BY ABEBE WOLDEGIORGIS
It goes without saying agriculture is the mainstay of Ethiopia’s economy. In addition, it is a major source of livelihood and export revenue for some 80 percent of Ethiopians and the national economy respectively. It also serves as a major supplier of raw materials for the manufacturing sector.
Despite the successive efforts to overhaul the sector, the country still faces challenges in terms of poverty reduction and food security. And one of the solutions to change this reality is to modernize its traditional agriculture sector. Besides commercializing the sector, one of the methods to achieve this goal is increasing productivity via the application of agricultural input.
The Ethiopian Agricultural Business Corporation (EABC) is a state-owned entity that imports and supplies agricultural machinery and inputs to supply it to farmers and agricultural enterprises.
The Corporation is celebrating its fifth year anniversary. It was established with 2.44 billion birr authorized and 610 million birr paid-up capital.
Kifle Woldemariam is the Chief Executive of the Corporation. In an exclusive interview with The Ethiopia Herald, he said as the government demands the corporation to build upon its paid capital; it is planning to increase it to 2.44 billion birr.
As to him, fertilizer is one of the key inputs which plays a crucial role in raising agricultural productivity and before the establishment of the corporation, the country purchase fertilizer from the international market via brokers and agents. This has also resulted in the exploitation of farmers and consumers. The establishment of the corporation could shorten the value chain and enable to supply of agricultural inputs at a lower price.
The new purchasing system via direct contact with producing company enabled the country to save 3.2 billion birr annually. The farmers can now buy a quintal of fertilizer with 382 birr and this is supporting them in improving productivity.
In addition, the Corporation facilitated the supply of more than one million quintals of selected seed to farmers and agricultural businesspersons.
Similarly, it provides services in relation to agricultural mechanization by providing machinery that is utilized in preparing extensive farms and harvesting products. These services particularly play a key role in reducing wastage of agricultural produces.
According to Kifle, EABC was established through merging five organizations which are the Ethiopian Selected Seeds Organization, the Natural Gum Production Organization, the Agricultural Input Supply Organization, the Agricultural Machinery and Technical Service Provision Share Company based on the proclamation number 368/2008.
By the first half of this budget year, it was predicted that the Corporation could face a deficit of some 3.03 million birr due to the outbreak of Corona Virus and the impact of the desert locust. Yet, it managed to change the challenge into opportunity; it increased the input supply of fertilizers, chemicals, natural gum and transport service provision to customers. Consequently, it paid its debt and made a profit of 60.4 million birr.
To meet the rising demand, the Corporation also reproduced selected seeds and supplied them to the market. This played a crucial role in raising productivity at the national level. In an effort to obtain land for producing selected seeds, it has requested to secure two hectares of land in Bonga area in South West Ethiopia. The area will be utilized for seed preparation, storage, office and laboratory work. In addition it obtained more than three thousand hectares of land in “Tamashalo” of Keffa for selected seed reproduction.
The challenges that the Corporation faced currently, among others, is the fact that regional governments have taken away its natural gum farmlands in Qunzila and Shalona towns. The scarcity of hard currency in commercial banks which in turn hampers the importation of spare parts ultimately crippled the Corporations service provision capacity to customers.
AS to Kifle, the Corporation suffered from looting and incurred property damage due to the political turmoil in various parts of the country. Because of the fluctuating circumstances in the exchange rate of the Birr against the US Dollar, during the opening of the letter of credit in Bank, the Corporation is asked to pay the difference worth 548 million birr by the Ministry of Revenue. This made the Corporations financial stability in an uncertain condition.
As the merged organizations which form EABC had been in service for long, their machinery are outdated and the scarcity of hard currency has become a challenge in the Corporations effort to replace them.
Despite the challenges, EABC is eyeing to achieve more success stories in the coming five years.
“The EABC as public enterprise supports the national development endeavor,” Kifle said adding “and as a business entity, it competes in the market to gain profit. It has a dual purpose and it crafted its five years plan accordingly.”
In its plan, it targets to provide services to customers with an estimated value of 19.6 billion birr and earn a profit of 1.5 billion birr before tax. In addition, it planned to boost its export earning capacity. Formerly the Corporation exported only natural gum products to foreign market but in the coming five years, it is planning to export other agricultural products by adding values. With this, it is planning to earn 20.8 million birr.
As a public enterprise, the Corporation has a duty to support the national development endeavor and to meet its goal as a profit-making company in the coming five years. It strives to supply 100 percent of the nation fertilizer demand and 27.7 percent of selective seeds demand.
To achieve the plan of enhancing the quality of selected seeds supplies, it allotted 45 million birr to import two incubation machines for selected seeds. It also allocated 32 million birr to import three harvesting machines.
To increase the supply of quality selected seeds, it prepares 3500 hectares of land and to that end, it allotted 159.6 million birr. It has allocated 19 million birr for the expansion of irrigation farms.
Based on the feasibility study and demand assessment, it has also budgeted 87.7 million birr to process and add value to the natural gum products and fruits to supply to domestic and foreign markets.
The Ethiopian Herald February 20/2021
