Reclaiming Global Value Chains Amidst Hard Currency Headwinds

Reclaiming Global Value Chains Amidst Hard Currency Headwinds

Jun 13 , 2026. By Mekonnen Solomon ( Mekonnen Solomon (ehdaplan@gmail.com) is a horticulture export coordinator and senior staff of the Ministry of Agriculture. )

Nearly 85pc of fruits and vegetables are destined for Djibouti and Somalia, taking the weighing-and-packaging debate beyond air cargo. Truck exports to neighbouring countries face similar questions over measurement, packaging and valuation. Duty-free imports of heavy packaging materials can reduce exporter costs, but they may also increase packaging weight relative to the actual product, writes Mekonnen Solomon (ehdaplan@gmail.com), an agricultural economist with experience in the Ministry of Agriculture.

Exporters of fruit, vegetables, and herbs move some of the most perishable goods through air cargo, but the weight system behind that trade remains uneven.

The Ethiopian Customs Commission does not have its own specialised weighing infrastructure for these exports but relies on cargo scales of the Ethiopian Airlines to assess shipments, creating a conflict at a sensitive point in the export chain. The Airline is a profit-driven operator, not an impartial customs authority. The result is a system in which two institutions use weight for different purposes.

The Airline calculates freight charges using gross or volumetric weight, a method that serves its commercial billing needs. The Commission needs precise net weight to enforce rules, verify export declarations and support revenue collection.

This gap has pushed the industry toward self-declaration by exporters, who mark net and gross weights on carton boxes and declarations, and the Commission accepts those figures. For a trade tied closely to foreign currency repatriation, this is more than an administrative weakness. Repatriation is calculated by multiplying net weight by the designated floor price. If the net weight is inaccurate, the projected foreign currency revenue will also be erroneous.

The loophole can skew horticulture export earnings. This is why calls have grown to move from self-declared estimates to an independent, standardised weighing system designed for customs and trade valuation. The issue is not only how much fruit is inside a carton. It is how the authorities measure, price, and account for the value of exports that should bring hard currency home.

Experts at the Ministry of Agriculture tried to address this problem by establishing standard packaging weights for fruits, vegetables, herbs, and seeds transported by air freight. Issued in May 2018, the standard sets average material utilisation ratios for edible horticultural products. It was meant to address long-running problems in export weight valuation, foreign currency repatriation, and the quality of perishable produce shipped through Ethiopian Airlines.

The standards emerged during the official push to raise horticultural export revenue, which is important for comparative advantage, job creation, and development. But they also opened a debate. Exporters argue that packaging is often dictated by international buyers, who focus on quality, size, safety and premium presentation for perishable goods. Others argue that allowing foreign buyers to determine packaging standards gives external parties too much influence over Ethiopia’s terms of trade and its ability to capture domestic value.

Minimum floor prices are applied to the net weight of exportable fruits, vegetables, herbs and vegetable seeds. Customs authorities and banks calculate mandatory foreign currency repatriation by multiplying that price by the net volume or weight of the goods. Net weight depends heavily on the weight and volume of the packaging material. Heavy or bulky packaging reduces the reported product content. It lowers repatriation amounts and the realised export value. Lighter and better-designed packaging increases net volume, improves repatriation efficiency, reduces air transport costs and raises economic returns.

Practices vary widely, however, as exporters use different materials, designs, and weights depending on the product, market, and buyer preferences. It makes it difficult to apply consistent net-to-gross ratios. Customs has historically relied on carton markings and a narrow risk-management verification system that covers approximately 15pc of shipments. For perishable goods, verification can delay freight handling and offloading. Airport customs officers often favour fast clearance to protect product safety. The intention is practical, but the trade-off can weaken controls over the fruit and vegetable export system.

Technology offers a way out, but adoption remains slow. In both developing and advanced countries, AI-powered scanners, digital counters and automated classification methods are increasingly used to assess gross and net weight, count fruits, berries and vegetables, and identify weight and material types. Manual fixes proposed by the Ministry of Agriculture may help, but they do not solve the problem. A durable response would require cooperation among the Ethiopian Artificial Intelligence Institute (EAII), the Ministry of Science & Technology, the Ethiopian Standards Institute and private innovators.

Critics also point to the politics of packaging. When foreign buyers dominate packaging decisions, producing countries may lose control over parts of the supply chain that shape economic outcomes. The concern is sharper as heavy packaging materials are often imported duty-free under export incentives. Those incentives reduce exporter costs, yet can limit profit repatriation by increasing the share of packaging weight relative to the actual product.

That paradox calls for an integrated policy framework. Import incentives should be aligned with national foreign currency objectives. The system should encourage sustainable, lightweight packaging and give domestic producers more control over supply chains. Such alignment would support economic resilience, protect sovereignty and allow the country to capture a fairer share of value in international trade.

Field survey results and empirical benchmarks point to where action is needed. For avocados and grapes in standard cartons and on wooden pallets, the material ratio is around 18pc. Strawberries range from 29pc to 30pc for 2.5Kg cartons, with bundles reaching up to 31pc. Herbs have higher intensities, up to 65pc and 69pc in vertical cartons, imaging their protection needs. Vegetables such as lettuce and tomatoes show 13pc to 25pc on pallets, while mixed crates and smaller packs reach 16pc to 22pc.

Current regulatory target ratios include 80 to 20 for produce-to-packaging for avocados and grapes; 65 to 35 for blueberries and strawberries; 31 to 69 for herbs; 67 to 33 for various vegetables; and, 32 to 68 for seeds. These ratios may provide a path to rationalisation, but they also show where lightweight, high-strength materials, improved carton geometry, and standard designs can protect produce while reducing unnecessary weight.

Standardised weights can strengthen competitiveness by improving logistics and signalling reliability. They can also reduce buyer dominance and improve Ethiopia’s bargaining power in the European Union (EU), Middle Eastern and Asian markets. But the system should be realistic. Higher packaging ratios for delicate products can squeeze margins, especially when competing with competitors in East Africa and Latin America.

Sustainability adds another layer, where wooden pallets risk deforestation, while plastic alternatives require reuse and waste management systems.

Duty-free imports of heavy materials deepen the inefficiency. Without incentives for lighter local alternatives, Ethiopia risks locking in value leakage. Policymakers should review how duty-free schemes interact with weight optimisation and support domestic manufacturing, research and development in biodegradable options, and supply chain resilience.

Ethiopia needs post-implementation reviews that use trade volumes, rejection rates, costs, and sourcing data. High-intensity categories should be prioritised, especially where imported packaging affects repatriation. Export hubs need AI scanners, digital counters and integrated systems to reduce reliance on self-reporting. Tripartite forums among the Ministry, exporters and importers can refine flexible, tiered standards. Duty-free schemes can be conditioned to favour lighter materials, while economic models should measure expected gains. Even five to 10pc improvements in material ratios could bring substantial foreign currency inflows.

Other levers should include trade harmonisation under the African Continental Free Trade Agreement (AfCFTA), technology-transfer partnerships, pilot programmes and benchmarking against Kenya, Peru and the Netherlands. Truck exports to neighbouring countries need similar modernisation, for almost 85pc of fruits and vegetables are destined for Djibouti and Somalia.

The 2018 packaging standards showed an effort to reclaim agency in global value chains. But standards alone are not enough. The challenge is now to turn that framework into an enforceable daily practice at export points. Ethiopia still needs independent weighing, better technology, coherent import incentives and closer coordination between regulators and exporters. Without them, packaging remains a budget vulnerability. With them, it can become a strategic asset.

PUBLISHED ON Jun 13,2026 [ VOL 27 , NO 1363]