Currently, Ethiopia receives 76 percent of its export earnings from its agricultural products such as Coffee, Oilseeds, Chat, Pulses, Cut Flowers, Fruits, Vegetables, Dairy and meat among others. The first 5 commodities cover 28.7 percent, 14.5 percent, 11.4 percent, 10.2 percent and 9.6 percent of the volume exported in 2018/19 respectively. Major export destinations in 2018/2019 included Asia (41.6 percent), Europe (25.4%), and Africa (20.8 percent).
The export trend of the country shows that high-value markets are not significantly targeted as exporters target destination countries where import regulations are at ease. This is not always by choice but with the existing functionality of many agricultural value chains exporters that are not producing themselves have no or little control over the quality of the products they export. Buyers that have strict regulations or demand on such parameters are difficult to access. High-value markets, like the EU or Scandinavia, have stringent requirements where they have little room for tolerance. Therefore, implementing an effective quality control system is fundamental to improve Ethiopia’s agricultural export volume and income.
Experts emphasize that with agricultural export countries getting more competitive for a better position in the international market, addressing internal hurdles observed in the export sector to improve the quality control system of the country would encourage competitive spirits of the private sector along with ensuring higher value for exports. It is high time to implement timely and proper policy measures to improve the agriculture sector export earnings. Having effective policy implementations immensely contributes to augment Ethiopia’s agricultural export earnings.
According to a research by Precise Consult International PLC, the agriculture sector faces different quality related problems including contamination, poor post-harvest handling, adulteration, differing produce size and color, lack of traceability, lack of standards for certain products, and lack or incomplete market information among others.
The main reason for this is the lack of a comprehensive quality regulatory framework which has posed several challenges ultimately on businesses and on the country’s export earnings. One of the challenges discouraging the private sector is misinterpretations of mandates among the leading public institutions which create inconvenience for the private sector in receiving efficient services. This associated with lack of coordination between offices; gaps in implementation; and capacity gap in agricultural marketing among staffs makes doing business much challenging.
Agri-business Consultant at Precise Consult International PLC, Helen Getaw told The Ethiopian Herald that private investors’ participation in the agriculture sector is fundamental to boost production and productivity. And ensuring quality is the major factor to generate more from the agriculture sector export earnings.
The absence of agricultural finance policy and strategy promoting the supply and utilization of agricultural finance products was among the identified policy gaps and challenges in the agriculture sector. This was reflected in the form of lack/shortage of credits, agriculture insurance services, and saving mobilization.
Currently, most of the Ethiopian agricultural produce is harvested through organic agriculture which gives more impetus to be competitive in the global market. Horticulture, coffee, soybeans, oilseeds, grains, among others are expected to dominate the Ethiopian agricultural products’ export volume in the future, according to her.
Having international certificates for healthy and quality agricultural products enhances the country’s efforts to attract the market and increase export volume. The ongoing quality policy preparation by the Ministry of Trade also facilitates the market channel and ease of reaching international agricultural traders.
Promoting financial accessibility, lease financing, and agriculture insurance, among others contribute to farmer’s and private sector practitioners’ engagement in quality agricultural products supply to the global market. Agricultural extension experts in the Ministry of Agriculture are expected to build their capacity to enable farmers and other agricultural producers to promote quality harvesting. Thus, the government is expected to work hand in glove with pertinent stakeholders; deliver agricultural inputs timely; and introduce new technologies to boost production and productivity, she recommended.
Mihiret Teamir, Precise Consult International PLC Agriculture sub-sector Project Coordinator said that setting innovative policy paves the way to improve the agriculture sector performance. Availing enough financial supply and subsidizing the agriculture sector is crucial to address the sector gaps.
To ensure agricultural growth, structural transformation, and economic development in the country, “accelerated agricultural financing” is the recommended policy direction, she noted.
Accordingly, she further stated that tasks that are required to enhance financial accessibility to the agriculture sector in general, and smallholder farmers in particular, include the following: Formulation of comprehensive and practical policies on agricultural finance and development of regulatory frameworks; Establishment of financial institutions, such as farmers’ cooperatives and unions to full-fledged banks; drastic improvements of smallholders’ financial services utilization through financial literacy.
Moreover, setting up institutions providing services such as financial literacy to including the smallholder farmers and pastoralists, business development support, credit appraisal services, and follow-up and evaluation of credit utilization is important, Mihiret stressed.
In addition, reorganizing an independent body promoting focused and knowledge-based, and accessible insurance services for agriculture are helpful to tap the agriculture sector potentials.
The experts recommended various policy options to enhance the country’s agriculture sector’s competitiveness in the global market. Setting up quality control mechanism at primary markets with improved quality control infrastructure to enable corrective measures for the poor quality as well as avoiding aggregation of poor and good quality together. Incorporating quality standard awareness in the extension package as well as contract farming setups is also fundamental to increase quality orientation in production. Having a system to timely add/adopt testing parameters of commodities based on international market trends enables to stay competitive.
BY TEWODROS KASSA
The Ethiopian Herald June 1/2021
