John Giles, a market research consultant and the divisional director at Promar International, a leading UK-based agri food supply chain consulting firm, gives a sneak peek about emerging future sources of supply for UK buyers
Your presentation at LPS15 focus on a market analysis of increasingly important potential sources of supply. It include Ethiopia among others. Why Ethiopia in particular?
John Giles (JG): The idea is to present something different. We all know probably quite a bit about the likes of Chile, Turkey, South Africa, Kenya and Egypt as suppliers. I want to move away from the familiar suspects and look at lesser-known countries around the world as an educational guide.
Ethiopia, is deliberately-chosen country of which people will have some sense, but probably won’t know a great deal, yet it is becoming more influential and important. It can produce a wide range of produce – a combination of fruits and vegetables – it is known for some products and some participation in international markets.
My objective is to give some insight into Ethiopia as potential exporter or as in-country supplier.
Why do you feel UK buyers need to take notice of Ethiopia?
John Giles (JG): At any forward-thinking produce company part of the role as a buyer is to be well informed about current sources of supply but also about future sources. You should be looking at what is happening in new areas and asking what is their potential.
If you look back in history, developing a modern fresh produce industry doesn’t happen overnight. Some 20 years ago Chile was only just coming on the scene and now it’s a firmly established supplier. Morocco, Thailand and Turkey are other good examples.
Ethiopia, is just an interesting source. Their fruit and vegetable sectors have grown quite significantly in the last 10 years. It has shown what they can do in various products and they are all improving rapidly. In all three countries, the best of the best are already very good.
Over the next five to ten years I’d expect more businesses in Ethiopia to master the skills that international buyers are looking for, whether that’s the technical know-how, the commercial prowess or the accreditations required. It is only going to continue to get better and be more successful. Buyers should be considering it.
Tell us more about Ethiopia. Why should this East African nation in particular pique buyers’ interest?
John Giles (JG): Ethiopia will be remembered for a lot of the wrong reasons and while the images don’t fade easily, we mustn’t get trapped into that way of thinking. It’s a very different country to what it was 30, 20 and even 10 years ago. The reality is that the horticulture industry is now booming and it’s becoming increasingly impressive. Ethiopia is the fourth-largest exporter of cut flowers after the Netherlands, Kenya and India, and a growing exporter of vegetables. Just 10 years ago, you wouldn’t have dreamt of that scenario.
What has happened to change things?
John Giles (JG): Ethiopia has had a sustained period of economic growth – 5-10% per annum – and its economy is booming [it’s the largest economy by GDP in East Africa and Central Africa]. There’s a population of over 90 million people [it’s the most populous landlocked country in the world and the second-most populated nation on the African continent]. There are movements towards democracy, like we’ve seen in Nigeria, and the politics are modifying.
Ethiopia is essentially still a poor country, but it has a massive aspiration. It’s seeking to become a middle-income country in two decades’ time. Turkey used to be a poor country, but now it’s a modern, thriving nation that’s a geographical hub with a per capita income of US$10,000 per year (£6,650). But Ethiopia can only achieve that with economic growth and political stability.
Already, there’s been ambitious investment in the horticulture sector. Money is flooding in from China, the Middle East and India too. And there have been significant developments in infrastructure, such as at the airport and across both the road and rail systems.
As a landlocked country, is water availability an issue in Ethiopia? What obstacles does this present for produce?
John Giles (JG): Certain parts of the country are well provided with water. In the Upper Awash Valley and south of Addis Ababa there are reservoirs and irrigation schemes. In other parts of the country, yes, water availability is more problematic. But Ethiopians are acutely aware of the problem. Saudi Arabia is investing in Ethiopian water projects, however they are short of water themselves. So, there needs to be massive investment in water and that may be helped through external finances.
What are the opportunities for the British produce buyers and, also, UK suppliers perhaps looking to extend their availability?
John Giles (JG): Ethiopia wants to accelerate growth, so it needs expertise and technology to achieve that. There are opportunities for training, technology and management skills to be transferred to Ethiopia from other countries, and obviously for produce supply itself. We might see international produce companies setting up joint ventures in Ethiopia as a way of creating year-round supplies. British companies are already supplying polytunnels to the flowers companies and Ethiopian growers/exporters are also using British accreditation schemes.
What’s on offer in Ethiopia for buyers from the UK in particular?
John Giles (JG): The UK is already an importer from Ethiopia, but the country plans to send a lot more fresh produce to western Europe. The UK will be a clear target market within that objective, so we are bound to see more Ethiopian produce arriving on our shores.
Do you see any other African country like Ethiopia, which hold promising supply potential?
JG: There are a whole range of East African nations that have threatened to make a breakthrough in horticulture or floriculture, such as Tanzania and Uganda. For whatever reason they’ve not done it, but they will. Zimbabwe and Zambia have historically exported to Europe but they’ve found it increasingly difficult in recent years. A lot is to do with the macro-economic and political situation there.
How can any buyers interested in these countries get involved in sourcing opportunities?
John Giles (JG): From my experience, and definitely for Ethiopia, if any country wants to accelerate the growth of an industry their relevant institutions will be promoting a range of inward investment schemes. For Ethiopia, we at Promar could help depending on what the buyer is looking to do. A combination of trade associations and government institutions will welcome you with open arms if you wish to do business. In general, trade associations are very responsive because they’re looking for investment or trading relationships to help buyers build relationships with growers and exporters, which can often lead to joint venture agreements. In a lot of these countries the natural resources are there but sometimes what’s lacking is the knowledge of export markets or their requirements and how to meet those demands. The learning process can be quite long so it helps to do it in association with someone else.
Increasingly, exporters are coming to markets like the UK to do business. But buyers obviously need to go to a country of interest themselves to visit the market and learn about the structure of the industry. So, if you’re going to Kenya, why not visit Ethiopia as part of your trip?
NB: Edited version of the original article