Malt factory to suspend production

ETHIOPIA – The Assela Malt Factory, the main supplier of malt for breweries in Ethiopia, is suspending production until the middle September when barley ordered from Denmark is expected to be delivered.

“The factory will stop production as soon as it finalises processing the 15,000qt it has in its stock, which will be finished before mid-august,” said Amare Wakjira, managing director of the Factory.

The Factory is located just outside Assela town in Tiya Woreda of Arsi Zone, a region popular for the quality of barley it produces; despite the fact the factory is not getting enough supply from the farmers.

“The main reason for the scarcity of barley is the farmers’ poor interest to harvest barley,” said Amare.

The Company is paying farmers 360 Br more a quintal starting July to encourage farmers to grow more barley; its old price used to be 900 Br to 1,050 Br. Sometime before that Diageo, the owner of Meta Brewery, had bought 70tns of barley from the same market where Assela gets its supply, according to a source working in the industry.

Diageo’s communication office confirmed the purchase but declined to discuss the subject of malt. The office asked questions to be emailed to it, but Menen Wondwossen, corporate relations director, replied saying, “We are not able to comment on this at the moment.”

The Assela Malt Factory sent a Letter of Credit (LC) to Denmark on August 5, 2104, for shipments of 17,500tns of barley, a four month supply, for six million dollars, at nearly twice the price in the domestic market.

The Factory expects the ships carrying the barley to arrive at the Port of Djibouti on September 10 and reached to the Factory on September 30, 2014.

The Malt Factory needs 600,000qls of raw malt barley to produce 360,000qls of malt a year, which it supplies to the breweries in installments of 30,000qls to 32,000qls.

Its clients include BGI Ethiopia, Harer Brewery, Bedele Brewery Share Company, Meta Brewery and Beer Garden. The Factory sold close to 220qlt for 345 million Br to these five breweries in 2011/12.

Some of these breweries declined to comment on the consequences of the malt factory suspending production.

Dashen Brewery gets its malt from its, Gondar Malt Factory, a sister company, both owned by Tiret Endowment Investment Organizations (TEIO). 

Gondar Malt Factory started production last year with an investment of 670 million Br, in Gondar town, in the Amhara Regional State, with a production capacity of 16,200tns of malt a year.

The company gets barley from Gondar, Gojjam and Northern Shoa. The brewery consumes three quarters of the malt produced by the malt factory.

According to data from the Ethiopian Revenue & Customs Authority (ERCA), 5,425tn of malt was imported in 2003 at a cost of 2.8 million dollars. This number had grown more than 15 fold by last year, forcing the country to spend 47.3 million dollars on the import of malt.

Following maize, wheat, teff and sorghum, barley is the fifth most important cereal crop in the country, and it is produced on about one million hectares of land of which Arsi and Bale contributed close to 20pc.

Asella Malt was established 30 years ago, and remained for long the sole local supplier of malt to the local beer industry, whose production capacity has reached about four million hectoliters.

Raya, Zebidar and Habesha breweries are expected to join the industry in coming years.

Starting from July 8, 2014, the Factory increased its prices from 1,695 Br to 1,795 Br a quintal.

August 15, 2014; http://addisfortune.net/articles/malt-factory-to-suspend-production/

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