Relying on TPLF’s powers & influences, EFFORT’s Abergelle is muscling in on competitors, instead of winning market thru competition

9 Feb

By Keffyalew Gebremedhin – The Ethiopia Observatory (TEO)

Topping the Africa list in its livestock population and ranking sixth in the world, the potential of the livestock sector for Ethiopia cannot be disputed.

First state-owned abattoir was established in Ethiopia in 1957, which in 1992 was renamed the Addis Ababa Abattoirs Enterprise (AAAE) under the Addis Abeba city government. One thing Ethiopians from young age and for the greater part of the last century have been made to realize at schools is how richly Ethiopia has been endowed with livestock resources.

To date, nonetheless, it is noticeable that Ethiopia has hardly managed to draw benefits from this national wealth it richly deserves. Among others, the livestock sector has been afflicted by lack of modern management system and practical knowledge about market identification to create niche for the products. In turn, this has caused Ethiopia’s uninterrupted absence from the ranks of nations listed in the statistics of world milk producers, or in the cheese, beef and veal markets. That being the case, unsurprisingly it has come to be known as a country that could not even feed itself.

It is no laughing matter, therefore, that at a first glace the presumed omission of Ethiopia, for example, in such notable global reports and data prepared by the US Department of Agriculture (USDA) spurs many citizens into dismissing it out of hand as erroneous for not carrying their livestock-inventory-rich nation’s name – as per their education of Ethiopia’s livestock wealth and the world view it has inculcated in them.

Perhaps, to the best of my knowledge, the most serious improvement of the sector was undertaken in 2013 with nearly about a million euro expenditures, when AAAE, through a French project undertook detailed feasibility study through a Meateng Consortium contract with South-Africa, New-Zealand and Australia, natioins with rich experiences. This project was partly financed by France through development agency (AFD). The feasibility study had the objective of establishing an accurate understanding of:

    (i) national and international market demands,

    (ii) environmental management of the effluent and sanitary risks, and,

    (iii) the evaluation of different abattoir economic models. It was also indicated in the document that review of technical, operational and extensive financial analysis of the retained model by the Addis Ababa municipality was to be undertaken in the subsequent phase.

There is also the Ethiopian Meat Producer-Exporters Association (EMPEA), which could not escape that same claim and story, narrating that Ethiopia has 42 million heads of cattle, although USAID data lifts Ethiopian livestock inventory to 52 million cattle. The association was established in August 2004 with the value chain approach as its guiding principle, with particular focus on meat and live animals; hides, skins and leather; and dairy products.

meat exports

Seen against the country’s potentials, the export of meats has been unsteady and its foreign exchange earning capacity limited. Humbled by coffee, oilseeds, pulses, gold, live animals, flower etc., in the basket of the country’s major export items in 2014/2015, meat was ranked tenth of out of twelve export items. Accordingly, the National Bank of Ethiopia (NBE) reports that total exports in 2014/15 was only 19 million kgs, up from 15.5 million kgs in 2012/13 and 15.0 million in 2013/14.

EMPEA has nine members listed in the table below; interestingly if not all, most of the membership export their meat products to the United Arab Emirates. This has penalized some of them heavily, when that country from time to time imposes ban on import of Ethiopian meats, as it did recently on October 1, 2015.

The emergence of the TPLF-owned Abergelle has now complicated things for everyone in the sector, the Ethiopian Meat Producer-Exporters Association, especially for the AAAE.

It appears that Ethiopians have never had inkling that a mightier political force would systematically undermine the meat export market. This force’s objective is to prepare for take-off, initially gaining preferential treatment that gives it the right to export meets below the floor price EMPEA members had agreed on. Not surprisingly, this has become the stone in some members’ shoes, including office holders in the association that pledge allegiance to the TPLF.

Courtesy of  USAID's AGP-Livestock Market Development Project

Courtesy of USAID’s AGP-Livestock Market Development Project

[Click to manginfy]

As it happens, on November 15, 2015, EMPEA members agreed on floor price of $4,950 per tonne to the United Arab Emirates and $5,000 to Saudi Arabia, with leeway of $200 more for Abergelle, allowing it to see at $4,800 per tonne. Not long after, the association was compelled to call another meeting because some members were displeased with the preferential treatment Abergelle receives. It was a wrong move since some members have higher calling and dual loyalty.

At the time, association chairman Getachew Hagos, executive vice president of MIDROC Technology Groups and ELFORA Agro Industries Plc prevailed. He tried to calm everyone into accepting the preferential arrangement for TPLF company stating in a language that cuts both ways: “We should not be subsidising our buyers” and “The unity will give the country more bargaining power.”

Abergelle finds special treatments in every corner. During this lean drought season, EFFORT has provided Abergelle $60 million grant “to prevent cattle deaths and falling prices of livestock.” Moreover, the abattoir Abergelle runs has also been beneficiary of technical and financial help from USAID contractor, Cultivating New Frontier in Agriculture (CNFA), not to speak of the $100,000 USAID grant and another $200,000 from EFFORT to upgrade facilities and prepare for ISO participation, according to Addis Fortune.

Where does this leave those others that do not see the hands of USAID or EFFORT for alms? How would this defeat market and competition and keep the Ethiopian livestock sector in its perpetual doldrum?

However, Abergelle has found market in Comoros, which, according to Addis Fortune quoting the company’s chief is writing that it is preparing to send ten shipments of 28tn each to the Comoros Islands over a period of three months, “at which time the agreement will be up for revision.”

At the same time, Abergelle has been expanding its operations at home lavishly provided resources and institutional support, which its competitors lack are not privileged to have.

Inauguration of TPLF's Abergelle dry meat factory in the presence of EPRDF's who is who (fotocredit: Fana)

Inauguration of TPLF’s Abergelle dry meat factory in the presence of EPRDF’s who is who (fotocredit: Fana)

In addition, Fana at the end of last month reported that Abergelle inaugurated dry meat (ቋንጣ) and animal feed factories at Wag Haemra, Amhara regional state, in the presence of the who-is-who of EPRDF.

Abergelle has expanded operations in Tigray, Somali, Afar and now Amhara. Abergelle’s livestock purchasing operations are carried out in many other places, including Oromiya and SNNPR.

I would not be surprised, if the TPLF is to succeed alone in taking control of livestock production and the market, under Abergelle’s name to make millions for the politico-military leadership sitting on Ethiopia’s head.
 
*Updated to correct for cost of feasibility study.
Let there be no mistake, for Ethiopia, this would kill competition; that would be the killer of the mystery behind improved products and the mother of wealth making. No sooner than the TPLF believes it has made it, there would follow announcements about the death of quality, then production and eventually the market.

This would prolong the non-beneficiary status of Ethiopians from their rich livestock resources.
 
*Updated to correct for an error on France-supported cost of feasibility study.
 

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