As the government raises the need to add value, quality and diversity of export items, exporters on the other hand seek the removal of barriers in the exporting process. In a six months report to the House of Peoples Representatives (HPR) recently, Ministry of Trade and Industry has disclosed that the country’s export trade during the stated period has plummeted by 38 percent.
Among the reasons for the decline in the export volume and revenue is the decrease in the global market price and the attractiveness of the local market for the products. Agricultural produces account for the lion’s share of the country’s export items, which is more than 75 percent of the total. The products were exported as raw materials without value addition.
The country can’t obtain the expected benefit from the products as a result of lack of value addition on products. Ministry of Trade and Industry’s Public Relation and Communication Affairs Office Head Wondimu Filate told The Ethiopian Herald that, some private and government companies have recently started exporting products by adding value.
Without denying the need to maintain quality, diversity and value addition for export items, exporter on the other side argue that the country’s agricultural products can penetrate in to the global market even if without adding value, and the already available level of quality.
The overseas market is more attractive to the export items than the local one. However, the exporters are forced to sell out their export cash crops as they are embittered by the various hurdles they face in the process. Among the problems surrounding the gap in export trade is the intervention of intermediaries like brokers and commodity exchange market, exporters complain.
Edao Abdi, owner and General Manager of an international trading company says farmers are not allowed to directly supply their produces to the warehouses of the commodity exchange market which unfairly benefits the suppliers and brokers.
This also forces farmers to either hoard their produces or shift to other agricultural items that are not required by the commodity exchange market. Moreover suppliers are required to keep produces in warehouses for 45 days which exceeds the 30 day deadline exporters are required to supply as per their contracts.
He added since some suppliers are also exporters they are in a position to cause price distortion. Some investors who have farms of cash crops also abuse the commodity exchange platform to keep prices very high so that they can sell their produces in the local market on high prices.
Furthermore, many expenses are associated with the long chain of supplying items to the warehouses of the commodity exchange which raises the price of the items which renders them incompetent in the export market. Expanding agro-processing parks would have a critical role in tapping the country’s abundant agricultural resources and earn more foreign currency.
Expansion of the parks would help to improve the economy of the country as well as to boost production and creating market chain for the produced products in international market. However, despite the priority given to the sector, and the fact that the country’s export capacity has increased significantly, the performance of the export sector is plummeting and much effort remains. According to him, the country can go about it either by adding new products on the existing export product, by processing the products and thereby adding value to them.
This will enhance Ethiopia’s competitive capacity at international level and it also helps the country in increasing global market opportunities. Wendimu stressed that, if we work on adding quality value to them, and work on shortening the value chain of our export goods, we can make our exports more competitive and the country will benefit more.
According to him, these direct and indirect measures are expected to give an impetus to improve the competitiveness of the country’s export sector, and maximize its contribution to Ethiopia’s economic growth and vision of entering middle income status. Edao on his part noted fixing the export gap is all in the hands of the government as all it needs is removing the stated hurdles without any precondition and allow the smooth flow of the export market.
Herald January 26/2019
BY HAILE DEMEKE
