Development of new horticultural area in Ethiopia

The land won’t be exclusively for Dutch investors. But they are given priority because of the good relationships that developed over the years between various parties from the Netherlands and Ethiopia.
Bloemisterij 13-01-2017

Development of new horticultural area in Ethiopia

Ethiopia wants to double its agricultural production. The Netherlands support the Ethiopian government. The current focus is on the integrated development of a new horticultural and floricultural area north of Hawassa. In the meantime, the Dutch embassy is having a critical dialogue with Ethiopia and helping the Ethiopian government to start a conversation with its discontented population.

By Hans Neefjes
[email protected]

The activities near Hawassa, about 275 km south of Addis Abeba, might receive support this time round. Niek Bosmans, Counsellor for Agriculture, Nature and Food Quality at the Dutch embassy in Ethiopia, explains that it concerns a 1,500-ha area. “It’s situated 1,600 m above sea level, not far from Lake Hawassa. There used to be a state company here, so the land is owned and used by the government. The large plot is divided by a ridge, so it’s actually split up into two parts, one of 1,000 ha and the other one of 500 ha.”

The land won’t be exclusively for Dutch investors. But they are basically given priority because of the good relationships that developed over the years between various parties from the Netherlands and Ethiopia. The main objective is to develop a production area that is particularly sustainable. Sustainable in every way, so not just with regards to environment and labour. Knowledge and experience from the Dutch will therefore come in handy, says Bosmans.

Meeting in February
Bosmans wants to organise a meeting for growers in the Netherlands at the end of February. “We’re hoping to welcome flower growers, but also growers who would like to cultivate vegetables or other crops in Ethiopia. The growers will be responsible for all further planning of the area. We’re hoping to see lots of people at the meeting. Projects will be facilitated by the Ethiopian and Dutch governments. Neither of those want to ignore the riots of 2016, though. The Dutch Government proposed a number of conditions, such as transparent processes and the involvement of the local population.”

Bosmans knows that some growers who are already based in Ethiopia, might also be interested in suitable land to expand their farms. Is that still the case? The fate of Esmeralda Farms in Bahir Dar has received a lot of attention, but in fact eight farms were attacked during the demonstrations, among which six Dutch businesses.

“But the interest remained, just like the drive to develop land. This is what we hear from growers, suppliers and governments. There are a number of political reasons for the riots of 2016, and they haven’t all been resolved. It has definitely shown us that it’s important to go about things very carefully and in close consultation, at all levels. The land in Hawassa has been owned and used by the government for a long time. There is no ambiguity about it. "

Favourable conditions
There’s been an airport near the site in Hawassa since 2016 and the idea is that this will be expanded into an international airport. That would mean that all the produce for export no longer needs to be driven to Addis Abeba, which is a 4.5-hour journey. Nearby Lake Hawassa provides plenty of good water. The site is quite flat and has a fertile cultivation layer of around 30 cm. The high altitude makes for favourable climate conditions. Employees might be found in Hawassa or the nearby town of Shashmene.

All in all, conditions are favourable for growers. The Ethiopian government wants to help investors with favourable import rates, loans and training of staff. But they offer those same incentives to other industry types they want to attract to the area, too. There have been extensive talks with an American clothing company with brands like Calvin Klein and Tommy Hilfiger for example, regarding a recently developed industrial estate nearby the city. They’re going to collaborate with local clothing companies.

Bahir Dar
Ethiopia stands by its objective: to double the country’s agricultural production. The plans for the activities near Hawassa started a few years ago. They’re along the lines of what was developed around Bahir Dar, almost 500 km north of Addis Abeba, a little while ago. Those developments kind of came to a halt because of the riots in 2016. But eventually, things will pick up again there, including a project that both the Dutch and the Ethiopian governments are deeply involved in.

Apparently, using 60 million euros of regional investments, they want to develop a 200-ha horticultural area in consultation with local farmers. Four businesses will collaborate in order to bring together cultivation, breeding and distribution/trading. A construction that could serve as an example for the activities in Hawassa.

Trade agreement
The first trade agreement between the Netherlands and the Ethiopian government was signed in 2004. Since then, around 125 Dutch companies opened a branch in the African country. Horticulture, flower production in particular, is the main activity of the Dutch in Ethiopia. Next to the cultivation of flowers, fruit and vegetables, they produce things like oilseeds, milk, fish, animal feed, vegetable oil and coffee. And the Dutch are also involved in logistics, tourism and the construction of cold stores for example. The Dutch government stimulates this entrepreneurial spirit, for example by organising trade missions and by offering financial support.

The Dutch government spends around 60 million euro per year on development funds in Ethiopia. Add to that the indirect support through UN agencies, the World Bank and international NGOs, and you’re looking at double the amount. The trade balance between the Netherlands and Ethiopia is now in favour of the African country.

Most of the exports to the Netherlands still consist of flowers. Exports of other products such as oilseeds, is becoming increasingly important, and they’re starting to do business with more and more countries. The Dutch government wants to assist Ethiopia with realising that diversification. The country has the largest average growth rate in Africa (9%). The export value of ornamental plants increased from €133 million in 2010 to €333 million in 2015. Nearly half of the exports are made up of roses. 
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