BY ABEBE WOLDEGIORGIS
Ethiopia needs nearly 2 billion Dollar in the coming two years to import unprocessed edible oil inputs that can be used for its production in order to meet the domestic demand which in turn needs maximum effort from the concerned bodies.
During a public discussion conducted recently here in Addis focusing on the current shortage of edible oil and its inputs’ high cost, it was noticed that the nation’s edible oil demand is highly exceeding the amount of local industries are producing. This deficit poses a great challenge to the nation regarding the supply of edible oil.
On the occasion, Melaku Alebel, Minister of Trade and Industry said that in the already began Ethiopian budget year, the nation’s edible oil demand will rise to 906 million liter and to meet the demand, 993 million Dollar is required.
According to the Minister, based on the estimation for the 20212/22 and 2022/23 Budget years, 1.9 billion Dollar is required for the importation of raw inputs to be utilized for edible oil production. He further said that, the amount of hard currency required for the importation of unprocessed oil raw material exceeds the amount of money allocated for the importation of purified edible oil.
In order to curb this discrepancy, thus, the government with cooperation of the private sector has gone a long distance during the past three years. Doing so, could increase the number of edible-oil producing factories from 14 to 30 and enhanced their producing capacity from 89 million liters to 1.25 billion liters annually. Nevertheless, they are still unable to meet the increasing demand. Among the reasons for the failure is low productivity that is below their producing capacity due to various reasons.
During the discussion, a study paper was also presented and as to the paper, currently 95 percent of edible oil is imported from abroad and most producing factories also utilize imported unprocessed raw materials. Unless the inputs are substituted by local products, edible oil importation with high foreign currency will continue and its price will continue soaring as well.
The study further indicated that, due to the negligible effort to provide sufficient amount of inputs that fit the number of increased edible -oil producing factories, it was unable to substitute the imported oil yet. Hence, meeting the nation’s edible oil demand requires at least 10 years.
As to Melaku, even though there is sufficient capacity to meet the whole demand by the already producing factories at the moment, they are forced to import raw materials for the factories as a result of lack of sufficient oilseed supply locally.
Commendably, efforts are being exerted to substitute the imported materials by local products in the coming years and to that end, creating strong ties and value chain between oil seed producing farmers and the oil industries is undergoing.
In order to strengthen the effort, agricultural investment promotion work is undergoing so that concerted efforts with the cooperation of other stakeholders are put in place to meet the goal.
Be it is, efforts exerted to substitute imported edible oil raw materials during the last three years, bore tangible outcomes. As a result, it was possible to produce 46,580 tons of fatty acid and 32,606 tons vegetable butter from byproducts of edible oils input that enabled to save 75.23 million Dollar which would be allocated for inputs importation.
In line with this, job opportunities could be created for 4,000 citizens in the refining industries of unprocessed oil raw material. Currently, therefore, the nation’s capacity to produce edible oil has reached 1.25 billion liters and this indicates that if concerted efforts are exerted, attaining the goal will be realized.
However, though it is uttered by the Minister in such a way, the reality on the ground indicates that the price of oil in the market is soaring yet. As a part of reason here, in Ethiopia once the price of a commodity soared, it will never be slow down and the price of edible oil can be a case in point.
While new oil producing industries are flourishing in the last subsequent months the price hike on edible oil is exacerbated and this situation makes the matter an odd.
Flourishing of the factories and increasing in their output, could not stabilize the market. Rather, it is exacerbated. Years ago, for instance, the price of five-liter edible oil was not more than 350 Birr but now it is between 560 and 600 Birr.
If the oil factories currently operating able to produce in their full capacity, it could be possible to meet the whole aggregate demand but due to various reasons, they are producing below their capacity.
To tackle these and other challenges, the government is encouraging investors who have interest to involve in the agro-processing business and incentivize them by providing land and facilitating loan from banks. As a result, the number of agro-processing industries is flourishing. However, some argue that despite the expansion of the industries they did not bring a positive out-come in stabilizing the market price.
According to the study presented, insufficiency of the inputs remained as a bottleneck to the factories so that they are coerced to produce below their capacity for the reason that only 6 percent of oil seeds locally produced is utilized as input whereas the remaining great amount is exported.
Therefore, raising the factories oil producing capacity is vital by enhancing the volume of oil seeds production. By the same token, in order to meet the domestic demand in the coming 5 years, concerted efforts from all stake holders should be exerted.
According to the short-term plan, Ethiopia is running to attain self-sufficiency in edible oil production within three to five years and it is planned to succeed total substitution of the imported edible oil within five to ten years.
The Ministry of Agriculture as a stakeholder participated on the discussion platform and pledged to work with the cooperation of the Ministry of Trade and Industry.
Among the solutions forwarded by the participants is raising the productivity of oil seeds per hectare through utilizing irrigation farm. Similar to the wheat production, introducing irrigation farm for oilseed cultivation is taken as a way out. It is also the belief of the participants that political decisions also play a pivotal role in stabilizing the market.
According to the study, the currently operational edible oil factories need more than 6 million quintals of oil seeds. In Ethiopia, there are 232 edible oil industries operational at the moment including the 30 edible oil refining industries. Out of these, 26 are medium and higher enterprises whereas the rest 206 are small scale factories and they are running their business struggling with the shortage of inputs and to address their problem, organizing them in cluster was forwarded as solution.
THE ETHIOPIAN HERALD AUGUST 27/ 2021
