INVESTMENT OPPORTUNITIES IN AGRICULTURE
Agriculture is the main stay of the Ethiopian economy and a major source of employment for about 80% of the population. The sector, among others, is focused on export led development. It is also the most important foreign currency earner. Agriculture is open for foreign investment with a variety of packages of incentives available to both local and foreign investors. The sector is also a promising source of export diversification. With altitudes ranging from 148 metres below sea level to 4,620 metres above it, the country has 18 major and 49 sub agro-ecological zones, each with its own agricultural and biological potential. Thus the country possesses one of the largest and most diverse genetic resources in the world. Ethiopia has the soils and climate required for the production of a variety of food crops. Ethiopia has also more than 80 million hectares of arable land out of which 16% is under cultivation. Over all irrigation development potential is estimated at 3.7 million hectares of land while only 5-6% of this area is currently utilised. Irrigable large scale farms such as in the Rift Valley have big potential for the expansion of cash crops such as sugar, oil seeds and horticulture.
The major food crops grown are cereals, pulses and oil seeds. The country is endowed with vast resources of livestock, fishery and apiculture. A broad range of fruits, vegetables and cut flowers are fast-growing exports. Coffee, oil seeds, cotton, tobacco, sugar cane, tea and spices are the main commercial cash crops grown in Ethiopia.
Ethiopia has huge potential for investment in agro processing. The main investment areas available are;
- Processing of fruits and vegetables
- Processing of meat products
- Integrated production and production of fish and fish products
- Integrated Dairy farm
- Processing of crude and refined edible oil
- Processing of starch, cornflakes and edible oil from maize
- Processing of spices
- Manufacturing of baby food, roasted and ground coffee, soluble coffee, tea, yeast, vinegar, mayonnaise, artificial honey, and similar food products
- Production of spaghetti, macaroni and other similar products
- Brewing and wine making
- Sugar and sugar related products
Through the development of agro-processing, Ethiopia’s agricultural sector is expected to achieve rapid and sustained economic development for the long-term. Investors engaged in the agro-processing sector find encouraging incentives including abundant natural resources, cheap labour together with an attractive access to international markets. Export based agro-processing industries also enjoy loans extended by the relevant banks of Ethiopia.
Key agricultural sectors
Ethiopia is one of the biggest producers ofcoffee in Africa, with a reputation forproducing the world’s finest Arabica coffee inthe world. The word ‘coffee’ comes from the name of one of the many parts of Ethiopiawhere coffee is grown – Kaffa. Over 60% of Ethiopian coffee is produced as forest or semi-forest coffee. The soil of the forest floor is enriched from falling leaves, making fertilisers unnecessary. In these forests the high degree of genetic diversity has created a balance between pests and parasites,making chemical pesticides unnecessary. Coffee remains the most important foreign currency earner utilizing 600,000 hectares under cultivation mainly spread across the southern and south western highlands of the country.There is about 426,000 hectares of land unexploited opportunity for Domestic and Foreign Investors.Investors interested in roasting and packaging of coffee forexport purposes are also highly encouraged.
Ethiopia has gone a step further in creating due recognition and value to its premium coffee through a fair trade initiative. Five major coffees, namely, Harrar, Sidamo,Yirgacheffe, Limu and Nekemte brands are now trademarked. In addition creating value to the products,this initiative has ascertained that grass root coffee farmers could get better value for their products. For more information click www.ecea.org.et
Oil seeds and pulses
Ethiopian oil seeds and pulses are known fortheir flavour and nutritional value as they aremostly produced organically. The Ethiopianwhite sesame seed is used as a reference forgrading in international markets. Ethiopia’s major oil seedsand pulses exports include: sesame seeds, Niger seeds, linseeds, sunflower seeds, ground nuts, rape seeds, cotton seeds, castor oil seeds, pumpkin seeds, haricot beans, pea beans,horse beans, chick peas, beans and lentils. The majormarkets for Ethiopia’s oil seeds and pulses exports are: theGulf States, the European Union, Asia and neighbouringAfrican countries. Currently, there is a foreign investment surge in production of oil seeds and pulses which is encouraged under the investment code of Ethiopia. For more information click www.epspeaeth.org
Livestock, apiculture and fishery
Ethiopia has the largest livestockproduction in Africa, and the tenth largestin the world, with 50.88 million heads of cattle, 25.98 million heads of sheep, 21.80 million heads of goats and 42.05million poultry. Its dairy farming, poultry,meat and live animal industries which are organically produced are attracting huge export demand in the neighbouring countries and Middle Eastern markets. The global demand for increased food production has stimulated investors coming from the Middle East, Asia and Europe to participate in this sector.
The current annual production of honey and bees wax of the country is estimated at 43,700 tonnes and 3,600 tonnes,respectively. This provides a high investment opportunity in all aspects of the development of this untapped sub-sector in the production, collection, processing and marketing of honey and bees wax. In relation to this, the demand for the bee queen is growing rapidly providing an additional opportunity for investment.
The numerous lakes and rivers of Ethiopia provide huge opportunity for the development of the fishery industry. The total fish catch potential in Ethiopia is estimated at 40,000 tonnes per year. In addition to this, opportunities exist for investment in the construction of aqua culture to produce water fish for local and international markets.
Forest products and natural gum
Ethiopia is endowed with distinct climatic conditions, which enables it to grow diverse plant species used for industrialand pharmaceutical purposes. Acacia,Commiphora and Boswellia are just onegroup of the various plant species grownin the arid and semi-arid areas which produce gums. The increasing trend of consumption of convenience foods has enhanced the growth of production of gum and its use over the past few years. As in most other sectors of the additives industry, increasing health consciousness has also fuelled growth for thickeners of natural origin.
In Ethiopia, tea is mostly grown in the highland dense forest regions where the land is fertile and the use of fertiliser is very low. Moreover, the availability of abundant and cheap labour in the country has made the use of manual weeding instead of chemical weeding possible. Because of this mostly organic cultivation, Ethiopian tea is highly sought after. This is confirmed by the 'International Gold Star’ award for quality given by B.D.I. in Madrid, Spain to one of the major Ethiopian tea exporters –Tea Production and Marketing Enterprises.