Indian food processor Allana Group halts operations in Ethiopian unit following harsh operating environment

ETHIOPIA – Frigorifico Boran Foods Plc, the Ethiopian subsidiary of India-based Allana Group, has shut down its US$60m abattoir, after slightly over a year since it commenced operations.

The company has attributed the stalemate of operations to rampant insecurity in the area, insufficient livestock supply, high competition from contraband livestock market and high local meat prices.

The closure has meant that close to 300 people have lost their jobs, and the plant currently employs only a few dozen security and maintenance workers.

Sitting on a 72-hectare piece of land in Adami Tullu, 163Km southeast of Addis Abeba, the processing plant was inaugurated in 2018 after more than two and a half years of construction time.

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Featuring state-of-the-art facility, the abattoir can slaughter and process over 3,000 heads of cattle and twice the number of sheep and goats daily, mainly earmarked for export to the Middle East, reports Addis Fortune.

However, the factory was operating below full capacity, processing 300 tonnes of meat per month, due to lack of livestock supply and security concerns stemming from the political instability, coupled with shortage of skilled labour.

Ethiopia has sold about 35,280 heads of cattle to their counterparts in Somalia in the first three months of 2021

The company was relying on supply from livestock breeding cooperatives such as Adami Tullu, Borena, Bale and nearby lowland areas.

But the illicit cattle trade en route to Kenya, Somalia and Somaliland, offers higher incentives thus it became a stumbling block to Frigorifico Boran Foods Plc processing.

Ethiopian traders, according to the East African Crossborder Trade, have sold about 35,280 heads of cattle to their counterparts in Somalia in the first three months of 2021, exhibiting a six percent quarterly growth stemming from a surge in re-exporting the same products by traders in Somalia to the Middle Eastern countries.

With an eye also on the export market, the meat processor has not been able to fully venture into the lucrative business opportunity as skyrocketing prices of meat in the domestic market have also made it difficult for exports.

In comparison, the average retail price of a kilo of beef in the international market costs US$4.70 compared to the same in Ethiopia which costs close to US$14.

Despite the setbacks, the management of Frigorifico hopes to resume operations in six months.

Allana Group is India’s largest exporter of processed food products and agro commodities, including Frozen / Chilled Meat, Processed / Frozen Fruit and Vegetable products, Coffee, Spices and Cereals.

The company operates a second plant, Akseker Ethiopia Casting Plc, in Modjo, which it acquired from Turkish owners in 2015.

It invested close to Birr 500 million (US$11.7m) to upgrade the plant and install rendering machinery, enabling it to produce fodder for poultry and domestic animals as well as inputs for soap factories.

Besides its investments in Ethiopia, the 152-year-old Allana Group, headquartered in Mumbai, India, owns a similar venture in Tanzania.

In other related news, Ethiopia has cut ribbon to the newly built 100-million Birr (US$2.3m) veterinary drug manufacturing plant, constructed by the National Veterinary Institute (NBI) in Bishoftu town.

The factory will produce 91.5 million veterinary tablets annually, initially operating at 60 percent processing capacity.

The plant will enhance livestock productivity and accelerate the sector’s growth by availing cheaper and readily accessible remedies for the herds.

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