Two overseas firms have secured contracts to supply 600,000tn of wheat for a total of 159.3 million dollars inclusive of freight cost. The procurement is aimed at market stabilisation and for use in emergency responses.
Rosentreter Global Food Trading, a German firm, has been contracted to supply 400,000tn of wheat for 75.7 million dollars that will be used for market stabilisation. The Turkish firm Martina Mertens Sample was also hired to import 200,000tn of wheat for emergency assistance for 51.2 million dollars.
For the bid Rosentreter Global won, the Public Property Procurement & Disposal Service floated a bid under four lots in September 2020 on behalf of the Ethiopian Trading Business Corporation. The Service opened for bidding a week later, and 42 suppliers bought the bid document, but only six of them returned the bid documents.
Huyton Inc. Group from Liberia, Aston FFI SA from Switzerland, Promising International Trading Co. from Dubai, Grain Export SA from Switzerland, Aplas Importer from Ethiopia, and Rosentreter Global Food Trading took part in the bid. Rosentreter Global and Aplas bid for all lots, while Promising and the two Swiss suppliers each offered prices for only one lot. Huyton participated in two lots.
Rosentreter Global won all the lots for a total of 75.7 million dollars. It will ship the wheat from the Port of Novorossiysk, Russia to the port of Djibouti via the Ethiopian Shipping & Logistics Services Enterprise for 54 dollars a tonne. The contract is freight on board (FOB) plus credit financing.
The second wheat procurement tender, 200,000tn in two equal lots, was floated on September 8, 2020, on behalf of the National Risk Disaster Management Commission. The bid opened on October 15, 2020. Forty firms bought the bid document, and only four of them offered a price.
Huyton, Promising, Aplas Importer, and Martina Martens participated in the tender. All firms except Promising offered a price for both lots. Turkish supplier Martina Mertens Sample won the battle by offering the lowest price of 255.99 dollars a tonne for both lot one and lot two. The company's offer does not include shipping costs.
The procurement is critical in this time of post-locust invasion and instability, according to Messay Mulugeta (PhD), an associate professor of development & food security studies at Addis Abeba University.
"The country needs to have greater food reserves," he said.
However, he argues that imports should not have been taken as a viable option, because they are not sustainable.
"This is not a sustainable solution of food efficiency," he said, adding that the country should instead work on self-sufficiency by allocating resources toward agricultural mechanisation and crop-specific clusters in lowland areas in the west and east.
Messay anticipated that there might be market instability in the coming few months due to the impacts of the desert locust plagues, flash flooding, COVID-19 pandemic and instability.
"The government should forecast the dynamism of these problems and have food reserves," he urged, lobbying for the introduction of a land-use policy that frames exactly which grain should be planted and where.