Ministry to Introduce Contract Farming

The Ministry of Agriculture has drafted a proclamation to introduce contract farming. For the first time, farmers will be able to arrange contracts with buyers, determining prices and what they will produce in an agreed upon time frame.The new bill, which has been two years in the making, was sent to the Council of Ministers at the beginning of January 2020. The Council forwarded it to the House of Federation for comment, since the issue directly concerns the regional states.

Existing laws do not adequately address agricultural production contracts, according to the bill."Thus it has become necessary to put a comprehensive legal framework in place that facilities transfer of technology, knowledge and skills, and market linkage between producer and contractor to improve production and productivity,” reads the bill.The new scheme is expected to lay out a framework that allows agro-processing industries, investors, hotels, supermarkets and foreign investors to guarantee they will receive enough product to fulfil their demand.

Agricultural production contracts can be initiated through an offer by the producer or contractor; any government institution or non-governmental organisation involved in developmental activities can also initiate and facilitate such agreements.

The bill will introduce two types of contract farming agreements. The first type involves a contractor who is obligated to supply the inputs to the producers. Under this type of contract, the contractor provides the technology, technical assistance or finance needed for production. However, the price of the inputs cannot be higher than the prevailing local market price of the product.

Under the second type, the contractor has to supply the inputs to the producer only if there is a mutual agreement between the parties. If the contractor does not provide the necessary inputs, then payment must be issued to the producer. “The growth in demand for certain agricultural products was very low," said Sani Redi, state minister for Agriculture, “and the relationship between the farmers and the rest of the value chain wasn’t strong enough to design a legal framework for contract farming."

The contract must contain the parties’ personal information, the purpose and objective of the agreement, the size of the farm, the parties’ rights and obligations, production quality and quantity and the pricing model. It should also include the type of technical assistance that will be provided by the contractor, provisions for intellectual property, provisions for events considered to be force majeures, issues of succession, assignment of rights, duration of the contract, dispute resolution mechanisms, and the agreed upon dates.

Force majeures include extremely high or low rainfall or temperatures, floods, fires, landslides, earthquakes, diseases, and other unfortunate events depending on the details of the agreement. In such cases, the contract determines who will be financially responsible for the loss, according to the bill.

In addition, the parties can also agree to obtain insurance coverage against such force majeures with an understanding of who pays the premium for the insurance.The duration of the contract depends on the nature of the contract and production method; however, the Ministry of Agriculture may determine the duration with a special directive depending on the nature of the agreement."We expect the bill to be legislated by the end of the year," Sani said.

Even though the bill will help modernise the agricultural sector, it is not a long-term solution to the country’s need for sustainable food security, according to an agricultural economist who asked to remain anonymous. It is only applicable to a limited number of products, including oilseeds, sugarcane and sesame, because the country’s current levels of production do not satisfy the demand. The remainder is imported from foreign sources at a high cost, but this new bill will help fill in the gap, according to him.

“The scheme has to assume the floor price of the product at the time of the delivery, considering there might be price fluctuations," the expert said.

Ethiopian Wins ‘International Air Cargo Marketer Of The Year’ Award

Addis Ababa, March 2, 2020 (FBC) –Ethiopian Airlines (Ethiopian) Cargo and Logistics Services, has won the ‘International Air Cargo Marketer of the Year’ Award.Ethiopian, Africa’s largest network cargo operator and multi-award winner, won the award at the 2020 STAT International Award for Excellence in Air Cargo which was held last week in Mumbai, India.

It won the award for its valuable contribution to the air cargo industry in a highly competitive and one of the fastest growing markets in the world, said the airlines in a statement.

Commenting on the award, Ethiopian Group CEO Mr. Tewolde Gebremariam, remarked, “We are honored to have won the ‘International Air Cargo Marketer of the Year’ award which bears testimony to our leading cargo and logistics services in Africa and different parts of the world, catalyzing multi-faceted growth in all the regions we serve.

We have been investing heavily in facilities and freighters which enabled us to continuously expand our services and deliver safe, secure, dependable and competitive cargo and logistics services worldwide. The award will spur us to further excel in our operations.”

Ethiopian Cargo & Logistics Services has built the largest cargo terminal in Africa with a capacity of close to 1 million tons annually.It delivers cargo services spanning across 57 international destinations in Africa, the Gulf, Middle East, Asia, North Americas, Latin America and Europe with 10 B777F and two B737F aircrafts.

In the 2018/19 fiscal year, Ethiopian Cargo & Logistics Services uplifted a total of 432,417,404 kg cargo.

Ethiopian Airlines Launches Sustainability Initiative To Support Local Farmers

Ethiopian Airlines Group has launched an innovative capacity development initiative aimed at creating local value in agricultural products.

The airline said the initiative was tailored towards supporting cooperative unions comprising millions of farmers with innovations and technology, thereby ensuring their international market penetration.

While discussing with Mr. Tewolde GebreMariam, Ethiopian Group Chief Executive Officer at Ethiopian headquarters, recently, stakeholders drawn from government agencies and farmers’ cooperative unions expressed their gratitude on the launch of the capacity development programme and vowed to work together.

Tewolde on his part remarked: “We are delighted to have launched the initiative which is geared towards enhancing the livelihood of Ethiopian farmers as well as supporting them in competing in the global market place. We will keep sharing our experience and underpin the implementation of the import substitution strategy of our country with consistent and progressive local value creation (LVC) endeavors.”

Ethiopian sources organic produces directly from the farm and significantly contributes to the import substitution move of the economy.

Kenyan traders resort to Ethiopia for tomato imports

Kenya is now importing tomatoes from Ethiopia to bridge the market deficit that has seen the commodity’s prices more than double in the past one month.

A single tomato is currently retailing at Sh30 in most parts of the country up from between Sh5 and 10.Traders who spoke to the Star said that the price of the imported tomatoes has also gone up  and now costs Sh4,000 per crate compared to last year’s price of Sh2, 000.

Once in Kenya, this is  divided into three categories  with a large crate retailing at Sh 18,00o,  Sh 11,000 for the medium crate and the Sh4, 000 for the small crate.

Last year, the large crate retailed at Sh8,000 while the Medium and small crates retailed at Sh4, 500 and Sh2, 000 respectively.Traders have warned of a continued shortage blamed on changing rain patterns that has affected production.

Tomatoes are 95 per cent water, with most varieties soaking up summer rains to become pump and juicy on the vine. The weather forecast for March-April-May (MAM) 2020 shows that enhanced rainfall is expected; however above average rainfall is expected across the country.

 The expected rainfall is likely to be higher than the long-term average amounts (above normal) for the season. The climatic change has had huge impact on tomato production as the vegetable is fairly adaptable and grows well in warm conditions in optimum temperatures of 20 -25 degrees during the day and 15 -17 degrees at night.

“The current change of climatic conditions has led to very low yields on our own farms. It is also expensive to transport the tomatoes because they are perishable and also the crate has little produce” John Gichoke, a trader at Nairobi’s Wakulima Market said.

According to the National Farmers Service (NFS), tomato farming is appropriate during the dry season as the crop is less prone to diseases such as tomato blight, leaf curling and powdery mildew which cause more than half of the losses in affected plants.

“I need to sustain my family because the economy is tough at the moment. After importing the tomatoes , dividing into different quantities is what brings in the little profit.” Mutuma Joseph, a trader at Nairobi’s Muthurwa Market said.

“We have to sell the tomatoes at a higher price because it is also expensive to purchase from the Ethiopian traders and the goods are also perishable therefore we incur losses when some of the tomatoes arrive when they are already decayed.” Joy Muhambe, a trader at Nairobi’s Fig Tree market said.

Figures from the latest inflation report by Kenya National Bureau of Statistics (KNBS) food basket, indicates that there was an increase in the price of tomatoes from Sh90.28 to Sh95.78 a kilo, a rise of 6.1 per cent.

In Ethiopia, tomato price is imposed by intermediates that usually set a low farm-gate price to boost their profit margin at end-markets.

According to a study conducted in Ethiopia, 98 per cent of the total tomato production is sold in the market while merely two per cent is used for household consumption. Kenya grows more than 400,000 tonnes of the vegetable every year, which corresponds to seven per cent of its total horticultural production making it one of sub-Saharan Africa’s top tomato producers.

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