Ethiopia opens 2nd avocado processing facility, eyes international market

Ethiopia opens 2nd avocado processing facility

ETHIOPIA – YBM, a new private avocado oil processing company, has gone operational within state owned Yirgalem Agro-processing Park in Southern region of Ethiopia.

Established with a capital investment worth Birr 104 million (US$2.1m), the new factory is set to start processing and exporting avocado oil to international markets including Europe, Asia and UAE.

The facility is set to source raw materials from own farm and over 40,000 surrounding smallholder farmers production clustered with 21 Farmers service cooperatives and one fruit & vegetables supplying association.

YBM has indicated that it utilizes state of the art technology with a processing capacity of 5 tons per hour, to produce super standard, nutritious, tasty & pure crude & extra virgin avocado oil for the global market.

The company has commenced operations and so far, created 50 permanent jobs and 150 temporary positions.

It joins, Sunvado, Ethiopia’s first organic avocado oil sourcing and processing company, established by Tradin Organic in 2019.

Sunvado was founded in 2018, with the vision of offering local avocado farmers access to the export market.

The farmers used the avocado trees to provide shade for their coffee and for their own consumption or sold on the local market at meagre prices.

However, most of the avocados were not harvested at all and were simply left to rot.

The avocado oil processing facilities offer farmers better price for their produce, while offering premium organic avocado oil to customers around the world.

In recent years, the government of Ethiopia has been working to improve the quality and production of avocados in an attempt to include the Fruit to its export items list.

The government of Israel through its development agency MASHAV, and USAID have been assisting the Ministry of Agriculture of Ethiopia in introducing new avocado varieties and providing technical support.

Hass is one of the highly preferred avocado varieties from Israel, which Ethiopian farmers have been producing for export over the past few years.

According to reports by Addis Fortune, last year Ethiopia exported around 3,000tn of the Hass avocado, generating close to US$800,000.

Though the value is 800% larger than what was earned four years ago, there is more potential.

Kakuzi issues profit warning due to lower prices in key markets

Meanwhile, Kenyan agricultural firm Kakuzi expects its earnings for the full year ended December 2021 to fall to levels seen at least six years ago on the back of reduced avocado exports and depressed prices.

The Nairobi Securities Exchange-listed firm issued a profit warning, signalling that its full-year earnings will fall by at least a quarter, reports Standard Media.

The profit warning is despite the half-year results to June 2021 having been relatively steady, falling from Ksh285.9 million (US$2.52m) to Ksh276.7 million (US$2.44m) and indicating that its woes relate to the second half.

Kakuzi in 2020 posted Ksh622.03 million (US$5.49m) and the profit warning means the earnings will not be above Ksh466.53 million (US$4.12m) — a level that only beats the Ksh459.7 million (US$4.06m) posted in 2015.

The firm’s chairman Nicholas Nga’ng’a attributes the profit warning on an 18 per cent fall in avocado production due to biannual bearing — a phenomenon where an unusually heavy crop in one particular year is followed by a year of low production.

The decline in earnings is also due to lower global market prices in Kakuzi’s European markets amid low consumption trends due to the Covid-19 disruptions.

“This is due to an oversupply of fruit from Peru and Columbia which impacted prices during the same period that our fruit was also in the market,” said the firm.

Avocado accounted for 64 per cent of Kakuzi’s sales in 2020, highlighting the concentration risk and commodity price risk the firm faces as the price fluctuates.

“The board is stepping up the execution efforts on our product diversification strategy, which is of critical importance. This strategy aims to mitigate the global market volatility and overreliance on any one product,” said Ng’ang’a.

Kakuzi’s product diversification to include macadamia farming has however shielded the grower from a further decline in earnings.

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