ETHIOPIA – The Government of Ethiopia has reached an agreement with three companies; Bunge SA, Amropa AG and Archer Daniels Midland (ADM) Co. in the supply of 400,000 metric tonnes of wheat.

According to a recent report by Global Agricultural Information Network (GAIN) from the Foreign Agricultural Service of the United States Department of Agriculture (USDA) the wheat supply deal is valued at US$122 million.

This commodity is expected to be shipped in April/May as the first bulk wheat purchase this year and will originate from the Black Sea region.

According to the report, Bunge will supply 200,000 tonnes at an average price of US$308.5 per tonne, while Amropa and ADM will each supply 100,000 tonnes at US$308.4 and US$299 per tonne respectively.

The government had floated an international competitive tender to purchase 400,000 metric tonnes of milling wheat which followed the selection of the three companies.

Indications are that the Ethiopian government procurement agency made the bid selections despite receiving a lower offer from a Dubai-based grain company to supply the entire wheat tender at US$270 per tonne.

However, the agency declined the offer due to non-compliance to technical requirements on the supply deal, the report notes.

Ethiopia is a net importer of wheat and relies on international bulk procurements of the commodity to ease the pressure exerted on the increasing demand – projected at 5% annually.

“The Government of Ethiopia (GOE) will distribute the wheat to local milling companies and bakeries enrolled under the GOE subsidized wheat program.

Ethiopia will continue to import wheat in order to satisfy rising consumer demand,” the USDA report noted.

The bid had attracted a total of 38 companies including, Hakan Agro DMCC, Intrade Co. UK Ltd, Promising International and A Plus Import jointly with Wifag Mabruk General Trading.

Ethiopia is still feeling the impact of a continued drought that devastated outputs in some regions pushing the country into a large wheat import programme to cool domestic prices.

In 2017, the Ethiopian Trading Business Corporation purchased 1.09 million tonnes of wheat valued at US$299.3 million but the volume declined to 590 000 tonnes procured forUS$176.06 million, indicating a 46% decrease in the purchase last year.

The country’s local production stands at 4 million tonnes annually while the nation’s wheat consumption stood at 6.4 million tonnes in 2017.