It was back in the early 2000's that the floriculture Industry was introduced to the Ethiopian land. Rolled by different kinds of promotion and subsidies the industry has become among the major forex sources. But before a few years the industry starts to suffer after the laps of the holidays. Most significantly the unrest pulled the step back. But the past few months carried good news for European market-based growers of the nation. Writes HAIMANOT ASHENAFI, FORTUNE STAFF WRITER.
Based on his decade of experience in the floriculture industry, Zegirum Assefa, current manager of Olij Roses Ethiopia has a lot to tell about the industry.
He started his carrier at Sher Ethiopia, one of the leading flower farms in Ethiopia, 10 years ago – when the market was attractive, and many local and international companies were rushing to joining the business.
Growers from different parts of the world were excited with the incentives provided by the government and the potential cheap labour force. Notably it was the best time for the companies who have been in Kenya, the country that was in crises following the 2007 election.
Zegirum recalls that many companies set up their greenhouses in Ethiopia, which has a favourable climate for floriculture development due to its location in the Great East African Rift Vally, back then.
His current employer is the one taking and developing 20ha in Bishoftu town 37Km east of Addis Abeba, where other prominent flower farms reside such as Friendship Flowers Plc, ZK Flowers and JoyTech Plc. Currently, the number of horticulture investors has reached 172 of which 44 of them are floriculture investments, cultivating a total of 1,252ha of land.
Olij currently has 400 workers and 30 administrative staffs, with two of them being Kenyan. It exports one million cut flowers to the Netherlands, where the mother company is registered and engages with a retail business.
The company also supplies 90pc of propagations, breeding of specimens of the flowers, for the local farm which used to get the breeds from Kenyan previously. It sells a single propagation for 0.3 euros.
Even though the company mainly depends on the local market, the excitement back then could not last long. Five years ago business started to become challenging for the company as its tax-holiday laps and was replaced by high bills in tax.
Not only Olij but also Large-scale flower farms were requested to pay as high as one billion Birr in tax. It was coupled with the recent massive political violence in some parts of the Oromia and Amhara regional states, where many floriculture farms reside and become another headache for the companies.
The most prominent incident was the blaze of 10 flower farms, which were located in Bahir Dar, in September of 2016 due to a violent act. The damage was estimated to be worth a billion Birr summing the greenhouses, vehicles and grown harvest.
To make it worse, the weather was lousy for many farms, who needed warm weather, during the first three months of the current Ethiopian year. The temperature went below zero degrees centigrade, which stagnated the growth of the flowers.
“The nighttime temperature determines the output,” said Zegirum.
A headache keeps with another challenge, just two months ago the major feeder roads to Addis Abeba were closed due to a sit-in which was called for a week in most of the towns in the Oromia Regional State.
As a result, many companies could not transport their products to Bole International Airport, Addis Abeba leading them to lose the valentines day business.
Aiming to reverse the challenges of the industry the government and major players in the area efforted to ease the difficulties of the businesses. Just some months back the government extended the tax grace period for flower farmers widening the tax holiday for an additional five years.
Ethiopian Airlines has also launched a direct flight from Bahir Dar to Belgium, the principal destination of Ethiopia’s flowers.
Though it had failed, the Ethiopian Horticulture Producer Exporters Association had also organised an expo dubbed as ”HortiFlora Expo Ethiopia” which was to be held in Addis on March 14, 2018, for the seventh time with the primary aim of encouraging the industry and attract global buyers.
However, the exhibition was cancelled for the second time as a result of the foreign investor’s decision not to take the trip fearing there is unrest, according to floraldaily.com, a well-known website for the sectors updates.
With the accumulation of the kinds of challenges, close to 12 growers switched off to strawberry farming which they believe is profitable, according to a data from the Ethiopian Horticulture & Agriculture Investment Authority.
Notwithstanding, the bleeding sector to death, the past few months carried good news for floriculturists like that of Zegirum.
Since the past two months, the floriculturists started to cheer up, as the demand for local flower blooms due to a couple of reasons such as the recovered weather, supply decline of Kenya and devaluation of the dollar against euro.
The devaluation of the dollar against Euro takes the primary attribution as Ethiopia mainly exports its flowers to the European countries more dominantly to Holland. The Donald Trump administration devaluated its currency with the primary aim to discourage imports from China and encourage export to the Chinese market.
Within a year the US dollar was devaluated by 15.8pc against the euro, this coupled with the recent devaluation of Birr by 15pc against the baskets of the major currencies including euros, created a bright day for flower growers in Ethiopia.
European countries are also fully eying Ethiopia as a source of flower, as Africa’s leading supplier Kenya with 31pc market share in the European Union member states, was hit by bad weather that damaged its flowers.
Kenya, who leads the African market generating close to a billion dollars from the entire horticulture industry annually, was affected by the weather last year registering a 60 million dollars revenue decline.
Even more, the heavy rain, which started in March 2018 and is forecasted to extended until May, causes floods which could affect the greenhouses in the country.
The same incident occurred in Kenya back in 2015, when Naivasha, a market town in Nakuru County, Kenya lying north-west of Nairobi, suffered from the severe flood with some prominent companies having reported the drop in the production almost by 20pc.
Supply cut from Kenya can potentially cause a price increase on the products of the local flowers, according to Habete Jebessa, (PhD), an agro-economist at the Addis Abeba University College of Natural Science.
“This could help Ethiopia to earn more from flower export,” Habete told Fortune.
For the current fiscal year, Ethiopia targets to earn 433 million dollars from horticulture export, up from the 271 million dollars it generated last year exporting 1.7 billion kilograms of cut flowers.
“The outcome will be recognised well in the coming months,” said Adugna Debella (PhD), deputy chief executive officer of Ethiopian Horticulture & Agriculture Investment Authority.
But Olij has already started reaping the fruit. The company has generated 445,500 Euros from cut flower export in the first 20 days of March, up from 325,900 euros it had generated 20 days in February.
Zegirum hopes that his company could earn better in the coming months listing the current positive signals, but Habte, the expert, recommends the government to focus on maintainable measurements to stimulate the industry, than the current seasonal boom.
“The government should work on environmental protection to increase productivity,” said Habte.
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