May 2 , 2020
By HAGOS GEBREAMLAK ( FORTUNE STAFF WRITER )
Three food processors that have been challenged by shortages of raw materials due to the Novel Coronavirus (COVID-19) pandemic have received supplies worth 221 million Br from a state-run agency.
Sororo General Trading, Bruk Abebe Tafese Flour Factory and Teshome Shiferaw Food Complex are the three plants that received agro-processing raw materials from the Ethiopian Industrial Inputs Development Enterprise. The companies received wheat, soya beans and cottonseed oil.
Sororo General Trading, which owns Kiya Food Complex, received 102 million Br worth of wheat. Bruk Abebe Tafese Flour Factory has taken 30,000 quintals of wheat and soya beans, each worth 92 million Br. The Enterprise also provided Teshome Shiferaw Food Complex with cottonseed oil worth 26 million Br.
The supplies were sourced from the local market, according to Dejenu Teklemariyam, deputy chief executive officer at the Enterprise in charge of sales.
The Enterprise, which was established to supply industrial inputs to companies, operates with two models. In the first scheme, business-to-business, buyers negotiate with the suppliers and ask the Enterprise to fund the procurement with a six-month loan arrangement. In the second scheme, industries can purchase raw materials directly from the Enterprise's store.
The three companies used the business-to-business model, submitting their documents underlining the type, quality, amount, and other information about the inputs they want to procure. They also produced documents such as unconditional bank guarantees and audited financial statements. Then the Enterprise covered the costs for the three factories and procured the agro-processing inputs themselves.
“We're availing agro-processing inputs for food manufacturing enterprises to ensure the supply of food products and market stability during the pandemic," Dejenu told Fortune.
The Enterprise is also devising a strategy to supply agro-processing inputs because of the pandemic’s disruption of the food supply chain, to avoid input shortages and to stabilise the market by making enough food supplies available, according to Dejenu.
“We're in the process of procuring more agro-processing and other essential inputs for the manufacturing enterprises," he said.
Established a decade ago, Sororo General Trading, which owns the Kiya Food Complex and Sororo Tour & Travel, was supplied with 66,000 quintals of wheat.
However, the supply does not satisfy the demand of Kiya, according to Elias Masresha, co-owner of Kiya Food Complex, which can produce 2,440ql of flour and 250ql of macaroni a day.
Kiya was on the verge of ceasing production because of the shortage of supplies, wheat price inflation and the liquidity crisis, according to Elias.
“We would've stopped production if the Enterprise hadn't supplied us with wheat,” he said. “Typically, there were wheat supply shortages around the rainy season, but now, unlike before, we're encountering a very severe wheat shortage.”
The government should ensure the availability of sufficient inputs and facilitate transportation of their outputs, according to Busha Temesgen, lecturer of procurement and supply chain management at Addis Abeba University.
"It should also ensure the supply of advanced technology to make online sales possible during this dreadful situation, limiting the physical contact required to buy and sell,” recommended Busha.
Sororo, which exports pulses, spices and oilseeds and imports soap, detergent and cosmetic chemicals, used to get loans from the Oromia Cooperative Bank.
"But right now the Bank can't lend us money due to the liquidity crisis banks are facing," said Elias.
Established in 2014, Kiya has already completed the construction of the civil work of a plant to process pasta and biscuits. It is currently waiting for foreign currency to procure the machinery, according to Elias.
PUBLISHED ON May 02,2020 [ VOL 21 , NO 1044]
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