An exorbitant rise in international prices for crude palm oil threatens to undermine the already low production by domestic edible oil plants.

The federal government earmarked 400 million dollars to import crude palm oil this year, mainly from Malaysia, for distribution to five large-scale edible oil plants. The quota was set in July 2021, when prices for a tonne of the oil were 1,100 dollars, nearly double the going price from the previous year. Prices have jumped by a whopping 63pc since, not including transportation and insurance costs. The country needs to spend over 1,900 dollars to buy a tonne of crude palm oil.

The Ministry of Trade & Industry imported 89,000tn of semi-processed palm and soybean oil over the last year to ease domestic oil plants' shortage of inputs. The import of edible and crude oil accounted for over 85pc of the 27 billion Br in import bills from Malaysia last year.

Phibela, Worku Aytenew (W.A.), Shemu, Harmessa and Al-Impex are the five industrial-scale oil plants that receive the federal government's allocation. These plants produce to meet nearly a third of the total monthly demand of 75 million litres of edible oil. The 232 small- and medium-size palm oil processing plants that source inputs domestically account for 10pc of supply. A survey conducted by the Ethiopian Edible Oil Manufacturer Industries' Association revealed that the industry is gripped by challenges in shortages of agricultural inputs and associated price surges.

The most aggravating issue remains the unavailability of foreign currency needed to buy crude palm oil and replace machinery.

The [five] companies are operating with what has been approved initially, according to Nigus Chernet, head of the team in charge of supervising the food and beverage industries at the Ministry of Trade & Regional Integration.

Phibela, a subsidiary of the Belayneh Kindie Group, produces edible oil at its plant in the Bure Agro-Industrial Park, in the Amhara Regional State. Inaugurated last year, the plant has a production capacity of 1.5 million litres a day.

Shemu, with a plant in Dire Dawa, can process close to two tonnes of crude oil a day following an expansion project it completed last year. However, it is struggling to meet even a third of its capacity. In operation since 2017, the plant has been under the Shemu Group, a conglomerate comprising 15 companies, including Shemu Detergent and Asveza Ethiopia Retailing. It has been granted access to the forex quota for the past two years. In September 2020, the company secured 8.5 million dollars through the former Ministry of Trade & Industry to import and bottle a little over three million litres of edible oil.