16 September 2012

Ethiopia: Govt to Drop Export Quotas, Agricultural Commodity Bans

The Ethiopian government says that it will no longer impose export quotas on commercial farm outputs and processed goods as a part of its commitment for the new partnership introduced by G-8 countries that focuses on facilitating private sector investment in African agriculture.

The partnership, dubbed the New Alliance for Food Security and Nutrition, currently led by the US, is a shared commitment by the G-8 member states, private sector partners and Ethiopia, Ghana and Tanzania.

The three African countries are selected to be the beneficiaries of the partnership that was announced by US president Barak Obama during the G-8 Summit at Camp David, held in May 2012.

The late Prime Minister Meles Zenawi was at the summit representing Ethiopia along with the late John Atta Mills, president of Ghana and Jakaya Kikwete, president of Tanzania.

These countries are committed to make policy reforms to attract investment to their respective countries for the new partnership, which takes private capital mobilization as one strategy for sustainable agricultural development.

"African countries must take tough reforms to attract this investment," Obama said during the summit.

The government of Ethiopia responded by dropping quotas and bans on commercial farm outputs. It is recently that the government lifted the ban imposed on raw cotton, a commercial output that has been there for about a year in order to satisfy the demand of the local textile factories.

Aiming at taming the food price inflation in the country, the government has also banned the export of maize and sorghum in 2009, the two cereals that are widely consumed in the country.

The Ministry of Agriculture (MoA) which usually takes such measures announced that it would tentatively implement this commitment before the end of this month on a workshop hosted by the Ministry of Agriculture (MoA) on Wednesday September 12, 2012, held at Radisson Blu Hotel.

It also announced that it would amend the Seed Proclamation of 2000, in such a manner that it could allow the private sector to engage in seed supply and distribution towards the end of this fiscal year. The government has also made another commitment to refine its different policies to improve investment opportunities until 2015.

The private sector partners that include multinational companies have also committed to invest three billion dollars in Africa's agriculture. Currently around 35 private sector partners have joined alignment.

This companies include Diageo, the global liquor giant that has high presence in Africa including Ethiopia, Yara International, a Norway based fertilizer company and DuPont, a US based company, that specialize on seed production and crop protection.

Eight multinational companies, out of the 35 companies, including Diageo, DuPont, Yara International, United Phosphorous Ltd, Natafim, Swiss Re, Syngenta and AGCO have also signed a letter of intent to invest on agriculture in Ethiopia. These companies specialize in brewery, chemicals, fertilizer, irrigation, risk management, and agricultural inputs and farm equipment.

Diageo for instance has signed a contract with Melka Awash Union in Oromia Regional State that embraces 764 farmers that produce 1,000tns of barley every season. The union is selected because it is located in Sebeta, where Meta Abo Brewery, which was acquired by Diageo last year is located, and because they had volunteered, said Mirafe Gebriel, special programme officer of the Agricultural Transformation Agency (ATA).

The company has pledged 100,000 dollars for the supply of fertilizer and seeds. The company is expecting its first delivery from the Union in January 2012. Diageo has also offered to pay the farmers 15pc more than the market price to be set using Bourayu or Addis Abeba markers as a reference as an incentive.

"We are committed in this because it provides us with a long term, secure and sustainable source of raw material for us than the volatile global commodity markets," Menen Wondessen, head of corporate relations of Diageo said during the workshop chaired by Wondirad Mandefro, state minister of Agriculture.

The five brewery companies currently are importing 60pc malt for their production. In the same year, Ethiopia has produced 1.6 million tonnes of barley, showing a 6.3pc reduction from the previous fiscal year.

Diageo also states that it want the farmers to scale up the program to other crops that are necessary for the brewery industry. "To make this happen is our target," Miraf said.

For this contract to realize, the government through the ATA is planning to secure market for smallholder farmers by reaching out large commercial buyers showcasing investment opportunities in the country. The agency also gives trainings to the farmers to make them competitive.

There are also six local companies from the banking and agro processing sector that have committed for the alignment. These include Bank of Abyssinia (BoA) and Zemen Bank, which have been giving loans to the agricultural sector through a 50pc guarantee by the USAID. There are also Guts Agro Industry and Omega Farms from the agro-industry sector.

While two of stakeholders of the new partnership made new commitments, members of G-8 did not offer any new financial commitment but commit to fulfill the 22 billion dollars pledged in 2009, at G-8 summit in L'Aquila, Italy. Out of the total pledges made by these countries to help end hunger for 50 million people through agriculture, only 58pc has been disbursed, according to the New York Times published on May 2012.

In order to reduce such kinds of risks, a framework that check up on the mutual accountability is prepared where by there will be an annual meeting where the commitments of the three stakeholders is measured.

There used to be no such framework to check mutual accountability previously, according to Abraham Getachew, Rular Economic Development & Food Security (RED&FS) secretariat of the Ministry.

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