Ethiopia: Harnessing the Multiple Benefits of Spices Production in Ethiopia

Opportunities for spice production in Ethiopia are almost endless and promising. Partnership between Ethiopia and the donors who are sincerely interested in helping the country may be further developed together with other partners and stakeholders interested in spice production. The business opportunities in spices will prove to be instrumental for raising the interest of new companies to invest in Ethiopia. They will certainly be strengthening and broadening the partnership between investors and local businesses. The creation of networks informs foreign private investors about business opportunities in the country. Of course, it is important to have friendly relationships, strong economic partnerships between Ethiopia and the donor countries that are the sources of private investment.

Partnerships may further stimulate economic relations through maintaining and diversifying foreign direct investment (FDI) and trade between the country and donors. Tapping into the investment opportunity and potentials in the country, the developed and friendly countries may use their influence to encourage the private sector to invest in spice in Ethiopia. However, the current level of investment in the country is not commensurate with the potential of the developed countries. Though committed to promote the private sector investment in Ethiopia, there is a need for offering a comprehensive set of incentives to enhance the FDI in the country. Investors need incentives depending on the sectors they want to be engaged in. Some of these inducements and motivations may involve customs duty exemptions on capital goods and construction materials, and income tax exemptions for a given period of time.

Several export incentives may be applied to encourage investors engaged in spice production for export. Ethiopia is highly devoted to protect investment through its policies and investment laws that protect private property, repatriation of capital and profit. Such incentives for investors are justified by their contribution to output, national income, employment, tax payment, and foreign exchange earnings. The Ethiopian government guarantees foreign investors protection from expropriation or nationalization. As a matter of historical event, foreign investors might not invest in Ethiopia for fear of nationalization unless guaranteed by the state.

The population of Ethiopia and its strategic geographical location offer a wide market access to spice production. Ethiopia with its huge investment potential has a lot to offer for the foreign private sector. The government is ready to address any investment request from the friendly foreign private sector in agriculture, specifically in spice production. This creates economic interdependence between Ethiopia and the developed countries and peoples. It is, therefore, necessary to elevate the economic relations of the cooperating countries to a higher level. Currently spice production for domestic and external markets is not sufficient both qualitatively and quantitatively.

Quality is important for marketing spices. Commercial producers need, therefore, the support of agricultural agencies equipped with staff specializing in spices. International market is full of competition, and it is, therefore, risky to ignore the production and marketing chain, which are tied to international agreements. As pointed out by A. Tariku bilateral agreements also help in the production, promotion and marketing of spices. Its trade contributes to advancement of peaceful relations between trading partners. Through these relations they could exchange production technologies and skills that improve the wellbeing of peoples.

The contribution of spices to the world civilization is well recognized in ancient history. It established and destroyed empires, led to the discovery of new continents, and in many ways helped lay the foundation for the modern world. Spices have lost the status and allure that once placed them alongside precious metals as the world's most valuable items. Out of several products of herbs and spices category, most are of global economic and culinary importance. Global consumption of spices is expanding steadily with access to information, growing population, shifting consumer trends towards health, sustained economic growth in developing economies and increased consumption of meat. The "march of the meat eaters" in developing countries has resulted in a growing spices market. Both spice and meat have complementarity during consumption.

Asian-Pacific and European consumers are the largest consumers of spice, and the global market for spices is projected to grow tremendously. The market for spices in developed economies will continue to grow, but more slowly than in other regions due to maturity of the industrial sector. The Asia-Pacific region is projected to be the fastest-growing market for spices. The food processing industry in Asia will be an important driver behind this growth. There is a shortage in the supply of most spices. Chilies are the most widely grown spice followed by ginger. Because of its vast population and spicy food tradition, India is the largest producer and consumer of spices. Other top producers include China, Bangladesh, Turkey and Pakistan. A large part of the production is assumed to be in "captive use" in the countries of origin. Most countries export what is left from domestic consumption. Some export a fifth of their output of spices. In fact, traditionally large exporters of spices have now become "net importers" due to population explosion that demanded more spices at home.

The gap between increased demand and insufficient supply as well as speculation resulted in a steady increase of prices. The prices of vanilla, pepper, cloves and cinnamon showed an exceptionally high increase. Despite the price increase, the EU market for spices, for example, has grown steadily over the years. These imports increased both in volume and price. The volume of imports grew substantially over the years. There is also a substantial intra-EU trade in spices. The main products imported from outside the EU comprised ginger and pepper. China is the EU's largest trading partner, and supplies mainly ginger, followed by India selling predominantly turmeric, pepper, and cumin seeds. Vietnam is the main supplier of black pepper to the EU market. Consumption of spices in the importing countries is on the rise, indicating an increase in demand. The largest drivers of consumption are the increasing popularity of spices, improved usage of condiments and seasonings, food innovation, health awareness and the demand for convenience products such as ready-made meals.

With increasing income, buyers often impose strict safety requirements. They look for high quality spicy food. Their demand changes in line with their income; they wish to enjoy highly valued spicy consumer goods, including conspicuous ones. The demand for spicy products and sweet pepper powder is expected to grow steadily in countries with rising income. In these countries the Chilies of Ethiopia are preferred for their pungency and dark-red color. In some cases, however, the quality of these spices is poor due to unhygienic and poor drying and storage systems. Spices like ginger are more pungent and have high volatile oil content and are well-accepted in western cuisine. It was the largest Ethiopian spice export primarily to neighboring countries. However, due to the bacterial wilt disease of ginger, which spread throughout the country, production as well as its export, has declined.

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