Ethiopian Airlines (ET) has become the cause for furious complaints from the Ethiopian flower growers for the past three months since it started leasing its cargo airplanes to farmers directly, cutting out the companies that were giving the service.
Such continuous complaints led the Ethiopian Flower Producers & Exporters Association (EFPEA) to call a meeting in order to provide a platform for the growers to make their issues heard to the Ethiopian Horticulture Development Agency (EHDA). The meeting was conducted at Intercontinental Hotel on Friday, June 1, 2012, where all growers and senior officials of the Agency were in attendance.
Although the meeting was called to discuss the different issues in the sector as a whole, it was overwhelmed by complaints from aggrieved growers over the performance of Ethiopian and the repatriation price that the central bank has required them to repatriate back to the country, according to growers who attended the meeting.
The complaint over cargo fright all started when the management of ET decided to launch a service to take horticulture products from farm gates all the way to the auction floors in Europe, sidelining the three companies that were giving the service chartering ET planes. Ethiopian, which claims that it engaged in cargo operations to help the sector, promised that growers would have daily access to the international market, irrespective of volumes and at a reasonable price.
The growers, however, furiously complained that there are frequent delays and documentation problems, in a meeting that took three and a half hours. ET is not notifying the agents in Europe about the cargo's departure from Addis Abeba and sends the relevant documents that allow the forwarding agents to start clearance before the plane arrives in Europe and prepares trucks at the airport, according to sources who attended the meeting.
"We can understand a three or four-hour delay, but it is difficult to tolerate a 24-hour delay," a disappointed grower told Fortune after the meeting.
The delay was partly because of the mechanical problems that the Airlines has faced, as the managers of the Airlines stated, according to Tsegaye Abebe, former president of the Association and member of supervisory board established to oversee the functioning of the new system comprised of growers, the federal Agency, and ET.
Essete Yehsitila, acting manager for public relations and publications of Ethiopian, confirmed that the 24-hour delay occurred only on Wednesday, June 6, 2011, because three tyres of a plane went flat in Cairo, Egypt, which delayed the process until a Saudi Airways plane came with the needed tyres.
"This happened because Ethiopian usually [only] carries two tyres for emergencies," Essete claims.
Although the manager argues that there will not be such a delay again, except in cases of force majeure, growers seem uncertain.
"This is causing a trouble for the whole industry, which contributes much to the country's revenue," a flower grower told Fortune. This is slightly seen in the export performance of the sector in April, the second month after the ET takeover of the freight service. While the government has planned to collect 23 million dollars in the month of April 2012, by exporting 236.9 million stems of flowers, it has only collected 18.8 million dollars, exporting 188 million stems of flowers, according to the data of the Agency.
Some of the aggrieved growers suggested that Ethiopian should outsource the document handling and focus on the freight service. This, however, does not hold water for the officials at the Agency.
"It is not going to happen," sources at the Agency told Fortune.
"We have notified the Airlines and the Agency that such a problem should be solved before the rainy season comes," Tesgaye told Fortune. "If such a problem exists during such a season, it will be total chaos for the sector, as the flowers might be affected by diseases, if not lifted from the farms for export, on time."
The other issue that raised hot debate was that of the repatriation price that the growers were obliged to repatriate at.
In its bid to control the foreign currency that should be repatriated to the country, the government has changed the measurement of the export of flowers to kilogrammes from stems, based on a sample counting of packages. The growers who were expected to repatriate 10 dollar-cents, previously, have now been required to repatriate 3.68 dollars a kilogramme for the past four months.
However, growers claim that the price does not consider the disparity of stem numbers between lowland and highland flowers in a kilogramme.
Because the lowland flowers have shorter stems and heads, a kilogramme can contain up to 40 stems, while highland flowers have larger stems and flower heads, so a kilogramme can only hold around 20 stems. However, both are expected to repatriate the same amount. This has disappointed growers who have farms in the highlands. They are claiming that they are disadvantaged.
The Agency, on the other hand, argues that the exporters will benefited from the price, as highland flowers fetch a higher price in the international market than lowland ones and, hence, will be compensated.
"Every season of the year is not a bed of roses for the flower market," a flower grower who has a farm in the highlands told Fortune angrily. "There are times when we sell a stem for 10 dollar-cents when the peak season fades away."
Although the months from December to May are regarded as a good season for the flower market, January, February, and March are regarded as the peek season because of the many marketing events like St Valentine's Day and Mothers' Day, while the rest of the year is considered a low season.
Out of the total 1,310 hectares of land covered by flowers, the largest area of 480ht is located in the lowland vicinity of Zeway and Awash. Highland areas include Holeta, Sululta, and Sendafa, comprising 390ht, while the midland areas include Sebeta and Bishiftu (Debre Zeit), constituting 413ht.
Declining to comment in detail on this matter, Tsegaye stated that a detailed study should be done for the upcoming rainy season to examine one of the low seasons of the flower industry.