This is a best prospect industry sector for this country. 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 in 2012, yet in the same period 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 of annual 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, which when 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, the four IAIPs are at various stages of planning 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. Generous government investment incentives, preferential access to the United States 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 2018/19, the industrial parks generated $140.6 million in export earnings.
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 small holder 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 IAIP are the following:
Coffee – Ethiopia exported 3.98 million 60-kg bags of coffee in 2017/18 generating $897 million in revenue. Ethiopia aims to expand production and reach $2 billion in sales by 2019/2020.
Maize – Ethiopia produced 7.3 million metric tons of maize in 2017/2018 and provides both food and feed source for processing.
Poultry – Poultry production for 2017/18 was about 54,000 MT, and the retail price of imported chicken meat ranges between $10-11 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 which allows duty free import of feed production inputs. This new directive will boost both production of feed as well as dairy and poultry production.
Sesame – In the last five years, sesame production has doubled, except for the 2015/16 drought year which resulted in nearly a 10 percent reduction in total production for the year.
Potato – Potato production has increased substantially in recent years, with estimates at nearly 6,000 MT produced last year. Demand for processed potatoes should continue in the foreseeable future.
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 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,
Government of Ethiopia
Industrial Parks Development Corporation
Ministry of Industry
Ethiopian Investment Commission