Unchecked Franco Valuta Imports Grind Domestic Mills, Threaten Animal Feed Supply | The Reporter

Millers’ association pleas for government hearing

A lobby group warns that a flour market driven by cheap Franco-Valuta imports is impairing millers and industries that are dependent on byproducts from mills.

Complaints forwarded from grain millers, flour processors, as well as producers of pasta and biscuits, shed light on the serious threats posed by flour products making their way to domestic markets via franco-valuta.

Franco valuta is an import scheme under which any business and individual who has foreign currency can import certain basic commodities without going through the central bank’s Letter of Credit (LC) process.

The federal government allowed imports under the scheme in a bid to ease the forex quagmire the country is facing. Commodities imported under the new scheme constitute nearly 30 percent of Ethiopia’s total imports, according to reports from National Bank of Ethiopia (NBE).

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The Ethiopian Millers’ Association, comprising over 200 large millers and processors, wrote a letter on December 14, 2023, to officials at the ministries of Trade and Industry, intervening on behalf of its members and more than 250 other millers and processors that are under the chokehold of unregulated franco-valuta imports.

The Association says imported flour products are suffocating domestic millers and animal feed processors. The letter points out that several manufacturers and traders are importing wheat in vast quantities, flooding the market and crippling domestic millers that face shutting down and putting thousands of employees out of work.

Domestic millers and their production costs cannot compete with the cheaper, imported flour products available in markets. The Association observes the shortage of animal feed resulting from falling productivity at domestic mills “has driven feed prices to 2,500 birr a quintal from 1,400 birr a week ago.”

“This will contribute to the price hike in animal products such as meat, dairy, and poultry,” warns the letter.

Muluneh Lemma, president of the Association, told The Reporter he does not understand why the Franco-Valuta scheme is being enforced in a country with approximately 450 industries engaged in flour production.

The flooding of cheaper flour is affecting Muluneh’s business, and has even forced several mills in the area of ​​Burayu Tatek to cease operations, he disclosed.

“The worst isn’t happening to us, but to animal feed processors. They are suffering the most,” said Muluneh.

He argues the import of raw wheat would have been a far better option than importing flour.

Meanwhile, officials at the Ministry of Trade and Regional Integration are readying to implement a nutritional fortification policy on the import of all flour and edible oil products.

On December 14, 2023, the Ministry issued a notice granting a three-month grace period to importers already in the process of importing flour and edible oil. The import of unfortified flour or edible oil will be prohibited beginning March 9, 2024.

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