ETHIOPIA – The government is importing two million quintals of milling wheat, in addition to the four million quintals it has already bought by the beginning of the current fiscal year, leaving only 500,000ql for its plan for the year.
Public Procurement & Property Disposal Service (PPPDS), on behalf of the Ethiopian Grain Trade Enterprise (EGTE), announced the international tender to buy the wheat three weeks ago on the state-owned daily newspaper, The Ethiopian Herald. Financial opening is expected to take place on October 22, 2014.
The government has been importing varying amounts of wheat for years for market stabilisation purposes. In 2009/10, it had imported 5.3 million quintals, then nearly half, 2.58 million the following year.
In 2011/12 and 2012/13, the imports were 4.2 million and 5.6 million quintals, which again was slightly down to five million quintals in 2013/14.
The price per quintal at which the government bought the wheat has also increased from 353 Br in 2009/10, to 507 Br, 534 Br and 549 Br through consecutive years until 2012/13.
At the global market, the price of the wheat is estimated to be 468 Br per quintal on October 9, 2014, according to USDA Market News.gov, a United States based website.
Accordingly, the latest order could cost the government somewhere around 936 million Br. Nevertheless, the first batch of wheat the government bought this fiscal year has cost 600 Br a quintal excluding transport cost.
Following the problem of wheat shortage in the local market, the government bought four million quintals of milling wheat from Ukraine for 2.4 billion Br. The government made the order to six companies.
As of October 10, 2014, the EGTE has received 2.1 million quintals, which is stored at the central warehouse between July 29, 2014, and October 7, 2014. So far the EGTE has distributed 1.2 million quintals to 288 flour factories throughout the country, according to Etenesh Gebremichael, public relation & trade information head at the Enterprise.
The distribution takes place from warehouses at each regional capital every 15 days. These 288 factories supply flour to 5,000 bakeries identified by the Ministry of Trade and regional trade & industry bureaus.
In the first distribution for this fiscal year, between July 29 and August 19, warehouses at Addis Abeba and Mekelle were the biggest recipients, with 97,950ql and 89,598ql, respectively. Adama and Bishoftu had 47,787ql and 41,999ql, respectively, while Bahr Dar and Dessie each had 36,820ql.
The cost of the wheat to the government, including transport, is 776 Br, says Ali Siraj, state minister for trade. The government sells this to the mills at a subsidized price of 550 Br a quintal.
The mills make 73kg of flour of a quintal, according to Ali, which they sell to bakeries for 796 Br. A special consideration in Addis Abeba is that 4,520ql out of its biweekly quota of 113,000ql of mill will be distributed to people considered as lower income.
The government has been importing wheat with a total expense of 8.47 billion Br between 2009/10 and 2012/13. In the 2013/14 fiscal year, it had bought five million quintals during the last fiscal year for market stabilisation.