8 October 2017

Ethiopia: Severe Drought Triggers Hefty Wheat Procurement

In a bid to relieve the 8.5 million people who are in need of urgent food assistance in the country, the government is procuring 400,000tns of wheat worth an estimated two billion Birr.

The Public Procurement & Property Disposal Service (PPPDS), on behalf of the National Disaster Risk Management & Control (NDRMC), announced the tender for the procurement. The move comes just two months after the number of drought victims increased by three million from 5.6 million in April 2017.

"The wheat will be delivered to drought victims for the next three months," said Debebe Zewde, public relations director of the Commission.

As a move to procure the wheat, the Service has already floated an international bid to select a supplier. More than 24 companies showed an intent to participate in the bid so far. The tender will be opened on October 17, 2017, at the premise of the Service located at King George VI street.

"The supplier must supply the wheat in no more than a month as it will be used to respond to the drought victims urgently," said Gojjam Tadele, a senior communication expert of the Service.

The procurement is the second in a year after the government awarded three companies to supply equivalent amounts of wheat costing two billion Birr. The bid was conducted on behalf of the Ministry of Trade with a rationale of stabilising the wheat market in the country. Three companies: Promising, ADM and Phoneix are supplying the wheat to the Service.

The new tender was announced while the Service is already reviewing the financial offers of six bidders for the procurement of 70,000tns of wheat from a previous tender, which was floated following an urgent notice by the Ministry of Agriculture & Natural Resource (MoANR). It will also be used to support drought-affected people under the World Bank-financed Productive Safety Net Programme (PSNP).

This is not the first time that the NDRMC has ordered import to help drought-affected people. The same amount of wheat was procured during the surge of drought-affected people two years ago, reaching as high as 10 million- the worst in three decades.

Now, despite the decrease in the number of drought victims by 1.5 million from the past year, food requirement did not remain static. The financial requirement has instead grown from 948.6 million dollars to over 1.2 billion dollars. In the same token, the number of weredas under critical condition has also increased from 454 to 461.

Following the growth in drought victims, the amount of wheat imported is also growing proportionately year after year, reaching 2.5 million tonnes a year ago from 661,386tns in 2015. This has forced the country to spend a considerable amount of Forex to import the item, reaching 2.5 billion Br in the past year alone.

The hike in imports of wheat is despite the growth in wheat production from less than four million tonnes two years ago, to more than 4.2 million tonnes in the previous fiscal year.

The growth in import of wheat seems concerning for the agricultural economist with a three-decade experience.

"The government should rethink its policy towards wheat production instead of using the 'business as usual' approaches," said Assefa Admassie (PhD), an agricultural economist. "Unless local wheat production is boosted using better technology, focusing on the international market whenever there is a shortage is not advisable."

The import of wheat comes in a time when the food price reaches its peak in the country. Last month, the inflation rate hit 10.8pc, the highest in 22 months. The rise was primarily due to an increase in prices of cereals including wheat.


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