Fortune News | Jul 18,2020
On a chilly morning outside Ke’Geberew Market, Yeshi Chane, a 35-year-old mother cradling her seven-month-old baby, stands amidst the throng, her anxiety palpable.
Only a day earlier, she had heard of onions being sold for a mere 25 Br a kilo, a remarkable discount. Yet, with 200 Br in her purse, she found herself faced with an unanticipated challenge: the onions were part of a mandatory 500 Br package filled with other produce.
The rising price of this staple vegetable, reaching an astonishing 120 Br for a kilo on certain days, has become emblematic of the country’s broader economic challenges.
Unable to afford the offer, Yeshi returned home to scrap what was left of her civil-servant husband’s 6,000 Br monthly salary while paying 3,500 Br for rent and squeezing the rest between school supplies. However, she could not have passed 300 Br the next day. She spent three hours queuing at the doors of the Lafto area, one of the seven outlets the company runs in the capital.
“I’ll beg my way to some onions,” she told Fortune.
Enter Purpose Black, a two-year-old company, which, in the face of these skyrocketing prices, has devised a solution — or, as some critics argue, a clever marketing tactic. They have bundled five kilos of onions with an assortment of other goods, priced collectively at 500 Br.
The package system, however, has not been universally welcomed.
Addisu HaileMichael, 32, found himself begrudgingly buying the set. Though mostly content, he bristled at the inclusion of oranges. He feels coerced into buying the other items in the package.
“I did not want these,” he declared, frustrated at the company’s unwillingness to accommodate substitutions. “But they wouldn’t budge.”
Mesfin Assefa, the deputy head of the Addis Abeba Trade Bureau, pulled no punches in his criticism, seeing the company’s tactics as skirting the edges of consumer law.
“It’s complete mischief,” he said, alleging the discounted onions serve merely to offset the other items’ prices, pressuring consumers into buying the entire bundle.
The Trade Bureau is taking these concerns seriously. A stern warning letter to Purpose Black executives made clear the view that the practice is, at best, misleading, and at worst, fraudulent.
“We’ll shut them down if it persists,” Mesfin warned.
He considers the package offerings by Purpose Black as exploitative of the fleeting lull in supply, partly due to large procurements made during the successive holiday festivities and the freezing of imports from neighbouring Sudan, fueling the market chaos.
While Purpose Black has been in the public eye recently for various ventures, its rapid rise to prominence in the capital’s economic landscape is undeniable. Yet, Ermias Birhanu (PhD), the company’s Deputy Board Chairman and legal advisor, insisted that the accusations are misplaced.
Championing the company’s consumer-centric approach, Eremias emphasised that the package was purely optional, painting a picture starkly at odds with the experiences of consumers like Yeshi and Addisu.
“We would be violating the law if we did that,” he told Fortune, countering accusations that they are cornering the market.
But the nuances of this might be even more intricate. Ermias pointed to the potential of outside forces, including competitors and onion suppliers, trying to tarnish the company’s reputation because “they cannot compete” with Purpose Black’s aggressive marketing strategy. The legal advisor ardently maintains that no forced purchases have occurred. He acknowledged that the company had capped purchases of onions at five kilos upon learning that they were being resold by merchants taking advantage of their pricing.
Onions have always been more than just a vegetable in Ethiopia. As one of the world’s most significant consumers, the country sees the bulb as a dietary staple. Its skyrocketing price, therefore, has both tangible and symbolic repercussions.
The city’s central vegetable hub, Atkilt Tera near Haile Garment neighbourhood in the southeastern part of the capital, has been a barometer of this crisis. Here, traders like Worku Negese speak of baffling price escalations, with a resigned acceptance that underscores the complexity of the problem.
“We don’t know what happened,” said Worku.
He said intermittent increments of five Birr have finally sent shockwaves to the market unbeknownst to dealers and traders alike.
More seasoned players in the market, such as Kurabachew Yidnekachew, link the price upsurge to the country’s political unrest, particularly in the violent conflicts in Amhara Regional State. The conflict has forced drivers to divert routes, exponentially increasing the cost of transportation.
“The markets won't stabilise anytime soon at this rate,” said Kurabachew, echoing a sentiment many in the trade shared.
However, the City Trade Bureau offers a different perspective. While the officials from the Trade Bureau recognise the current economic and political challenges, they also hint at some systemic issues, like the role of intermediaries who might be exploiting the situation.
While onions might seem like a mere vegetable to outsiders, the intricate web of economics, politics, and culture they have entangled within Ethiopia provides a vivid snapshot of the country’s challenges and its uncertain path forward. Ethiopia is one of the biggest consumers of onions in the world, ranked at 35th with annual two percent growth projected to reach 400,000tn in 2026. The price of onions will have widespread dietary implications, albeit the dismissal of nutritionists.
Nutritionists like Zelalem Kebede (PhD) have been encouraging Ethiopians to diversify their diets. She views the onion’s dominant role in local cuisine more as a cultural preference than a dietary necessity.
“People should learn to update recipes,” she advised.
As with most crises, adaptation and resilience become the way forward. Residents like Weletermariam Mamo, 58, have already started recalibrating their consumption patterns in the face of this economic upheaval. She is among those who have heeded the recommendations from the nutritionists, cutting down by half her 10kg biweekly purchases.
“I had to adjust to the soaring prices,” she said.
With such adaptability and the potential for solutions, there remains a glimmer of hope for Ethiopia’s economic landscape, even as the onion remains at its tumultuous centre.
Previously, when domestic onion supplies dwindled during the heavy rainfall season, Ethiopia turned to its neighbour, Sudan, for relief. The situation was manageable, with imports averaging around 1.4 million dollars worth of onions annually. But this year, a combination of factors, including the freezing of imports from Sudan and internal logistical challenges, has disrupted this traditional balance.
The Oromia Regional State, fondly referred to as ‘The Onion Belt,’ especially between Zeway and Meki, has historically been the heartbeat of onion cultivation. Yet, despite having a vast land area dedicated to this crop, a supply shock has emerged, shaking the confidence of both consumers and traders.
Tesfaye Gesho, deputy head of the Oromia Trade Bureau, points to the current rainy conditions as the root cause of this imbalance.
“It’ll be scarce for the next few months,” he cautioned.
Given that 300,000 farmers had projected the production of approximately 12 million quintals of onion last year, the gravity of the current shortage becomes even more pronounced. Despite a whopping 89,044hct being covered by onion, a supply shock has transpired in the Oromia region. As onions become a scarce commodity there, officials have resorted to sourcing them from the neighbouring Somali and Amhara regional states at inflated prices.
This internal reshuffling, however, is just a band-aid on a much larger wound. Ethiopia’s onion supply difficulty seems to be a symptom of a more significant issue.
Abdela Tegene, head of the horticulture bureau at the Ministry of Agriculture, highlighted a broader shift encouraged by Prime Minister Abiy Ahmed (PhD): enhancing cultivation to wheat production. In his view, this sudden transition, especially in major vegetable-producing areas like Amhara and Oromia, has severely disrupted the vegetable supply chain.
“Political aspirations have trumped agricultural priorities,” Abdela told Fortune.
This claim does not go well with officials at the Oromia Agriculture Bureau.
Deputy Head Berisso Feyisa was taken aback by the insinuation that local authorities have coerced farmers to switch to wheat farming. He retorted that a temporary gap due to the rainy season had created a drop in supply, insisting that equal focus was given to rice, barley and horticulture despite the particular emphasis towards wheat production.
“Farmers produce whatever they wish to,” he told Fortune.
Berisso placed the blame partly onto what he perceives to be increased contraband trade out of the country. Despite his insistence on equal attention for all crops, Oromia covered around 4.2 million hectares in wheat this year, a 1.4 million hectares jump from the previous year. A parallel contour of expanding wheat cultivation at the expense of other crops has been drawn within the high vegetable-producing Amhara Regional State.
The budding shift from onions to wheat is vividly captured by production, which has fallen by one million quintals to 7.44 million this year. Last year’s output transpired over 43,815hct, which has dropped to about 37,000hct this year.
Experts observe a combination of conflict and the shift in cultivated crops fueling the supply crunch.
Menweyelet Jembere, a researcher at the Bahirdar Research Institute, affiliated with the Amahra Agriculture Bureau, observed a shift in the past few years that had initially begun with 2,000 farmers.
He referred to Merawi in the northern Gojam and Fogera towns in southern Gonder sones, former hotspots for onions, which had 10,000hct each transformed into wheat farming. Farmers are being won over by the promise of fertiliser, improved seeds and returns while they are being denied access to onion seedlings, according to Menweyelet.
“They’re being pressured to switch by the authorities,” he told Fortune.
Horticulture experts from the regional state underscore the need to strike a balance between wheat farming and cultivating other commodities due to the suitable nature of the region’s climate.
Aweke Zelalem, from Amhara Agriculture Bureau, revealed a decline of onion farmers by nearly 20,000 while those growing wheat have jumped nearly sixfold to 684,000 from the last year.
“Farmers will gain more if they cultivate both crops,” he said.
Despite the decline in supply to urban markets and the price hike sweeping across the country, some farmers are contented with the shift towards wheat.
Tiget Mesfin is a lifelong onion farmer in the southern Gonder area. He shifted to wheat last year, after being courted by regional authorities. He said fertiliser and improved seeds provided by the region’s agricultural bureau through a revolving fund offered him better prospects.
“I was convinced of better opportunities in wheat,” he told Fortune.
The father of four says being able to harvest wheat both during the summer and winter seasons makes it preferable to onions, which favour only the dry periods. Having harvested 65qtl of wheat during summer from half a hectare, which he later sold at 50 Br a kilo, Tiget has preferred the grain to onions, which fetched him 30 Br a kilo on a good sale.
“I’ll completely shift to wheat the coming season,” he told Fortune.
The complicated architecture of the onion supply chain is indicative of a deeper malaise plaguing production and demand, according to economists.
“It’ll only worsen,” warns Atlaw Alemu (PhD), an economist lecturing at the Addis Abeba University. He pointed to continued conflicts fueling the galloping inflation rates and disrupting the supply chain.
“The government needs to usher in security,” Atlaw underscored.
Absent a durable resolution to conflicts through negotiated settlements, a perpetual price surge and constant supply chain disruptions are inevitable, according to Atlaw.
“Citizens are already struggling to afford essentials,” he told Fortune in a concerned tone.
Drivers like Kebede Aschenaki, who transport these vegetables across the regions, have been feeling the pinch, both financially and emotionally. With increasing insecurity stemming from regional tensions, their journeys have become perilous.
“It’s a life-threatening pursuit,” Kebede noted, highlighting the very human cost of this crisis.
Yet, the City Trade Bureau remains optimistic, attributing the price surge to a combination of changing weather patterns and declining imports. Sewnet Ayelew, the Communication Director, emphasised the temporary nature of this shortage.
“Meeting the capital’s demand is a difficult task,” he acknowledged, but remained hopeful for a turnaround.
As the authorities grapple with onion-induced price escalations, the situation sheds light on the broader intricacies of the agricultural ecosystem. On the one hand, there is a push to modernise and diversify; on the other, there is a deeply rooted cultural and economic reliance on traditional staples.
Trade lawyer Yehualashet Tamiru provided a pragmatic take, suggesting that while Purpose Black’s packaging strategy may be controversial, it is not necessarily illegal.
“It is not against the law,” he told Fortune.
Attempting to muzzle such market strategies could have unintended consequences, he warned.
“Long-term protection should be the authorities' goal," he emphasised.
In the Ministry of Agriculture corridors, officials recognise the importance of a balanced agricultural portfolio. With the push towards wheat and away from horticulture, there is a growing sentiment that long-term planning, rather than impulsive policy shifts, is the need of the hour.
Markets that once bustled with chatter and commerce now resonate with murmurs of discontent and resignation. The very essence of the Ke’Geberew Market, built on a business model of “from farm to fork”, is under strain. The company was incorporated, raising equity from 21,000 shareholders, of which 85pc are farmers. Promoted by Fesseha Eshetu (PhD), founder of Unity College, the company has adopted a business model that thrives by providing agriculture products directly sourced from farmers in Afar, Oromia and Southern regional states, hence the name “Ke’Geberew”.
If only it remains relevant to consumers such as Yeshi and Addisu. Their hopes remain that as the country navigates its economic challenges, the simple joy of cooking with a staple like onions remains uninterrupted. Whether it is a call for diversifying diets, as suggested by nutritionists or finding a way to make onions more accessible and affordable, the underlying sentiment is clear: a country’s well-being often hinges on seemingly simple things, and in this case, it is the humble onion.
PUBLISHED ON Sep 30,2023 [ VOL 24 , NO 1222]
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