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Tessema Kebede, 29, lives in Yeka District, with his three children.
Ever since his father died, nine years ago, the
tables have turned against him and he has been
tasked with the burden of ensuring the survival of
his three brothers and sisters, with the income
generated from a small family owned bakery with a
registered capital of 50,000 Br. The bakery is
located around Megenagna on guinea, and was
previously administered by his father.
Tessema’s bakery pays rent of 1,000 Br on a monthly basis for a two
room bakery. He buys wheat flour, and used to bake
around 450 loaves of bread on a daily basis
generating around 500 Br. However, things have
become difficult for Tessema, particularly in the
past two weeks when his supply of wheat, the
essential raw material for running his business, was
in shortage supply.
“Now I only sell around 100 loaves of bread in a day because I only get
100Kg of wheat flour on a weekly basis, and only
after facing a long queue at my suppliers who
usually buy directly from farmers in the Dodolla
Zone, 325Km west of the capital located in Oromia
Regional State,” he claimed.
“Because my suppliers have also encountered problems in getting the
wheat from the farmers, I get the 100Kg only after
waiting in long queues,” Tessema said.
The shortage is caused partly because of the reduction in wheat
production since most of the production goes to
household consumption rather than for sale. Out of
the total production of 28.5 million quintals, 16.4
million quintals (or 57.7pc) is for household
consumption, while 5.3 million quintals (18.7pc) and
5.6 million quintals (19.6pc) is for seed and sales,
according to the data of CSA.
Besides the Oromia Regional State, the Amhara, Southern and Benishangul
Gumuz Regional States are the largest wheat
producers, producing, 15.5 million, 8.2 million and
2.4 million quintals of wheat out of the total of
28.5 million quintals produced during the 2010/11
fiscal year, according to an agricultural sample
survey conducted by the Central Statistical Agency
(CSA).
In the meher or planting season (June to August) of 2010/11, the total
land area of about 11.8 million hectares was covered
by grain crops including cereals, pulses and oil
seeds which are the major food crops for the
population, serving as sources of income at both
household and country levels. Cereals cover 9.6
million hectares of plantations and return a high
volume of 177.8 million quintals of production.
Unlike other crops, cereals are grown in all the
regions in varying quantities.
Out of the 9.6 million hectares covered by cereals, 1.5 million
hectares is covered by wheat, producing 28.5 million
quintals in 2011 and exhibiting a 7.7pc reduction
compared to the previous year. Accordingly, the
production of wheat has also decreased by 6.7pc in
the 2009/10 harvest year, producing 30.7 million
quintals.
The country’s wheat production has shown similar amounts of yield for
the past three years. Since 2008/09, the country’s
overall production of wheat, which stood at 25.4
million quintals, has increased only by 12pc in
2010/11.
This indicates that the soil in the central highland areas, by far the
most suitable for wheat harvest, has been depleted,
according to Biratu Yigezu, directorate director for
CSA’s agricultural and natural resource statistics.
Adding to the problem, wheat crops were infected by yellow rust, a
fungal disease in all the major wheat producing
regions, included Amhara, Oromia and Southern States
in November 2010. Because of the disease, close to
460,000 wheat plants have been infected in 29 zones
of the three regions.
The country should use technology if production needs to be achieved
and farmers need to be trained to use a specific
type of fertiliser for a specific strain of wheat to
achieve greater yield, suggests Biratu.
Abdurahman Kidir, 55, who lives in Hawassa, located 275Km south of
Addis Abeba, has two hectares of land which produces
30ql of wheat on a yearly basis. However, due to the
yellow rust his productivity has decreased.
The national average wheat price in
August 2011 stood at 11,000 Br per ton 136pc higher
than the same month in 2010. Wheat production in
2010/11 covered 1.5 million hectares of the total
11.9 million hectares. The total arable land covered
with wheat declined by 16.7pc when compared with the
previous year. Due to the reduction of cultivated
areas, wheat production also exhibited a reduction
by seven per cent. In order to fill the gap created
by the lower level of wheat production, the
government imported 888,045tn of wheat in 2010.
“Production has decreased by more than half,” he told Fortune.
“I usually save three quintals and sell 27ql, but since I have little
produce, I am planning to save at least five
quintals for my family,” he contemplated.
All these factors have created a shortage of the wheat supplies in the
country, prompting supply shortages in flour
factories which in turn slows production in
bakeries.
In Ethiopia, there are around 207 flour factories, of which 71 are
located in the capital, with a total production
capacity of 3.2 million tonnes of flour a year,
producing 8,853tn on a daily basis.
To fill the gap between supply and demand, the government has imported
887,045tn of wheat at the cost of 3.6 billion Br in
2010, of which 287,045tn are imported from the US,
showing a 10.4pc increment from the previous year
which was 803,711tn, according to data from the
Ethiopian Revenues and Customs Authority (ERCA).
In a bid to ease the impact of the increasing inflation on low income
households, the government has been importing wheat
in bulk since 2007 which stood at 198,888tn, showing
a 311.5pc increase in 2008 with a 818,377tn import
supply. Wheat is mainly imported from the US,
Bulgaria, Italy and Romania, according to ERCA data.
China,
India and Russia are the top three producers of
wheat in the world, producing 115 million tonnes, 81
million tonnes and 62 million tonnes in 2010,
respectively.
However, the imported wheat did not seem to fulfil the demand of
millers and bakeries. There has been a supply shock
in the market that threatens the existence of
business like Tessema’s. “If the supply shock
remains the same for the next two weeks, I may not
cover the rental expense of the bakery,” he
complained.
Misrak Flour and Bakery, which has the capacity to produce 1,213ql of
flour on a daily basis, is among the companies which
faced the problem. “We used to supply flour in large
quantities, from 10kg to 100kg, but it has been a
month since we sold flour to customers in our
branch.”
Following the supply problems, the price of wheat has gone up in the
event of Buhe, a Christian holiday, celebrated in
the middle of August in which people consume more
wheat to bake mulmuls, an oval shaped bread that is
baked and exchanged for the holiday.
Price hikes on food items reached 47.4pc from last year and total price
index of cereals in July 2011, increased by 42.1pc
when compared to the same month last year, the
country’s annual inflation rate reached 39.3pc in
July 2011, compared to the same month last year.
A quintal of wheat was being sold at a price of 1,100 Br at Ehil
Berenda, on Fitawrari Habtegiorgis Street on
Tuesday, August 18, 2011, showing a 57pc increment
from the previous month of 780 Br.
The international price of a quintal of wheat has also shown a six per
cent increase from 303.8 dollars in June to 322.6
dollars in August, 2011.
The Ethiopian Miller’s Association (EMA), which has 207 members, has
submitted a letter to Ahmed Tusa, state minister of
the Ministry of Trade (MoT), calling for a solution
after alleging that the Ethiopian Grain Trade
Enterprise (EGTE) has failed to supply the item.
The EMA, nevertheless, did not get a response from MoT or EGTE, and
officials at the EGTE have refused to speak to
Fortune about the issue.
In response to the shortage, the EGTE signed a 94 million Br agreement
three weeks ago with the London based, Agrimpex
Company Limited, for a supply of 300,000tn of
milling wheat that is expected to arrive in
September. There is no confirmation that the EGTE
will inject all of the procured wheat into the
market, although the Miller’s Association optimistic
on the procurement of wheat.
Though the millers hope that the import will ease the supply problem,
they are concerned about the quality of the wheat
supplied by Agrimpex.
“The government has purchased wheat from the company for the past three
years but the quality is not good enough and does
not meet standards,” Biruk Temeke, technical officer
for the EMA, told Fortune.
“The company has failed to fulfil our technical evaluation in 2008 when
the association floated a bid for a 150,000ql supply
of milling wheat,” he claimed.
The quality specification for milling and general purpose wheat is
different in terms of the content of the protein,
failing number, moisture and weight tests. The
moisture content of wheat should be less than 11pc,
otherwise the item will be diluted and the protein
content should range between 11.5pc to 12.5pc.
The government always sets these requirements in bid documents, but
after the procurement, the wheat proved to be poor
in quality, the technical expert at the EMA claimed.
“It will be good if the government conducts a milling and baking test
before importing the wheat,” he suggested.
Despite the delays in the delivery of wheat and promises of fresh
deliveries in some weeks time Tesemma’s fears and
many bakers like him could be forced to make hard
decisions as their revenues plummet and expenses
rise. |
