At the recent Ethiopian Fruits and Vegetables Investment summit held in Addis Ababa in July, the Ethiopian government, according to press reports, committed itself to supporting the development of a fruit and vegetable export sector similar to the floriculture sector that has been developed from nothing to an industry worth US$200 million a year in the last 10 years. According to the director general of the Ethiopian Horticulture Development Agency, the government is ‘preparing suitable land for investors, creating a better business operating environment, [and] facilitating adequate cold chain and logistics investments to ensure produce reaches regional and global markets in an efficient manner.’
The government is apparently hoping to build on the availability of input supply capacities built up around the floriculture sector. It is maintained that Ethiopia has the capacity to become ‘much more competitive than the continent's [heavyweights] in the sector, Kenya and South Africa’, due to its ‘low labor costs, extensive Government support, existence of input suppliers (already developed for the floriculture industry), and proximity to all the major markets’.
The Netherlands government is actively supporting Ethiopian efforts to promote the fruit and vegetable sector, and buyers interested in sourcing products from Ethiopia have been identified.
Ethiopia, meanwhile, is ‘seeking to enhance fruit and vegetable exports into the European market’ by getting to grips with food safety control and verification issues. At the beginning of July 2012 a workshop on setting up a food safety system to international standards was held in Addis Ababa under the auspices of the EU EDES Program (a €29.5-million EC-financed programme administered by COLEACP and European food safety organisations). The 2-day workshop focused on food safety issues from the levels of the producer through to the exporter, with a particular emphasis on establishing effective government control systems.
Horticulture sector development in Eastern Africa has the potential to improve the livelihoods of smallholder farmers if effective out-growers schemes are established around core export orientated commercial operations. Experience in Kenya, however, has shown that sector development needs to be largely driven by the private sector, with government providing an enabling policy environment.
Organisation of producers into cooperatives and farmers’ groups has often proved critical in empowering farmers, by improving the efficiency of service delivery, gaining economies of scale in input procurement and certification to the requisite standards, and in raising the bargaining power of producers within fruit and vegetable supply chains.
The development of partnerships between private sector core business units and smallholder farmers is also of considerable importance, with the nature of the contracts entered into being important determinants of the distribution of costs and benefits within specific supply chains, and the net benefits gained by smallholder farmers.
While the Government of Ethiopia is already dealing with food safety issues, and has the advantage of relatively cheap labour in attracting investment, it will also need to be alive not only to the underlying issues that need to be addressed regarding standards, but also the issue of the distribution of the costs of ensuring standards compliance within contractual arrangements.
The question of availability of affordable energy will also have to be addressed, as it has a significant bearing on the cost of production and competitiveness of the final product.
In addition, as highlighted by the recent experience in the floriculture sector (where export volumes and earnings declined as a result of administrative and logistical problems when shipping arrangements were changed), issues related to transport logistics management will also need to be systematically addressed, to ensure the smooth flow of products from farm to retail outlets.