ETHIOPIA – The government is set to procure additional 200,000 tonnes of wheat to stabilise the local market fearing a spike in food prices. It is estimated to cost the state over a billion Birr.
The move comes three weeks after the government floated a tender to procure 400,000tns of wheat for 8.5 million drought victims in the country.
Ethiopia Trading Business Corporation, which is under the control of the Ministry of Trade (MoT), requested the Federal Public Procurement & Disposal Service (PPDS) to prepare a tender document.
Following that, the service is now reviewing the request of the Corporation to cross-check the rationale of the procurement.
It is expected to raise the government’s import bill for wheat to over five billion Birr this year.
Half a year ago, the Service awarded Promising, ADM and Phoenix, to procure 400,000tns of wheat with a cost of two billion Birr to even out the wheat market. It was intended to be used by 300 flour factories and 5,000 bakeries.
During the same week, the Service also postponed the opening of the tender floated to buy 400,000tns of wheat for drought-affected areas.
Even though more than 30 companies showed an interest to participate in the bid, the service rescheduled the bid opening to October 24 at its premise located at King George VI Street.
“We have adjourned the opening date due to an adjustment made in the tender document regarding distribution,” said Assefa Solomon, deputy head of public relations at the Service.
A volume adjustment is made in areas where the wheat will be distributed.
The procurement made on behalf of the National Disaster Risk Management & Control (NDRMC), is likely to cost over two billion Birr.
It is needed to urgently respond to the 8.5 million drought victims that require quick assistance. In doing so, the awarded company must supply the wheat in no more than a month.
This is not the first time the government has ordered a massive wheat procurement in a bid to help drought-affected people. Two years ago, a similar amount was procured for 10 million people in need of urgent assistance.
Owing to the growth in drought victims, the amount of wheat imported by the government is increasing considerably every year.
Over the past two years, it has almost quadrupled to 2.5 million tonnes; forcing the government to spend over 10 billion Br in the past year alone despite the hike in wheat production from less than four million tonnes to 4.5 million tonnes.
This seems to worry the economist with over three decades of experience.
“By employing better technologies, the wheat production must be improved significantly,” Assefa Admassie, an agricultural economist, remarked. “Otherwise, focusing on the international market during shortages is not advisable.”
The massive wheat import comes at a time when food prices are escalating in the country. The food inflation rate reached over 13pc last year, against the plan of the government to keep it within a single digit, due to an increase in prices of cereals including wheat.
There is also a fear of further price swell in food products after the recent devaluation. The effects can already be seen in the prices of edible oil.