Fortune News | Oct 11,2020
Farmers' unions across the country have inked a deal with a private feed processing company as the cost of nourishing livestock remains untenably high.
MSA Trading Plc signed agreements with no less than 20 unions from five regional states last week, with officials from the Ministry of Agriculture facilitating the deal. Ranchers and pastoralists have been under pressure from rising animal feed prices, which have nearly tripled to around 3,000 Br a quintal over the past year.
"We hope the agreement will bring relief to farmers," said Araya Abraham, director of feed development.
The rising costs for feed have been a worry for federal authorities as the livestock sector contributes 16pc to the gross domestic product (GDP). There are an estimated 59 million heads of cattle; sheep and goat populations count at 7.5 million and 13.2 million, respectively. The latest survey from the Ethiopian Statistics Service put the country's chicken population at around 59.5 million.
Experts blame compounded events over the last two years for such exorbitant prices. The Covid-19 pandemic, desert locust invasions, economic stagnation, political instability, runaway inflation, and civil war have contributed to the disruption of the feed market in the past two years, says Wessinew Adugna (PhD), who studied livestock productivity at the Addis Abeba University before embarking on a two-decade career in the field working for an international organisation.
"Developing processing plants where raw materials are easily accessed is another option," he told Fortune.
He believes attracting private investors to feed production is a sustainable response to deal with supply gaps.
Officials from regional agricultural bureaus and the Ethiopian Cooperative Commission (formerly the Federal Cooperative Agency) pushed for the sales contracts signed between the company's executives and the unions' leaders last week. The deals are set to run for the coming three years.
"The agreement is vital considering the long supply chain," said Ayalsew Werkineh, head of communications at the Cooperative Commission. "It required a huge amount of budgeting."
Incorporated in 2006 with a registered capital of 1.7 billion Br, MSA Trading processes over 25 types of animal feed from corn and soybean for fish, poultry, and camel consumption. Mulualem Alene, a founder of MSA Oilseeds and Tulip Hotel, is a significant shareholder.
It operates a factory erected on a hectare of land in Bahir Dar, the Amhara Regional State, 500Km from Addis Abeba. With a capacity of producing up to 4,800tns of animal feed a day, MSA sources maise and soybean raw materials from farmers in the western Gojjam zone. Aklile Belete, an advisor to the CEO of MSA Trading, declined to disclose sales prices but pledged the company plans to distribute animal feed to farmers at a "fair price."
MSA used to distribute its products in the Amhara and Oromia regional states through 30 agents. The latest deal with unions will spread its reach to the Southern, Harari, and Sidama regional states.
"The main goal is to abate shortages in production and supply," said Aklile.
Damot Union is one of 30 unions operating in the Amhara Regional State. Comprising 77 cooperatives, it lists over 173,000 farmers as members in West Gojjam. Damot signed up for the deal with MSA last week.
"We've made a deal to buy the feed at the factory's prices," said Mezgebu Mekonnen, deputy manager of Damot Union. "It's lower than what's offered in the market."
The latest development comes a few months after Eyob Tekalign (PhD), a state minister for Finance, waived customs duties for importers of animal feed components and exempted them from value-added tax (VAT). The preferential treatment applies to MSA Trading.
Erikum Union, based in Dessie, in the Amhara Regional State, has 270,000 farmers under 105 cooperatives. The Union operates a factory that produces four animal feed varieties, churning up to 100qtl a day. It is part of the deal with MSA Trading.
"It isn't sufficient to meet demand," said Mesay Alemnew, manager.
He estimates that demand sits near 2,000qtl a day for members of the Union such as Seid Hassen.
A father of five, Seid lives in southern Wello and supports his family through his dairy cows. He visits the market weekly to buy three quintals of "furishka," a feed made from wheat chaff. Each quintal cost him 3,000 Br, a six-fold increase from last year.
"The prices are exaggerated and unfair," he told Fortune. "I'm having a hard time feeding my cows."
PUBLISHED ON Sep 24,2022 [ VOL 23 , NO 1169]
Fortune News | Oct 11,2020
Radar | Nov 23,2019
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Commentaries | Jun 11,2022
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Agenda | Jan 06,2019
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