Meat Demand Price Hike Challenging Promising Exports

Meat exports in recent years have been sending promising signals to the export sector. Even though this new trend has shown potential to reverse the long-time narrative of how Ethiopia doesn’t take full advantage of its abundance of live animals, it is still being challenged by a competitive local market. As Ethiopians’ love affair with meat is pushing local prices higher and higher, more attention is advised to solve the hurdles of the sector to fully reap the benefits of meat production, writes EBR’s Bamlak Fekadu.

Ethiopians’ love affair with fresh raw meat began in the 16th century. As oral tradition has it, troops invented the manner of eating to avoid enemies who could trace their whereabouts by sniffing out meat being roasted or seeing the illumination or smoke of the cooking fire. Since then, the consumption of raw, as well as cooked, meat has also been associated with cultural and religious practices, being seen as indispensable to any celebration in Ethiopia.

In the past, the habit also denoted a certain social classification, one of belonging to the higher classes or becoming matured. Nowadays, seeing restaurants selling fresh goat meat and raw beef, as well as kitfo—the finely chopped traditional food of the Gurage people in southern Ethiopia—has become a defining scene for Addis Ababa’s small and medium businesses. One can find these restaurants in almost every corner of the capital.

Such was the love affair that brought together thousands on a sunny and windy October Saturday. The gate of the Exhibition Center and Market Development Enterprise, sprawling over 10,000 square meters in the center of Addis Ababa, was congested with custodians wearing yellow shirts, and meat lovers queuing to buy entrance tickets. The exhibition center was hosting the sixth meat festivity in collaboration with BGI Ethiopia, one of the largest breweries in Ethiopia, and Century Promotion. The festival looked to celebrate the Ethiopian culture of eating together. That’s why the organizers cut prices to half of market rates.

The central gate’s scenes were full of hundreds of custodians hollering to attract entrants to their butcheries which were rushing to serve raw and fried meat. Families and friends gathered amongst the seven butchery pavilions where butchers were heard sharpening their blades despite loud music grooving from the disk jockey’s stage.

Amongst the seven restaurants in the event was Noah Butchery, holding a corner of the main gate and where the family of Dawit Gebre and Tinsae Zewdie were present after being invited by their elder son Robel Dawit, a 32-year-old Accountant.

“I started eating raw meat when I was 16 years old, even though my father never supported it,” said Robel. “It is a wonderful event that brings together families and beloved ones. I wonder how a nation with so many meat lovers doesn’t have such a kind of national festival,” he added.

“The love of raw meat is something that makes Ethiopians unique,” says Edilawit Zewge, Project Manager at Century Promotion.

Ethiopians’ love of meat, however, is not evident in national consumption figures. Per capita meat consumption is eight kilograms per annum, lower than the sub-Sahara African average of 10.9kgs in 2015, which is expected to reach 13.4kgs in 2030, according to the United Nations Food and Agriculture Organization (FAO).

Meat consumption: kg per capita
Source: United Nations Food and Agricultural Organization (FAO)

With a ten-year plan put in place to make the nation the top meat producer and exporter in Africa, Ethiopia currently exports around 12,000 metric tons per year. A kilogram of beef costs around USD5 on the open market, equating to around USD5,000 per ton, according to Selina Wamucii, a market-access solution for farmers that integrates with cooperatives, producer organizations, agro-processors, small and medium enterprises, and other organizations that work directly with family farmers. Prices at urban eateries are much higher—some in excess of USD20.

However, for exports, a kilogram of beef is capped at USD5.75 by the Ethiopian Meat Producers Exporters Association (EMPEA). However, the cost is no less than USD10. Moreover, the price for a kilo of goat meat is around ETB240 locally with global market prices above local rates by just less than USD0.50.

The UAE is one of the top importers of Ethiopian beef, followed by Saudi Arabia. Ethiopian beef is also imported by a number of African nations, including Egypt, Republic of the Congo, and Cote d’Ivoire. Ethiopia now controls around 12Pct of Africa’s overall beef market.

Prices are set by the seasons. For example, during the wet seasons, which run from June to August, prices are at their highest since the animals are in full bloom.

Skyrocketing prices of meat in the domestic market have also made business difficult for companies like Frigorifico Boran Foods PLC, a subsidiary of the India-based Allana Group.
Frigorifico is erecting an abattoir with an investment of USD60million on 72 hectares of land. Established in 2018, the facility remains shuttered after well over a year, besieged by a host of problems from insufficient livestock supply due to contraband trade of cattle as well as the high local prices for meat.

Abyssinia Slaughter Service House (ASSH) is among exporting abattoirs in hot water following the skyrocketing price of live animals and red meat in the local market. ASSH was erected on four hectares of land with an initial investment of USD8 million in Bishoftu town, 47 km away from Addis.

In full capacity, it can slaughter and process over 500 heads of cattle and camel, and ten times that number of sheep and goats daily, mainly destined for export to Saudi Arabia, Kuwait, Qatar, and the United Arab Emirates (UAE), according to Tewodros Tadesse, General Manager of ASSH.

“The main problem with the meat export market is that it is impacted by supply shortages and local meat prices are higher than global market rates,” said Tewodros. Global competitors like Pakistan, India, and Sudan have commercial farms and are somehow considered as price setters of the meat market in the Middle East.

“We are not even at breakeven level from exporting, as meat prices are locally higher than the global market. However, the foreign exchange pulled into the country could be an advantage.” he added.

An official from Elfora Agro-Industries, a subsidiary of MIDROC Investment Group, agrees with Tewodros that the export of meat is not securing profits for slaughterhouses. “We are in hot water as export earnings couldn’t even cover operational costs,” an official from Elfora said.

The Ethiopian Meat and Milk Industries Development Institute (EMMIDI), along with the Ministry of Trade and Regional Cooperation, has the role of supporting meat processing industries through training, research, consultancy, investment facilitation, and market linkages and promotion. Currently, the government is focused more on market regulation. “The export price is fixed due to mal-certification of quality meat products and limited market destinations, despite the urge to obtain foreign currency as an exporter and nation.” said Abraha Negash, Director of Meat Industry Development at EMMIDI.

Common interventions are to set a minimum selling price to minimize dumping in coordination with stakeholders, meat processors, and exporters’ association. Local meat price interventions are common during holiday seasons when there is high demand for affordable meat. Export markets tell a different story: exporters are not at all happy about the ceiling. As of late, there are only 10 actively operational export abattoirs out of the 20 that were established, according to Abraha. These companies generated USD82 million in export revenues last year.

At first glance, the supply side of the explanation does not sit well as Ethiopia currently has the largest livestock population in Africa, with an estimated 65.35 million cattle, 39.9 million sheep, and 50.5 million goats. A closer look at the sector shows how due attention to develop the sector is missing. That’s one of the many reasons that explains why and how contraband has become a widely established market practice, at times involving people in government.

According to Fantalem Mohammed, Cattle Trader in the capital, climbing prices are partly due to the growing popularity of contraband cattle trade, where traders earn more money by selling their livestock to buyers in neighboring Kenya and Djibouti, who in turn, sell onwards to Middle Eastern countries.

Essaye Ahmed, a resident of the border town of Togochale, argues that for foreign buyers Ethiopian cattle taste better. Goat meat can be sold for as much as USD25 a kilogram. “That may be because they feed them organic fodder,” Essaye says. For Fantalem, the surtax levied on feedstuff is showing a significant effect on the escalating price of meat.

A year ago, a single ox would typically consume up to ETB40 worth of feed a day, in contrast to the current ETB250, while jute bags of fodder cost up to ETB3,500 a piece—both seeing an explosion in excess of 500Pct. Essaye’s argument seems to be shared by the Ministry of Agriculture (MoA) which drafted a document requesting the Ministry of Finance to remove taxes imposed on all kinds of animal feed, arguing it is one driving factor for price hikes in the nation’s livestock market.

Livestock production contributes a significant portion of farmers’ income in Ethiopia. Its contribution to the national economy is also very measurable. According to some records, about 20Pct of agricultural GDP comes from livestock. Ethiopian traders have sold about 35,280 heads of cattle to their counterparts in Somalia in the first three months of 2021, exhibiting a 6Pct quarterly growth. This stems from a surge in the practice of re-exporting the same products by traders in Somalia to the Middle Eastern countries.

“We can say it is a neglected sector. Meat processors and slaughterhouses are like traders, nothing more,” says Samuel Assefa (PhD), an Expert with over three decades of experience in livestock trade.

Exporters are not also interested in building commercial farms as they are supposed to in a country where the market is volatile and often sabotaged by intermediaries. No matter how encouraging it is, MoA’s decision to lift taxes on imported feed cannot come soon enough. Meat processors must consider insemination of the best bull breeds from selected regions like Spain, the Netherlands, and Australia to boost their productivity and also obtain sustainable products, industry insiders also recommend. EBR