Shortage in foreign currency pinches exporters

By Muluken Yewondwossen

WoubGet Business Group, through Flowerport Perishable Plc urges government to give the node in obtaining foreign currency from European sources in order to set up a cold chain platform for the export of perishable fruit.

The massive logistics company, which was instrumental in getting Ethiopian roses onto the international scene, has been busy setting up its handling facilities near Mojo Dry Port, which is close to the Ethiopia-Djibouti railway line, in order to make it easier for exporters of fruits, primarily avocados.

When things did not pan out as expected owing to land parcel issues, Flowerport has now resorted to adapt to the situation.

The logistic company, a major player in handling inland transport for flower export, has entered into a 30-year lease agreement with Oromia Industrial Parks Development Corporation to use the Meki Rural Transformation Center (RTC), an existing facility, as a hub for preparing fruit for export.

According to Dawit Woubishet, Director of WoubGet Business Group, “The RTC will service the collected avocado from farmers with value added to it for export,”

“The Meki RTC is close to the location where we are proposing to establish a processing factory in accordance with the original design,” Dawit further explained.

The company’s first investment plan was for 350 million birr, of which the Development Bank of Ethiopia (DBE) provided some funding.

He stated that although the long-term loan has been granted by the state-owned policy bank, DBE, a temporary halt has been imposed due to the delay in obtaining land from the Oromia area.

“Since we can now utilize the resources that Meki RTC has to offer, we are searching for foreign exchange to finance the import of the processing plant that will be set up at the RTC,” Dawit said to Capital. According to him, it now costs up to USD 2 million to purchase the necessary equipment, “If DBE avails the foreign currency, we will be all set to buy the equipment.”

As he explained, since the next avocado harvest season won’t occur until the second quarter of 2024, there isn’t enough time to wait for the foreign currency.

“We are aware that the nation is experiencing a shortage of foreign currency, so if the policy bank fails to provide the foreign currency on schedule, we will apply to the National Bank of Ethiopia, the country’s central bank, to obtain the foreign currency from an overseas financier so that the company can purchase processing machinery, reefer trucks, cold chain, and packing houses,” he clarified.

He stated that although the Italian financier has consented to fund the project, the central bank’s guarantee is still required.

Thanks to initiatives taken in the previous few years, the firm was ready to capitalize on the recent harvest season, which brought with it a significant amount of production.

“Due to the delay in gaining access to the land, we were unable to utilize the previous harvest season, which took place in August and September. The avocado is currently scheduled for shipment in the next few months,” he stated.

“If we receive foreign exchange and import, the necessary machinery and equipment, we will begin exporting within the next six months,” he projected the set goals.

A few years back, however, an experimental program saw avocados grown at Bahir Dar, which is located some 650 kilometers north of Addis Ababa, transported by vessel.

The product demonstrated encouraging quality during the testing, despite certain supply chain difficulties.

One problem identified in the experiment was the absence of an adequate and well-functioning supply network, such as reefer containers and trucks, pack houses, and processing facilities.

Despite the country’s volatility presenting an issue, exporting avocados has been noted to have the potential to bring in a substantial quantity of foreign exchange. As data shows, 60 percent of the function in the perishable business is played by logistics.

According to experts, rather than being managed on the large scale commercial farms found in other countries, avocado production is managed by farmers in Ethiopia through cluster schemes.

As a result, the private sector plays a crucial role in facilitating, sorting and packing houses, trucks, and storage. Because of this, the government as said by many ought to directly assist the private sectors in developing the platform.

Ethiopia is making progress toward its goal of increasing the production and export of fruits and vegetables, thanks to the support of sea freight.

Because it offers a competitive advantage in the worldwide market, shipping perishable cargoes via boats has strongly been advised. Ethiopian fresh produce exporters and producers, together with other players in the fruit and vegetable sector, have repeatedly brought up this crucial problem over the years.

The government has been conducting several pilot programs and attempts to export perishable goods using boats that are packed in reefer containers in an effort to address the issue.

Avocados from Ethiopia have been shipped as part of the project to the European market, which is anticipated to grow in the upcoming seasons.

The perishable logistics firm already has 20 reefer trucks, but it also plans to add another 20 trucks of various sizes, including compact cars that will gather high-quality items down to the farm cluster.

The firm, which is well-known for being the industry leader in cold trucks, also plans to purchase ten reefer containers in order to speed the export of a new commodity that the nation has planned to replace hard money with in the upcoming years.