The latest position paper and policy brief of Precise Consult under the title ‘Quality Control Systems and Regulatory Gaps in Ethiopian Agricultural Export Commodities’ recommends the government to give crucial and equal attention for agricultural commodities quality control similar to the one on the way to join international free trades. It said improving quality would give the country more earnings with out significantly increasing productivity.
The two documents that analyzed the country quality control system on agricultural products recalled the country has received notifications, warnings, and bans from several destinations on one or several of its agricultural products based on bad quality.
It stated that to be beneficiary and competent in the international market under trade organizations/agreements like African Continental Free Trade Agreement (AfCFTA) and World Trade Organization (WTO) it has also to give attention of quality supply.
“Ethiopia’s direction to be a member of international trade organizations/agreements (COMESA, AfCFTA and WTO), it is imperative to have a well-functioning quality control system and the regulatory framework to support it,” it said.
The position paper said that currently, Ethiopia receives 76 percent of its export earnings from its agricultural products such as coffee, oilseeds, chat, pulses, cut flowers, fruits, vegetables, dairy, and meat, among others.
The first five commodities cover 28.7 percent, 14.5 percent, 11.4 percent, 10.2 percent and 9.6 percent of the volume exported in 2018/19, respectively. Major export destinations in 2018/2019 were Asia (41.6 percent), Europe (25.4 percent), and Africa (20.8 percent).
It shows that how markets and destinations are strict on quality issues “high value markets, like EU or Scandinavia, have stringent requirements where they have little room for tolerance. For instance, for the EU, the allowed Maximum Residue Limit (MRL) level is 0.01 mg/kg for coffee export.”
It applauded that most Ethiopian agricultural products are known around the world for having a distinct flavor that is not matched anywhere else and for this many buyers wish to buy high volumes of produce be it coffee, sesame, spices, beans and others.
“Buyers from high-value markets like the EU are even willing to pay a premium price for it. However, Ethiopian exporters get stuck when it comes to the quality demand coming from buyers aside from other challenges. While the country has a trade deficit of over USD 12 Billion it is still targeting lower value markets due to their less stringent quality requirements. However, with the existing production volume, targeting lower value markets will not be able to close the trade deficit gap,” it elaborates the reality that Ethiopia faces.
It said that countries that have strong quality control on their products are getting significantly higher price for their export.
“The importing countries and their buyers are not paying low prices because of their incapability, as they are the same buyers that pay a higher value for other origins, but it is due to quality reasons a lower price is given to most Ethiopian products,” Precise Consult, who conduct policy papers in different economic issues says, adding, “therefore, without significantly increasing productivity, earning from export can be enhanced through improving the quality of agricultural export products and aim for higher value markets.”
As a whole, the agriculture sector has quality problems including contamination, poor post-harvest handling, adulteration, differing produce size and color, lack of traceability, lack of standards for certain products, and lack of incomplete market information, among others.
Lack of a comprehensive quality regulatory framework which posed several challenges for businesses and ultimately on the country’s export earnings is one of the reasons attributed for such poor quality of agricultural products.
“Overall, poor production, post-harvest, storage, and logistics is compromising the quality of agricultural products. Lack of well facilitated contract farming system, tracing system as well as quality check at various segments of the trading system including primary markets as well as more precise implementation of set regulations have hampered the performance of the private sector as well as the country’s international competitiveness,” it added.
It said that mostly quality control is undertaken at the final stage at the exporters hand or warehouses like on Ethiopian Commodity Exchange (ECX) but that shall be taken starting from the grassroots level.
“Quality control of agricultural export practice starts when products reach either the ECX warehouse in the case of pulses, oilseeds, and coffee, or the Ethiopian Coffee and Tea Authority lab in the case of coffee, or the exporters’ cleaning and packaging facility in the case of other commodities. The only exception of root -level control is in the case of commercial farms where on farm inspection is done by Ministry of Agriculture (MoA) for later certification before export,” it said.
It remind that over the past decades, the Ethiopian government has designed and amended its food quality and safety regulations to ensure a better quality control system for locally produced and imported goods, of which agricultural products are included. To that end different regulatory bodies and testing enterprises including one privately owned have been engaged on the quality control scheme.
Currently, there is no complete system for food quality and safety control in the country except efforts made by above stated institutions regulating some segments of the value chain.
“The fact that Ethiopia, through Ethiopian Standard Agency with other actors like Ethiopian Food and Drugs Authority, ECX, and MoA, sets (sub) standards that most of the time are not the same as international standards, brings an additional cost to exporters who aim at markets that require adhering to global standards. The country also has only one conformity assessment enterprise which is still not internationally recognized for most tests and one local private-run food laboratory. Both facilities struggle to import chemicals for testing, which makes the testing price extremely high,” it said.
It added that at a national level, the quality control policy and strategic direction need to answer the question of the main point of testing at the exit stage, “As that would only increase the rejected volume of products at the last mile and reduce export volume. Hence, advocating for more consolidation on improving and controlling the quality of agricultural products from production all the way to export is important.”
It alarmed that another potential national threat is the engagement of Ethiopia in trade setups like the AfCFTA and the planned WTO membership without a concise quality control system in place.
“Free trade involves availing more for consumers with better quality and or lower cost. Currently, most Ethiopian products are not the cheapest in African or international context. Moreover, low price is not always the competitive edge for the country’s agricultural products; quality could be the next factor buyers would be looking into.”
It said quality-oriented marketing would be a challenge for the country, thereby losing its market position, “also, the lack of quality-driven competitiveness among local businesses would shock the private sector and results in low economic performance in the short term.”
Besides policy and strategy, the policy brief recommended that to learn from experience of other countries and apply option of vertical integration for all commodities in order to give the private sector the means of trading traced commodities as well as investing in quality measures upstream while the public regulates the market to ensure there is no abuse by any actor.
Setting up quality control mechanism at primary markets with improved quality control infrastructure to enable corrective measures for the poor quality as well as avoiding aggregation of poor and good quality together, and incorporating quality standard awareness in the extension package as well as contract farming/outgrowers’ setups to increase quality orientation in production are other recommendations mentioned on Precise’s policy brief.
“Developing and implementing a strategy to adjust to international quality standards, while promoting market oriented policy may give higher volume export it does not automatically mean higher quality. Disease and chemical testing need to be conducted at national level for export commodities to maintain good national image,” the position paper added.