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Addis Modjo Edible Oil Complex SC, which has a
production capacity of 50,000lt in a day, has now
stopped production for 12 days, and failed to
produce 600,000lt of edible oil, implying a 6.75
million Br loss in revenue.
The factory was suffering a shortage in supply and
increasing raw material costs, and is now servicing
it boiler. It stopped production last week and
expects to resume next week.
The price increase of oil seeds in red, cotton and
niger seeds, which are important in oil production,
has reached 100pc in the past year. This price
increase has caused breaks in production in both
private and state-owned edible oil factories.
However, the company has received a letter from the
state to sell a litre of its oil for only 15 Br at a
time when it purchased raw materials envisaging
selling its oil at 22 Br per litre.
A member of Addis Modjo’s workers association told
Fortune this will affect the factory’s
survival in the business as it kept suffering from
shortage and technical problems and failed to
produce at its maximum level.
“The cut in price will seriously hurt the factory’s
ability to be profitable as the 22 Br price is just
on the margin,” said an association source. “The
state and association should discuss this matter in
order to protect our jobs.”
The uniform 15 Br price per litre came as part of
the government’s response to control the inflation
hovering around 16pc. On August 23, 2007, the
Ministry of Trade and Industry (MoTI) lifted the
surtax on edible oil, negotiating with producers and
importers, and came up with a set price applicable
in the whole country.
According to the Ministry’s study, the demand of
edible oil reaches 185,000tn annually while the
supply is only 120,000tn, 80pc from the imports. The
domestic production of 24,000tn annually works out
to average about 131,000lt daily.
If Addis Modjo, which distributes from its Modjo
branch, produced to its capacity it would boost
domestic supply by about 38pc.
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