Ethiopia - Agro-processing

Agro-processing

Last published date: 2024-01-18

Agro-processing

Overview

Agriculture is an engine of the Ethiopian economy, contributing nearly 40% to GDP, employing 80% of the total population, and generating 90% of its foreign currency from exports. Ethiopia’s agricultural exports are primarily unprocessed commodities, including coffee, oil seeds, pulses, live plants, and cut flowers. Despite accounting for half the country’s total manufacturing, agro-industries account for only five percent of Ethiopia’s GDP.

Ethiopia possesses a wide range of agroecological zones, arable land, and access to low-cost labor. In Africa, Ethiopia is a major producer of coffee and barley. Additionally, among African countries, Ethiopian production ranks second in sorghum, third in maize, third in wheat, and fourth in coarse grains. Additionally, Ethiopia has the largest number of livestock in Africa.

The GOE aims to make Ethiopia a top African manufacturing hub and boost exports and trade through $1 billion in investment in agro-processing industrial parks. Industrial parks are a key focus of Ethiopia’s economic development strategy. Through the Ministry of Trade and Industry (MOTI) and the Industrial Parks Development Corporation (IPDC), 17 agro-industrial growth corridors (AIGC) are planned for development, with coverage in all nine regional states.

Currently, four Integrated Agro-Industrial Parks (IAIP) are under construction, out of which three are already operational. These IAIPs will provide support services to companies and opportunities for skills development and will be an attractive destination for foreign investment. The four industrial parks are located in Humera (Tigray), Bure (Amhara), Yirgalem (SNNP), and Bulbula (Oromia). These sites were selected based on the area’s agricultural potential, infrastructure facilities (water, electricity, etc.), and regional market potential. The total estimated cost of the four pilot agro-industrial parks is $181 million.

Commodities intended for processing include coffee, sorghum, maize, sesame, horticulture, meat and dairy, and cereals, among others. The IAIPs will include companies that export value-added agricultural products as well as those producing products for domestic consumption. Major agriculture processing potential includes cattle fattening and processing, chicken production and processing, livestock feed manufacturing, wheat-based food production (e.g., pasta, biscuits), sesame processing (e.g., tahini), soybean crushing (e.g., soybean oil and feed), sugar production and processing, juice and dairy manufacturing, as well as garments and leather goods. In 2019, the Ethiopian Ministry of Finance implemented a policy change authorizing duty-free import of agricultural and irrigation equipment. This new directive aims to increase agricultural productivity for both smallholder farmers and commercial farmers, as they will have improved access to new agricultural farming capital goods. The GOE expects these IAIPs to result in $1.5 billion in investment, 400 new business opportunities, and 400,000 jobs.

Some of the challenges in the current agro-processing sector include:

Inconsistent commodity quality
Insufficient local product, in part due to complexities in smallholder farm structures
Post-harvest storage
Underdeveloped infrastructure to support sufficient raw commodities flow to processors.

Establishing effective supply chains, including cold chain, can increase agro processor access to local producers. With the establishment of the agro-industrial parks, the integration of smallholder farmers and processors into the industries as part of the commercial value chain could improve the local economy.

Opportunities

Leading opportunities for agro-processing are in the following sub-sectors:

Machineries for coffee roasting and processing
Machineries for dairy milk processing, chicken processing cattle fattening, and abattoirs
Machineries for animal and chicken feed production
Machineries for juice extraction and processing
Machineries for tomato and potato processing
Technology and machineries for flour processing, bakery, pasta, and macaroni manufacturing
Machineries for edible oil extraction, filtration, and processing
Provision of cold chain, post-harvest technology, mobile preservative technology, and storage facilities
Sugar processing technology and various machinery.

Within the IAIPs, opportunities exist design and construction, supplying machinery and technological equipment, post-harvest storage facilities, cold chain facilities, and mobile preservative storage facilities that transfer perishable commodities and food items.

Resources

U.S. Foreign Commercial Service (Teddy.Tefera@trade.gov)

Ministry of Trade and Regional Integration

Ethiopian Investment Commission

The USDA’s Foreign Agricultural Service (FAS) at the U.S. Embassy to Ethiopia prepares market intelligence reports for agricultural commodities. FAS also produces reports that highlight the opportunities and regulatory requirements for U.S. agricultural exports to Ethiopia. Please feel free to contact the FAS office for further information at the following address:

Foreign Agricultural Service

U.S. Embassy Addis Ababa, Ethiopia

Tel: +251 11 130-7128

Email: agaddisababa@usda.gov