Facing critical shortage of inputs, producers of edible oil are awaiting the government’s decision to import oilseeds from neighboring African countries without paying customs taxes.
Edible Oil Manufacturing Industries Association, representing over 232 businesses involved in the edible oil market, proposed to import oilseeds, including sesame, peanut and soybean, from African countries, including Sudan.
The Association hopes importing oilseeds would ease input shortages faced by edible oil producers and solve the shortage of the item in the market. It is also expected to save the much needed forex spent to import crude oil. The biggest four edible oil refinery plants alone need USD 600 million per year to import crude oil.
“At a time when the price of crude oil is going through the roof, allowing the import of oil seeds does not only help to save forex but also encourage producers to add value,” said Addise Garkabo, General Manager of Edible Oil Manufacturing Industries Association.
The proposal to import oilseeds has already received a positive nod among officials of the Ministry of Trade & Regional Integration, though it is yet to be approved by the Macroeconomic Committee at the Office of the Prime Minister.
“It requires policy change. That is why it made it to the committee,” said Addise, who applauded recent incentives introduced to encourage producers of edible oil to boost their production.
If the new proposal is approved, it will be the third big policy change implemented this year, next to the full tax exemption of edible oil products, and the addition of inputs of edible oil products in the priority list of the National Bank of Ethiopia’s forex allocation rule.
Ethiopia imported 89,000tons of semi-processed palm and soybean during the last fiscal year in a bid to alleviate the shortage of raw materials facing domestic oil factories.
Even though the last three decades saw the establishment of 26 large and 206 medium oil-producing industries in the country, with a capacity to produce 1.2 billion liters of edible oil, the factories utilize half of this.
Mohammed Yenus, General Manager of Addis Modjo, a company privatized 12 years ago, believes edible oil producers would be able to boost production if they are given a chance to source inputs from countries where there is abundant amount of oil seeds.
“There is a big price difference in oilseeds sold in Ethiopia and Sudan. That means, there is a huge opportunity to bring oilseeds from Sudan and other neighboring countries and process it here,” said Mohammed, adding, “That does not only increase our production rate but also allows us to get more byproducts, including animal feed.”