Addis Fortune (Addis Ababa)

24 August 2014

Ethiopia: Second Wheat Consignment Arrives to Stabilise Grain Market

The second consignment of two million quintals of wheat the government bought from Ukraine will arrive at the Port of Djibouti by the beginning of September 2014. The first consignment of the same size has already started to arrive at the central warehouse of the Ethiopian Grain Trade Enterprise (EGTE), as of July 29, 2014.

The second consignment will leave Ukraine on August 25 loaded on five ships, each with a capacity of 420,000 quintals. The government spent 2.4 billion Br to buy the grain through an international tender floated by the Government Procurement & Property Disposal Services (GPPDS). The GPPDS selected six companies to buy the two consignments, according to Ali Siraje, state minister of Trade.

The wheat will be distributed to different parts of the country to stabilise the domestic grain market, according to Etenesh Gebremichael, public relation & trade information supportive process manager at the EGTE. The government will distribute the wheat to 281 flour factories all over Ethiopia through the EGTE at a subsidised price of 550 Br a quintal It will then sell the flour to 5,000 bakeries, which have already been identified and linked with the factories, for 796 Br a quintal.

One quintal of wheat will yield only 73kg of flour, leading to the escalated price, says Ali.

"Only the bakeries that are linked with the flour factories will get flour," said Ali.

A special consideration in Addis Abeba is that 4,520qt out of its monthly quota of 113,000qt will be distributed to people considered as lower income. So far 740,000qt has arrived from the first consignment, of which 233,615qt is already under distribution as of Monday, August 18, 2014. A quarter of the supply will go to Addis Abeba; the least share among the regions will go to Harari, which will get just 2,500qt, according to Etenesh.

The government now subsidises 226 Br a quintal on retail prices, covering the transport cost from the place of purchase to the central warehouse in Addis Abeba. This costs the government a total of 776 Br a quintal, Ali said.

The government has been importing wheat like this for years. Its total wheat expenses for market stabilisation between 2009/10 and 2012/13 was 8.47 billion Br. The amount spent in 2013/14, in which it bought five million quintals is yet to be determined. In 2009/10, it purchased 5.3 million quintals for 1.87 billion Br; the following year, the import was down to 2.58 million quintals, which was bought for 1.3 billion Br. The 2011/12 fiscal year saw a 4.1 million quintal import for 2.2 billion Br and in 2012/13 the government spent 3.07 billion Br on 5.5 million quintals.

Agrimpex Ltd - a company registered in London, in December 1990 - has been a major supplier of commodities to the Ethiopian government, including a large portion of the one million tonnes of wheat it supplied since September 2008.

"We expect good production during the wheat harvesting period between October to December," said Ali. "But if we feel there is a gap, we will import additional wheat."

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