Ethiopia’s spices industry investment potential

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The history of spices in Ethiopia is an ancient one and spices remain as basic food items of the Ethiopian people. According to a Factsheet – Spices Ethiopia, prepared by Netherlands-African Business Council, Ethiopia is the homeland for many spices, for example Korarima, long pepper, black cumin, bishops weed, and coriander. The average land covering by spices is approximately 222,700 hectares, producing 244,000 tons of spices per annum.

Ethiopia is blessed with suitable agro-climatic diversity to grow various plant species. Having mountainous and lowlands areas enables to grow numerous spice and other crop varieties. Due to this and several other factors, Ethiopia has a lucrative spice sector for agro-processing investment.

Spices cultivation is scattered throughout Ethiopia and is carried out by smallholder farmers. In most cases, traders act as middlemen between farmers and spice extraction factories hiring trucks to collect spices from farm gate or intermediate markets. Spice is an important additive to Ethiopian meals. Therefore, the domestic demand for spices is large.

There are also other major factors that make the country an appropriate destination for agro-processing investments. But investment in the sector is still at its bottom level compared to other countries.

The Ethiopian spice industry is hindered by a number of production, processing, and marketing problems. Traditional cultivation practices, lack of post-harvest handling technologies and loosely coordinated market systems are among the major ones.

Though Ethiopia has suitable agro-climatic conditions for spices production and is geographically better located towards the EU countries than India, Indonesia, and other spice exporting countries, the country could not benefit from the sub-sector economy as expected as possible.

The Spice Industry Strategy Plan 2015-2025 states that to combat these problems and make the country competitive in the international spices market, all stakeholders of the sub-sector industry –growers, post-harvest handlers, brokers, processors, and exporters need to participate in promoting the proper practices at each stage of the value chain and thrive for gratifying local and international customer requirements in a coordinated approach to selling spices and derivatives that meet those requirements.

Thus, Ministry of Industry has developed the strategic plan to address the identified problems and support the sub-sector industry through providing services to the stakeholders actively participating in the development of the sub-sector economy.

Currently, various activities have been undertaken to put in place an effective bureaucracy to facilitate the engagement of different international and local investors in spice production.

Private Spice Growers Association President and spice researcher Addisu Alemayehu told The Ethiopian Herald that the spices sector is experiencing an ever-growing international demand and profitability.

“Spices and herbs have many applications. For instance, they can be used as a natural ingredient for the food, textile and garment, leather, cosmetics and pharmaceutical industries,” he added.

As to him, the government has to give due attention to encouraging practitioners and incentivizing multinational and local investors to join the sector.

Ethiopia grows more than 60 varieties of spices out of the 109 spice types grown globally that are listed by the ISO or the International Standard Organization for Standardization.

Moreover, proper mechanisms and ways should be installed to tap the spice sector potential of the country. Spices growers, processors, and traders also need to establish a stronger link to supply quality produce both to global and domestic markets, according to him.

Creating a defined market system would also be important in linking spice growers, processors and traders in a coordinated manner. Having an appropriate topography that allows growing various unique flavors of spices, herbs, and aromatic products, the country has not been able to produce with full potential and earn revenue as much as it can.

Currently, chili, capsicum, and black pepper are traded largely and account for more than 44 percent of the global market which is 16 billion USD. This is a huge potential, said Addisu.

“Private spice growers should work in partnership with the government to enhance production and productivity in the sector. Besides, the spice industry’s strategy should also target varieties that are most tradable at a competitive price.”

According to Adissu, one of the major challenges of the sector is lack of information among local investor’s and the government about the sector’s international market potential. In addition, the lack of skilled manpower, technology, effective policies, strategies and commercialization activities, lack of synergy to motivate private sector actors, inefficient use of land, the little attention given to processing, manufacturing, and packaging are also, major factors that hinder the sector from generating revenue at the desired level.

Adisu recommended the enforcement of policies and regulations on marketing, the standard of produce, certification and human power development as solutions to mobilize the spice sector development. He emphasized that the government should also implement the ten-year Spice Development Strategy.

On the other hand, private investors could have massively tapped the enabling economic policy, attractive incentive- which includes tax holiday and favorable financing options- and supports to acquire land, had they been well aware of the advantages of the sector, he added.

Likewise, the industrial (for instance dyeing, food preservative, and pharmaceutical), export and environmental (promote deforestation for it could be intercropped) paybacks could have led to aggressive promotion of the sector. Research firms, government departments dedicated to the sector and other pertinent bodies have, therefore, tasks ahead of them in creating optimal awareness on the enabling the situation for the production and marketing of spices, herbs and aromatic plants.

 The Ethiopian Herald March 5/2020

 BY TEWODROS KASSA