It helps flower exports to be located near a regional hub, Moller said, as all flowers are transported via Ethiopian Airlines.
“The growth of horticulture, which is a time-sensitive export product, is closely associated with the rise of Ethiopian Airlines,” he added. “The airline has become the country’s biggest export, earning nearly $2 billion per year.”
ADDING QUALITY TO COMMODITY EXPORTS
Over the past decade, Ethiopia has been one of the world’s fastest growing economies. While positive external conditions and increased exports contributed to this growth, the country also successfully leveraged agriculture exports to developed countries. To sustain growth, the report recommends Ethiopia build on its agricultural foundation by adding quality and value to its exports.
For example, Ethiopia is among the top producers and exporters of the best Arabica coffee in the world, but it is not taking advantage of the commodity’s full potential in the export market, according to the report. Ethiopia exports mainly raw, unprocessed green coffee beans for around $2 per kilo. However, a kilo of roasted Ethiopian coffee retails for as much as $40 per kilo in international markets.
OVERCOMING UNDERLYING VULNERABILITY
While upward price trends helped boost Ethiopia’s export growth between 2003 and 2012, the recent drop in prices of key commodities has led to the worst export performance since 2013. It has also exposed underlying vulnerabilities in Ethiopia’s export structure and highlighted the importance of strengthening competitiveness.
More than ‘what’ is being exported, it is the ‘how’ that is hindering potential, the update notes. As such, the update outlines seven areas of policy focus that could help unleash Ethiopia’s export potential:
- Coffee: If Ethiopia exported more wet-processed green beans instead of sundried, it could earn a significant mark-up. Roasting coffee would also considerably increase its value.
- Cut Flowers: Using higher quality packaging dramatically increases prices. Further value could be added with better management of the freight and cold chain.
- Live Animals: Processed meat is more lucrative (while retaining hides and skins for the leather industry). However, more needs to be done to meet international standards.
- Branding quality products would better enable Ethiopia to earn premium income. Examples include coffee from Yirgachefe, Harar and Sidamo, or Humera sesame seeds.
In addition, the update recommends that the country address key constraints in its export business such as reliable access to electricity, credit and foreign exchange.