The spice, herbs and aromatic sub-sector earns low annual export revenue as compared to the exceptional quality and wide variety of the produce which could grow in the various agro-climatic zones of Ethiopia, experts indicate.
Revenue amounting to 8.775 million USD was secured over the last Ethiopian fiscal year [July 8, 2016- July 7, 2017] from the sub-sector. The two preceding consecutive fiscal years also saw 6.473 Million USD and 2. 560 million USD respectively, affirmed Eyoel Legesse, Fruit Vegetable and Spice Processing Industry Director with the Ministry of Industry.
Though the revenues seem to go on an upward trajectory over the years, the amount is still at progeny for a country that grows at least 50 of the 109 varieties of spices which the International Organization for Standard (ISO) lists, a 2014 research by Addisu Alemayehu indicates.
Yet, the country’s topography allows various unique flavors of spices, herbs and aromatic produce. To anyone’s amusement, the country’s topography could help grow spices of the same species with unique and distinct flavors.
Countries with favorable agro-climatic zones like Ethiopia are reaping the blessings of the sector being competitive both in the international and domestic markets. A single Indian leading spice global trader, for instance, secures over 4.6 billion USD annually. And Vietnam which started developing the sector three decades ago has been registering a crowning achievement. “Currently annual production surged to 140,000 metric tons spices which was only 4,000 metric tons before three decades. Actually, Vietnam has diverted its focus to the spice sector while a fluctuation occurred in the world coffee market.
Experts suggest that various measures have to be taken to earn more from the spice sector.
Addisu Alemayehu, a spice researcher, says the spice sector’s strategy should target varieties that are most tradable at a competitive price besides boosting product and productivity.
Highlighting that Food, Beverage and Pharmaceutical Processing Industry Development Institute is working towards this end, Eyoel Legesse Fruit Vegetable and Spice Processing Industry Directorate Director at the Ministry of Industry adding that spice growers, processors and traders also needs to forge stronger link among themselves to supply quality produce both to global and domestic markets.
“In addition, creating defined market system would also be important in linking spice growers, processors and traders in a well coordinated manner.”
Addisu says the government and investors’ awareness on the developmental boon of the sector is limited.
Private investors could have massively tapped the enabling economic policy, attractive incentive- which includes tax holiday and favorable financing options- and supports to acquire land, had they been well aware of the advantages of the sector. Likewise, the industrial (for instance dyeing, food preservative and pharmaceutical), export and environmental (promote deforestation for it could be intercropped) paybacks could have led to an aggressive promotion of the sector by the latter. “Research firms, government departments dedicated to the sector and other pertinent bodies have, therefore, tasks ahead of them in creating optimal awareness on the enabling situation for the production and marketing of spices, herbs and aromatic plants.
Producing competent human power to boost research undertakings on the sector is no less important. However, Addisu underscores the absence of any course on spices in the country. This evidently hampers the generation of innovative practices.
Addis points out that three types of spices: Chili, Capsicum and Black Pepper are traded largely and account more than 44 percent of the global market or 16 billion USD.
“So, if Ethiopia aspires to earn and benefit more from the sector, it has to focus on increasing production and exporting of these three products through developing a strategy and upgrading its agricultural extension,” according to Addisu.
He also suggests the formulation of policies and regulations on marketing, standard of produce, certification and human power development. The government should also implement the ten-year Spice Development Strategy (2015-2025).
In addition, due attention should be given to processing, manufacturing and packaging to get the best out of the sector, he adds.
Dr. Dejen Gebremeskel is Owner and General Manager of Dejen General Exporter that has been engaged in the sector for over eight years. For him, lack of standard products, suppliers and competent companies are additional setbacks. Moreover, the spice value chain has also been facing challenges from less informed brokers.
Of course, the private sector should devise innovative mechanisms to tackle the problem. In this regard, we have embarked up on contract farming agreement with farmers which marks the end of brokers’ reign at the top of the value chain.
Dejen affirms that the global spices’ market has shown a raising demand which is good news to potential emerging suppliers. Thus, spice growers and processors that have been long engaging in the sector, and those who aspire to engage have the opportunity to earn their fair share by strategizing production, he adds
For his part Addisu said that Tepi Agricultural Research Center has released two best Black Pepper varieties which are better competitive than Indian and Vietnamese ones. Melkassa Agricultural Research Center has also developed capsicums and chili varieties and distributed to farmers.
On top of this, the government has decided to set up an independent coffee, tea and spice research institute, he discloses.
Furthermore, Spice Production, Processing and Marketing Initiative has been made effective. The Initiative is aimed at supporting both smallholder and commercial growers by providing services which make them produce good quality spices. It also avails technical and financial assistances to processors, while helping traders, mainly exporters, through creating international market linkage, Eyoel adds.
Accordingly, Ethiopia has been earning 28 million USD only from Ginger per annum exporting fifty two percent to Sudan, but if it was exported to European countries, meeting EU standards, the revenue could have been tripled or doubled.
Research based spice production, formulating appropriate curriculum for the sector, and raising pertinent bodies’ awareness would top off the sector making the country better competitive in the global spice market, the experts agree.
BY TEWODROS KASSA
The multifaceted benefits of spices, herbs and aromatic sub-sector have remained largely untapped tough the favorable and wide agro-climatic zones of Ethiopia enable the production of high-grade and wide-variety of the produces. The sector’s contribution over the last Ethiopian fiscal year was, for instance, about 0.3% of the annual export revenue. The tiny food seasoning and industrial inputs have not been, therefore, properly utilized to support the growing economy.
The contribution could have been lavish for a country that grows 50 of the 109 varieties of spices that the International Standard Organization (ISO) lists had those in the value-chain applied scientific approaches of the production, processing and marketing.
On top of this, the country’s topographic diversity has made the production of distinct taste spices possible even across the same species. Additional potential on the supply side is the attractive fiscal and non-fiscal incentive package to both domestic and foreign investors. Tax holiday, assistances to acquire investment land, importing capital goods duty free and benefiting from export credit guarantee scheme are just to mention few of the incentives.
On the demand side, global organic spices consumption for cuisine flavoring and industrial input is roaring up. Traditional spices suppliers, however, are unable to even meet their respective domestic demands. Estimates show that countries import 5.25 million tones of spices, valued at 1,500 million USD, while the amount grows at a rate of 4 percent. On the contrary, global production is about 8.5 million tones, worth 25 billion USD, shows a 2015 fact sheet by Netherlands-African Business Council (2015). The difference is, obviously, the increasing consumption of the most expensive spices by producing countries.
This deficit in the global market has, therefore, opened a window of opportunity for countries that have favorable agro-climatic zones and economic policy, among others. In this regard, Ethiopia stands among the top few countries that have ample potentials to supply high-grade and wide-variety of spices both to domestic and global markets. The question is: How can the country increase its global competitiveness in spices, herbs and aromatic produces’ production processing and marketing?
To earn more foreign exchange and broaden the export base, the spices’ sector should identify and grow the most tradable spices. Chili, Capsicum and Black Pepper (black pepper is also called the king of all spices) are highly tradable at a competitive price, for instance. Thus, the sustainable production, processing and marketing of such highly valuable produces help to increase economic benefits out of the sector. This is, however, hard to come by unless the sector is supported with rigorous research undertakings. Research firms of both public and private ones have responsibilities in emulating, and replicating best practices, in one hand. The firms need to nurture the sub-sector’s value-chain by introducing and expanding scientific approaches of production, processing and marketing, on the other.
The proper implementation of the ten-year (2015-2025) National Spice Sector Development Strategy is also no less important. The strategy is aimed at boosting the sub-sector’s earning hence to expedite the national aspiration of becoming a middle income economy by 2015. As the country is toiling to make the manufacturing industry one of the top earners during the GTP II period, the spices sector provides ample opportunity for the expansion of processing and packaging industries.
Finally, raising the awareness of smallholder farmers and investors engaged in agribusiness would pay off in immense. One defining attribute of the spices, herbs and aromatic production is that it could be intercropped. Due to this, smallholders, particularly the youth, can diversify their income without the need for additional farmland. Equally, the media along with pertinent government and non-government bodies has to promote the sector to lure more investors who could engage to the sector. And the promotion should not be a onetime campaign; it rather has to go on a regular basis.
The enabling investment climate in the country in general and the supports provided by Debre Brhan Town in particular have resulted in attracting over 400 local and foreign investors who run an aggregate capital of 26 billion Birr.
In an exclusive interview with The Ethiopian Herald, Town’s Mayor Tagel Amsalu said that the 86 per cent plain land of the town makes it suitable for investment. Over the last Ethiopian fiscal year more than 167 investment requests were presented to the Town’s Administration. The Administration provided licenses and offered investment land for 56 companies that fulfilled the criteria, Mayor Tagel added.
Currently, more than 200 investors are engaging in manufacturing sector only in Debre Brehan, out of this around 34 are local companies, he said.
According to him, the investors have engaged in manufacturing glass, textile and apparel, beverages, mineral water purification as well as, processing hides and skin.
He emphasized that the local-international companies’ partnership is contributing its parts towards augmenting technology and knowledge transfer, creating overseas market linkage as well as fulfilling capital gaps by local investors.
Mayor Tagel further elaborated that more than 13,000 citizens have been offered with job opportunities created only by the town’s investment sector.
“We have achieved the goal laid in creating a town that transited from darkness to brightness. Our town is marching to realize industrialization. We are highly committed to provide the required supports for investors who come to our town”
Temperate climate, suitable soil for construction and immense underground and surface water are the natural endowments of Debre Drehan while, brand livestock sheep and spices are the defining attributes of the town and its environs that could enhance the booming investment, he said.
According to him, the federal government has availed 100 hectare tract of land paying 41 million Birr to relocate residents and establish industrial park in the town while the Amhara State Government has been undertaking State Industrial park construction on 20 hectare of land as well as a 350-mega watt electric substation [50 per cent completed] under-construction near the town industrial park.
He underlined that the huge industrial inputs potential pave the way for the establishment of meat, milk and milk products, flour and beer processing factories to mushroom in the historic town.
“The town and its surrounding areas are rich in different minerals; like glass and glass products and construction raw-materials. Besides, the ever-growing agricultural production and productivity in the area is also contributing its part as a greater pull factor of the increasing investment.”
He confirmed that in the near future the town would see 13 star hotels.
He also said that naturally the town is gifted with abundant resources. This coupled with its proximity to Addis Ababa, and Djibouti Port gives ample opportunity to sustain the current socio-economic development.
Mentioning the main reasons for the town’s success in attracting more brand companies, Mayor Tagel said, adding the recent urban development policy and strategies as well as the commitment of the town’s leaders are catalyzing the industrialization.
US, British, Chinese, Indian and other African countries’ investors are hugely joining the investment sector in the town. These investors have confirmed the profitability of investing in the town.
BY TEWODROS KASSA