Despite the progress in enhancing commodities quantity and diversification, Ethiopia’s agribusiness industry is still in quest of competitive quality and value-addition to bring about the needed foreign exchange and structural transformation, economic experts say.
As agriculture accounts for over 46 percent of Ethiopia’s GDP and more than 76 per cent of its export revenue as well as the majority of employment generation, agribusiness is considered as a major economic activity in both the first and second Growth and Transformation Plan (GTP)periods.
For a Researcher and Agricultural Marketing Consultant, Dr. Shiferaw Mitiku, the conducive climate condition, export-oriented agricultural policy, attractive incentives, macro-economic stability and trainable labor force constitute the competitive edge for Ethiopian agribusiness industry.
He also points out that the country has enormous potential for agribusinesses such as milk and milk products, fruit and vegetables, textile, food processing as well as spices production and processing, among others that could attract the attention of both domestic and international investors.
The expert notes that the government has made commendable activities to lure private investment in agribusiness industry and to improve competitiveness providing export incentives, customs duty exemption, income tax holidays, and offering land in competitive lease price.
The ongoing aggressive development of integrated agro-industrial parks (IAIPs) is smart intervention to commercialize the agriculture sector and improve the livelihoods of the people, he says, adding that the parks have also key role in maintaining economic growth and bringing about structural transformation.
Furthermore, the current government has established various institutions including the Ethiopian Agricultural Transformation Agency (ATA) in the view to enhancing the growth of agricultural sector.
Sharing the above stated remarks , Agricultural Economist Dr. Fikru Deksisa says that the so far infrastructural development activities and the available conducive business climate have paramount importance in encouraging the private sector to take part in agribusiness.
According to him, the various agricultural policies and strategies adopted by the Ethiopian government and privileged investors that are entitled to tax holiday, duty free imports and access to bank loans are also among factors that have attracted business people into agribusiness investment.
He indicates that the existing establishment and expansion of agricultural processing plants would play key role in substituting imports and addressing the growing demand for catering products from the Middle East and Europe. “Ethiopia’s organic agricultural commodities is an asset for the ever-expanding economy and they also offer an opportunity to the country enter into international markets where prices for organic items increasing time to time.”
Despite all these, there is a huge imbalance between Ethiopia’s potential for agribusiness and the actual performance ,Wollo University Applied and Agricultural Economics Ass. Prof Hussein Beshir says in this regard that shortcomings to meet international quality standards and too much dependence on few exportable agricultural items are widely considered to be factors contributing to the unsatisfactory performance.
He notes that inadequate infrastructural connectivity and ineffective agriculture- industry linkage are also among the major hindrances. “Due to farmers’ limited knowledge on best agricultural practices, Ethiopia unable to utilize the competitive advantage it possesses in several crops, fruits and vegetables.”
He also points out that the presence of numerous middlemen in the market value chain causing ineffective linkage between producers and the final consumer and contributing share to unnecessarily high prices of Ethiopian commodities in world food markets.
“The limited communication between farmers and processors also causing the former to have little incentives to produce high quality products, employ best handling practice and invest in high quality inputs or adopt best agronomic practices that all hamper product and productivity.”
Lack of skilled labor in the area, financial constraints as well as limitations in accessing agricultural technologies and inputs are among the sector’s challenges mentioned by Dr. Hussein.
All experts agree that fostering Ethiopia’s agribusiness industry is not a sole responsibility of a single government entity, rather all actors in the sector need to take share.
Providing exports at the desired quality level and appealing package are crucial to narrow the gap in Ethiopia’s potential for agribusiness and the actual performance, Dr. Shiferaw says, adding that addressing quality issues is also vital to change the existing low interest for Ethiopia’s agricultural exports. The scholar further points out that the government needs to invest in human capacity building programs and provide continuous support for stakeholders in the agricultural value chain to ensure the quality of export commodities.
By the same token, Dr. Fikru states that encouraging innovative ideas in the agribusiness industry and sustaining the existing quality reform programs and commodity quality and safety inspection tests would play crucial role to ensure quality of exportable commodities.
The experts highlight that upholding the ongoing establishment and expansion of agro-processing industrial parks would have paramount importance to produce value-added items and bring in more foreign currency. Through incentivize and subsidize agribusiness modernization and mechanization efforts, Ethiopia will enhance the linkage between agricultural and industrial sectors thereby accelerating economic transformation, they remark.
(E.P.A)
BY BILAL DERSO
