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Ethiopia -Meat Association Sets Floor Price for Exports

meat-800x445The Ethiopian Meat Producers & Exporters Association (EMPEA) set a floor price for meat products exported to the Middle East. On Friday November 20, 2015, members of the Association assembled and made a unanimous decision to constrain the minimum price of exports to the United Arab Emirates to 4,950 dollars a tonne, and those to the Kingdom of Saudi Arabia to 5,000 dollars per tonne. However, an exception was made to provide a leeway of 200 dollars for a single company based in Meqelle.
What was then decided unanimously, is now causing doubts, as the Association has called for another meeting this Wednesday, December 9, to ask that company to either justify its cause, or adhere to the prices set for the others.
Concentration of exports to one region had intensified competition among traders in Ethiopia, causing the Association to repeatedly set a floor price in the last years. However, exporters reported that their buyers in the Middle East claimed that other Ethiopian exporters were selling at prices that were lower than those previously set, and used that information to bargain for lower prices.
This forced sellers to offer lower and lower prices that tested the limits of profitability, thereby creating a prevailing air of mistrust among the Ethiopian exporters.
“We should not be subsidising our buyers,” said Getachew Hagos, president of EMPEA, and Executive Vice President of MIDROC Technology Groups ELFORA Agro Industries Plc, explaining that setting a minimum price is in the best interest of both the individual exporters and the country at large.
“The unity will give the country more bargaining power,” he added.
Before going further, Abebaw Mekonen, secretary general, said the Association had carried out a cost breakdown and set the smallest price possible, with further decrement tantamount to incurring losses.
Abergele International Livestock Plc, a subsidiary of Effort Investments (the Endowment Fund for the Rehabilitation of Tigray), is the company that has been allowed to sell at prices lower than the rest.
This company is situated in Meqelle, and sources and processes its livestock around the Tigray, Somali and Afar Region. Traditional rearing practices were ruining the quality of meat, said Amanuel Gidey, marketing head at Abergele, adding that they had not been able to operate for two years because of that. But changing their livestock source from cattle to goats had enabled them to start operation in July. They now export about eight tonnes a week, two per cent of the country’s total exports.
“The leeway is necessary,” claimed Amanuel, “because we are situated much farther than the others, and would not be able to compete otherwise.” The company has to drive its exports overnight from Meqelle to Addis Abeba before the cargo flight.
Abergele’s source of livestock is not different in just geography, but also in price. The company pays about 400-450 dollars less than what the others pay for every tonne, said Hailesilassie Weres, director of Ethiopian Diary & Meat Industry Development Institute. Despite the insistence of the Association that the setting of a floor price was their own idea, Haileselassie claims to have pushed them towards making the decision.
“We do not want to create capital flight,” he said, explaining that set price is a little over 100 Br lower than meat prices within the country. “Opportunity must not be created to enable buyers to acquire the Ethiopian shipments at cheap prices, add little or no value, then re-brand and resell the same products at much higher prices,” he added.
Abergele had not exported much in the past two years, so the leeway was a gesture of encouragement, Haileselassie explained.
The gesture of encouragement, had been extended in the absence of the recipient but apparently, Abergele was not the only one selling below the agreed price.
There are ten operating meat exporters, all of whom are members of the Association, bar one who only just started. Two are foreign owned, and the rest are Ethiopian. Collectively, they send 52tn of meat, about one cargo flight daily, mostly to the two Middle Eastern countries. In the past fiscal year alone, the shipment of 19,478tn of meat has secured foreign exchange to the value of 93 million dollars for Ethiopia. In the first four months of this fiscal year, 33 million dollars worth of exports had been sent. Sixty-one per cent went to UAE and 36pc to Saudi.
One of the foreign owned companies, Frigorifico Boran Foods Plc, a subsidiary of Indian the company Allanasons Ltd. is world’s largest producer and exporter of frozen halal boneless buffalo meat. Allanasons is, according to the Kuwait Times, owned by International Foodstuffs Company (IFFCO), a UAE based group, which manufactures and markets a well-integrated range of mass-market food products and related derivatives including London Dairy, Tiffany, Tiffany Break, and Igloo. It started operations in Ethiopia with the construction of a 60 million dollars slaughterhouse, which is only half-finished, and the acquisition of a Turkish slaughter house in Modjo, for over 10 million dollars.
Frigorifico was one of the companies that sold at prices lower than those agreed upon, added Haileselassie.
The agreements were recommendations and were therefore not binding. Having learned from the past, however, the Association and the Institute, partnered with banks and intervened to prevent meat from being exported without confirmation that the prices quoted adhered to the recommendations.
“We did not not mind,” said the export division head of Luna Farm Export & Slaughterhouse, a member of the Association, when asked about the fairness of the leeway offered to Abergele. “They do not export as much so we do not consider them competition.”
Abebaw, however, sounded less confident about the feasibility of the arrangement.
“All the buyers are looking for is an excuse,” he said, explaining why Wednesday’s meeting had been called. “If they find one company selling at lower prices they will try and force all the rest to sell at that price, and the sector will find itself back to where it started,’ he concluded.
Source –Addis Fortune 

Read Aloud:   Letter of Appeal to the Saudi Embassy in DC and their branch offices in Saudi Arabia

1 Comment

  1. Before they feed there own ppl they export the meat that’s shame on the Ethiopian government witch is not elected by the people .

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