Ethiopia is to make its largest wheat purchase this year – 400,000 metric tonnes – in an effort to supply the 10.2 million affected by the drought and in need of immediate food assistance.
“The purchase will be covered by government finances,” Yigezu Daba, director of the Public Procurement Property Disposal Service told Fortune.
The National Disaster Risk Management Commission (NDRMC) ordered the procurement last week. The International Grains Council set the price of one tonne of wheat at 187 dollars, making the possible cost of this purchase 1.6 billion Br.
“We are almost done with the process and we will open a restricted bid in the coming two weeks,” Yigezu said.
So far, large industry players such as Hakan Agro DMCC, Promising International Trading and Phoenix have supplied previous purchases.
However, over the past months, logistics has been one of the biggest obstacles to the distribution of aid. Weak integration and coordination defied transport and distribution at every stage of the end to end process. Delays led to huge expenditure for demurrage, a cost that competed with the actual engagement, purchase and distribution of food and other emergency aid.
Reports emerging from the Port of Doraleh in Djibouti indicated that there is still a significant amount of aid stuck there because of a shortage of trucks from the Ethiopian side.
To make matters worse, the upcoming shipment will not have time on its side.
“Given the 120 day procurement and transportation lead time required, the funding gap should have ideally been covered by the end of February,” stated the UN Office for the Coordination of Humanitarian Affairs in its weekly bulletin on February 29. “The window for timely and effective action is rapidly closing.”
In order to tackle this issue, the Federal Transport Authority (FTA), mandated to facilitate the logistics, is considering the use of more trucks from Ministry of Defense, Alemayehu Wolde, director of Freight Transport Competency Assurance at the Authority indicated in an earlier interview with Fortune. Enough trucks in order to offload 12,000tn per day from the port are hoped to be accessed by this venture.
Finance is of critical shortage as well. The Ethiopian government’s budget allocation has so far been dominated by expenditure on the purchase of wheat for food aid.
Including donors’ contributions, Ethiopia has mobilized 680 million dollars out of the needed 1.4 billion dollars to mitigate the impact, with the major share contributed by the government.
Over the last six months, 1.4 million tonnes of wheat have been bought at a cost of six billion Br.
Hakan and a company called Huyton INC won the bid to supply the highest quantity at the cost 890 million Br in October, 2015.
The purchase was made on behalf of two federal government offices. The Ethiopian Grain Trade Enterprise ordered 605,000tn for the purpose of market stabilisation, and the remaining quantity went to the Ministry of Agriculture & Natural Resources to be directly distributed to those in need.
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