Attempts to begin oilseed production by one of the leading edible oil refinery plants in the country hangs by a thread as regional authorities fail to avail land.
Shemu Edible Oil factory, which has the capacity to refine 1,186 tons of crude edible oil, requested 10,000 hectares of land from Somali Region, in a move to start harvesting oilseed with a long term plans to substitute the crude it imports locally.
While the request was made four years ago, the regional authorities failed to prepare the land for production to date. The land, which is said to be suitable for oilseed production, is located in Shinile Setti Zone of Somali Region. It is situated 60 km from Dire Dawa, where Shemu’s factory is located.
“We are closely monitoring the case and we are yet to get a response from the authorities,” said Tedros Tadesse, chief communication executive officer of Shemu.
The late response from the authorities goes against the policy of the government, which have been pressuring factories to substitute imports locally. It is a measure targeted at saving foreign currency and reducing imports, a key to narrow the trade deficit of the country.
Shemu was in the process to harvest high-fat content peanut, whose oil content reaches 56 percent.
“It will eventually enable us to substitute 70 percent of crude oil that we are importing now,” said Tedros, adding that will ease the forex shortage for the country that needs USD one billion to import crude edible oil annually.
Shemu, which also intends to get more land in other regions, is not the only company seeking to harvest oilseeds in a bid to substitute imports of crude edible oil and other inputs from abroad.
Addis Modjo Edible Oil Complex, which has been crushing oilseeds at its plant in Gotera, Addis Ababa, is in the process of leasing land in Benishangul Gumuz Region.
“We are finalizing our preparation to begin the application process,” said Mohammed Yesuf, general manager of the factory, which plans to harvest sesame, soya bean and peanuts.
Experts applaud the move to substitute the imports of inputs from abroad. They believe it is the right solution to avert the edible shortage in the country, which they believe is caused by the lack of inputs due to a dearth forex supply.
“Building refinery plants will have a little impact in making edible oil affordable and supply to the market without any interruption,” said Yesuf Seid, researcher in the field of oilseeds.
The existing edible oil refinery plants in the country can produce surplus in the market. Together, they have the capacity to produce over 91.8 million liters of edible oil a month, which is much higher than the local demand during the same period.
Since the beginning of this month, the price of edible oil skyrocketed in the market with five liters of edible oil costing as high as 1000 birr, more than 50 percent higher than the cost during last year’s same period.
Two weeks ago, the Ministry of Finance decided to import 150 million liters of edible oil for the coming three months.