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Ethiopia: Export Horticulturalists Negotiate Expansion Hurdles with the Government
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Addis Fortune (Addis Ababa)
24 December 2007
Posted to the web 27 December 2007
Wudineh Zenebe
Addis Ababa
Minister of Trade and Industry (MoTI) Girma Birru last week concluded a three-day visit to export farms in the Oromia Regional State, where he was told by horticulturalists - who grow flowers and berries - that the industry needs more land to expand.
In a trip that concluded on Monday December 17, 2007, Girma toured five farms, including Luna Fruits, Almeta Impex, Ethio Vege and Ilantot and the Wine and Strawberry Farm, which are located between Modjo and Koka in Oromia.
Most of the developers engaged in horticulture farms in these localities have faced difficulties expanding as local farmers request greater compensation for their land, while some flower farms simply cannot find any land in close proximity to their existing plots.
Almeta, which has a 90hc flower farm and also produces table grapes and strawberries, was one of the companies that requested a plot of land in another area.
"Although we know the scarcity of plots in the area, since the company is expanding its market, it has requested land for expansion purposes somewhere else where abundant land is available," said a source at Almeta who declined to be identified.
Ilantot Plc, an Israeli-owned horticulturalist, is instead facing the possibility of paying higher compensation to the farmers in the area for its expansion.
Ilantot has developed 20hc of land with an investment of 11.2 million Br to produce strawberries for export market. Encouraged by the good return from the market, Ilantot requested an extra 20hc of land on December 21, 2005. However, due to the rising cost of compensating the farmers, it has been unable to carry out its plan.
When farmers are displaced, the government resettles them elsewhere and provides new land, but the flower farms are expected to pay an extra compensation equivalent to one year of harvest. Ilantot originally intended to pay farmers in the area 250 Br per quintal of teff that they can produce on their land. However, with the price of teff, the company is now expected to pay compensation ranging from 450 Br to 500 Br per quintal, too high a price for Ilantot, sources disclosed.
Tempted by the growing international market, the Ethiopian government has handed out over 400,000hc of land for the development of fruits and vegetable. It has also privatized one state-owned enterprise: Zeway. Sher Company now grows flower on part of the formerly state-owned farm, whereas Castel Group has taken part of the farm to develop wine.
During his visit of the flower farms, Girma was pushed by the investors to consider making land available in areas where the Awash River spills over during the rainy season.
It would be possible to develop 1,000hc of land for horticulture farms in this area if dams can be constructed to control the seasonal flooding, and official from the Ministry of Trade and Industry told Fortune.
Indeed, it is highly likely that the government will consider the request to convert develop the area, the official added. Meanwhile, the government insists that investors pay the required compensation for the farmers.
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Speaking to Fortune, Tsegaye Abebe, chairman of the Ethiopian Floriculture- Horticulture Producers and Exporters Association (EHPEA), expressed optimism that once a dam is built along the basin of Awash River, the concerns of developers would be in large part addressed.
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