill and crop scouting are among the courses currently delivered by EHPEA.
Members of EHPEA and cooperatives, unions, agro-processing companies, experts from Agricultural Transformation Agency (ATA), and Ministry of Agriculture are beneficiaries of our practical trainings, he explains.
Ethiopia has an untapped potential in fruits and vegetables. In the period ahead, EHPEA is aspiring to include Ethiopia on the map of the leading horticulture producing and exporting countries.
Regarding the TVET center, making it a Center of Excellence (CoE) at a continental level is too another great vision of the Association.