Midroc Investment Group to beef up Ethiopia’s edible oil processing capacity with US$1 billion planned investment

ETHIOPIA – Ethio Agri-CEFT, subsidiary of Ethiopia’s largest diversified conglomerate, Midroc Investment Group, is seeking to invest US$1 billion in the establishment of a new edible oil processing complex in the country.

The factory set to be the largest edible oil processing facility in the country, will also produce animal feed from the by-products.

Ethio Agri-CEFT has been majorly undertaking oilseeds farming alongside other crops for the export market.

The earmarked investment will enable the company to extend its operations along the value chain by engaging in processing of the commodity for the local market to reduce the high importation of the product into the country.

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Currently, local edible oil factories cover 40 percent of the 75.5 million litre local demand per month, a demand which has almost doubled since 2019, according to Melaku Allebel, Minister of Trade.

The share grew just from 10 percent last year, after big players like Phibela and W.A oil factories joined the market, processing crude palm oil locally, indicates Ethiopian Reporter.

Currently, there are 26 medium and large edible oil factories with daily processing capacity of more than one metric ton and about 720 small edible oil processors, mainly cottage industries.

In total, the local industries have an installed capacity to churn out 3.4 million liters of edible oil per day, which is basically more than the 2.5 million liters daily demand.

Yet, Ethiopia spends close to US$ one billion annually to import edible oil. This is mainly because the local industries are utilizing less than 50 percent of their installed capacity, due to lack of raw material.

Half of the 8 million quintals of annual production in oilseeds are directly exported, while a substantial part of the rest is consumed at household level.

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The demand of oil factories for domestic oilseed raw material is 6.5 million quintals per year, while crude oil production requires 1.2 million tons of crude oil per year, according to a study conducted by the Ministry.

“We are encouraging edible oil factories to invest in their own oilseed farms.  They must produce for their own factory needs, since the oilseed in the market is very expensive. However, there are no improved oilseed varieties.

“Existing varieties have very poor productivity. It takes up to twelve years to introduce a single improved variety in oilseed, because Research & Development is very weak,” said Yusuf Seid, researcher at Food, Beverage, and Pharmaceutical Industry Development Institute.

Some edible oil factories such as Phibela are already on a move to invest in a backward integration program.

To this end, Phibela is currently investing in large scale oilseed farming, on a land at Guba, near the Grand Renaissance Dam (GERD).

The government’s strategy is to replace edible oil import in five years-time. But the short-term plan is to stop importation of final palm oil products by importing the crude oil and processing it locally.

To further bridge the demand and supply gap, the country is establishing five cooking oil manufacturing projects, which will have the capacity to provide 50.6 million litres of palm, 27 million litres of sunflower, and 21.8 million litres of soybean oil.

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