This is a best prospect industry sector for this country. Includes a market overview and trade data.
This is a best prospect industry sector for Ethiopia. This section includes a market overview and trade data.
Agriculture is an engine of the Ethiopian economy, employing 80% of the total population, contributing 39% to GDP, and generating 90% of its foreign currency from exports. Ethiopia’s agricultural exports are primarily unprocessed commodities, including coffee, oil seeds, pulses, live plants, and cut flowers. Conversely, agro-industries accounted for only five percent of Ethiopia’s GDP, yet 50% of the total manufacturing production was in food and beverage. Ethiopia possesses a wide range of agroecological zones, arable land, and access to labor, which allow for a wide range of agricultural systems. In Africa, Ethiopia is a major producer of coffee and barley. Additionally, among African countries, Ethiopian production ranks second in sorghum, third in maize, third in wheat, and fourth in coarse grains. Finally, Ethiopia maintains the largest number of livestock in Africa.
The Government of Ethiopia (GOE) aims to boost exports and trade through $1 billion investment in agro processing industrial parks to make Ethiopia a top manufacturing hub on the continent. Industrial parks broadly are a key focus of Ethiopia’s economic development strategy. Through the Ministry of Trade and Industry (MOTI) and the Industrial Parks Development Corporation (IPDC), 17 agro-industrial growth corridors (AIGC) are planned for development, with coverage in all nine regional states. In its current first phase, four Integrated Agro-Industrial Parks (IAIP) are under construction, out of which three are already operational. The IAIPs when fully completed will provide support services to companies, opportunities for skills development, and attraction for foreign investment. The total estimated cost of the four pilot agro-industrial parks is $181.2 million. The GOE intends for the four IAIPs to result in $1.5 billion in investment, 400 business opportunities, and 400,000 jobs. The four industrial parks are situated in strategic locations throughout Ethiopia and were selected based on the area’s agricultural potential, infrastructure facilities (water, electricity, etc.), and regional market potential. The IAIPs are envisioned to provide a one-stop shop to provide various services to facilitate trade logistics, access to land, customs clearance, and other business services. At present, three IAIPs are already operational and one is under construction and development, located in Humera (Tigray), Bure (Amhara), Yirgalem (SNNP) and Bulbula (Oromia). Aside from these, there are multiple textile and apparel industrial parks, the most notable being Hawassa Industrial Park where the U.S.-owned apparel manufacturer, Philips Van Huesen (PVH), is producing shirts and other garments for the export market. In 20222, however, PVH sold its plant and left the country ceasing its operation in Ethiopia. Generous government investment incentives, preferential access to the United States large market under the African Growth and Opportunity Act (AGOA), low cost of electricity and labor, and abundant natural resources have resulted in increased foreign direct investment into the parks. In 2019/20, the industrial parks generated $610 million in export earnings and created 89,000 job opportunities. Following the war between the government of Ethiopia and Tigrayan forces, the U.S. government suspended Ethiopia’s AGOA privileges.
Commodities intended for processing include coffee, sorghum, maize, sesame, horticulture, meat and dairy, and cereals, among others. The IAIPs will include companies that export value-added agricultural products as well as those producing products for domestic consumption. Major agriculture processing potential includes cattle fattening and processing, chicken production and processing, livestock feed manufacturing, wheat-based food production (e.g. pasta, biscuits), sesame processing (e.g. tahini), soybean crushing (e.g. soybean oil and feed), sugar production and processing, juice and dairy manufacturing, as well as garments and leather goods.
In 2019, the Ethiopian Ministry of Finance implemented a policy change authorizing duty free import of agricultural and irrigation equipment. This new directive aims to increase agricultural productivity for both smallholder farmers and commercial farmers, as they will have improved access to new agricultural farming capital goods.
Key agricultural commodities intended for processing and exports through the IAIPs are the following:
Coffee – Ethiopia exported 271,111 metric tons of coffee in 2020/21 generating $855.6 million in revenue. During the first ten months of the current 2021/22 fiscal year, Ethiopia exported 232,000 MT of coffee and earned a record-breaking revenue of US $1.2 billion from coffee exports. Ethiopia targets to export up to 300,000 MT of coffee by the end of the fiscal year.
Maize – Ethiopia produced 9.4 million MT of maize in 2021/22, both for food and feed source for processing.
Poultry – Poultry production (chicken meat) by the end of 2020 was estimated at 68,000 MT, and the retail price of imported chicken meat ranges between $9-10 per kilogram.
Dairy – In the last 15 years, the volume of milk production has tripled. Ethiopia faces shortages of feed, land, and pasture for its cattle herds. In May 2019, the Ministry of Finance released a new proclamation that allows duty free import of feed production machinery. This new directive will boost both production of feed as well as dairy and poultry production. In June 2022, the GOE removed import duties and value added tax levied on animal feed products. The exemption would help lower the cost of animal feed by a third and the prices of dairy products by an average of 17%.
Potato – Potato production has increased substantially in recent years, with estimates at nearly 1.14 million MT produced last year. Demand for processed potatoes should continue in the foreseeable future.
Avocado – Avocados are becoming increasingly popular in Ethiopia, both among producers and consumers. Over the last five years, the GOE has given increased emphasis on avocado production due to the rapidly growing international market and presence of suitable weather for growing avocados. Recently, Ethiopia has begun exporting fresh Hass variety avocados to the European market.
Sugar: Ethiopia has 13 sugar manufacturing factories with all plants owned by the state. As a part of PM Abiy Ahmed’s economic reform program, transfer of the sugar factories to private ownership is underway. At present, the 13 state owned sugar factories are undergoing technical, price, social and environmental impact assessment studies. The initial plan is to privatize six out of the 13 sugar plants to local or international private investors.
Some of the challenges in the current agro-processing sector include insufficient local product, in part due to complexities in smallholder farm structures, post-harvest storage, as well as inconsistent commodity quality. Furthermore, a critical constraint to agro-industrial development is the lack of infrastructure to support sufficient raw commodities flow to processors. Establishing effective supply chains, including cold chain, can increase agro processor access to local producers. With the establishment of the agro-industrial parks, the integration of smallholder farmers and processors into the industries as part of the commercial value chain could improve the local economy.
Machineries for coffee roasting and processing.
Machineries for dairy milk processing, chicken processing cattle fattening and abattoirs.
Machineries for animal and chicken feed production.
Machineries for juice extraction and processing.
Machineries for tomato and potato processing.
Technology and machineries for flour processing, bakery, pasta and macaroni manufacturing.
Machineries for edible oil extraction, filtration and processing.
Provision of cold chain, post-harvest technology, mobile preservative technology and storage facilities.
Sugar processing technology and various machineries.
There are multiple business opportunities for U.S. companies to benefit from Ethiopia’s emerging integrated agro industrial parks. Opportunities exist throughout the value chain of the IAIP. U.S. construction and architectural companies can participate in the design, development construction and supervision of the IAIPs. Business opportunities are also available for U.S. companies to design, supply, install and commission the agro processing facilities at the IAIPs. U.S. technology suppliers can also sell machinery and technological equipment to the agro processing plants. U.S. companies can provide technology to IAIP value chain such as post-harvest storage facilities, cold chain facilities, mobile preservative storage facilities that transfer perishable commodities and food items from small holder farmers to IAIPs and from IAIPs to ports for export market. U.S. companies can also invest in the Ethiopian agro processing sector either in private or in partnership with local investors.
U.S. Foreign Commercial Service,
Ministry of Trade and Regional Integration
Ethiopian Investment Commission