Established in 2014, Verde Beef Processing PLC is an agribusiness company with an established feedlot in Adami Tulu, Oromia, Ethiopia on a 1,300 hectare farm.
For our members who are not yet familiar with your company, can you tell us a bit more about the activities of Verde Beef?
Our company seeks to become the largest beef production firm in Ethiopia and to be locally and internationally recognized as a premier producer of high quality beef. To do so, our business model focuses on buying young calves locally and to grow them, through a mix of appropriate care and great quality feed, to full size A grade steers of which their high quality meat with be exported to Middle East markets.
Our herd is currently 6,000 head on feed but once fully operational, we aim to be tenfold bigger, at around 60,000 heads. This will generate an annual slaughter in the region of 100,000 head. Our USD 25 million investment includes a USD 10 million first-class abattoir, which, once constructed, will be up to western standards for meat processing.
Why did you decide to invest in Ethiopia?
First of all, our experienced management team knows the market, having collectively managed several agribusinesses in Ethiopia over the recent years.
Also, Ethiopia has a very large livestock population, the biggest in Africa, which allows us to source from the local market. The climate in Ethiopia allows for two crops per annum under irrigation, this is a competitive advantage over most other beef producing nations.
Ethiopia is also a great location for our business, as we can reach our Middle East markets quickly and cost-efficiently, through air and sea freight.
Finally, Ethiopia is a growing market on its way to becoming the power house of East Africa. Although we intend to sell only 5% of our production in the local market, it is still a great market to be in.
How is your relationship with the Ethiopian administration and its agencies?
The Ethiopian administration has been very cooperative and efficient in the investment phase of our project. We were able to secure land, Investment Permit and other requirements quite swiftly, which allowed us to begin our operations within 6 months of establishment. We definitely benefited from the fact that our activities are very aligned with the government economic objectives (agro processing, use of Ethiopian’s large livestock resource and an export-oriented business).
However, it seems that the big picture, as outlined and understood by top officials at the government agencies, is often misunderstood at lower levels. The rationale behind our business model and business decisions is often less understood at this level. As such, we do face many challenges in our everyday operations which cause delays and can sometimes impact significantly our business.
How did you recruit employees and how is your interaction with the local community?
I believe we have a good relationship with the community. We currently employ 300 people (full-time, part-time and contractors) but we aim to reach 1,500 full-time employees once we get to full capacity. These employees were primarily hired in the local communities around our farm. We also hired from other regions, when we could not find specific expertise in the area. We intend to provide appropriate training and technology transfer as our procedures and processes become fully implemented.
We also provided easy access to drinking water for the communities and a forum was set up to facilitate dialogue between our company and the local population though the forum of community elders..
Finally, we buy locally around 40% of what is required for the feed and we created demand for young calves, allowing farmers to generate revenue earlier on their cattle investment. This also facilitates de-stocking which is vital to improving range land quality and the reproductive potential of the herds. As such, there is significant spill over effects from our investment that benefit the local community.
What would be your recommendations to other EU businesses investing/willing to invest in Ethiopia?
It is very important to do your preliminary research well and to make sure that your business activities will align with the long term economic goals that Ethiopia set for itself, notably in its second Growth and Transformation Plan (2015/2016 – 2019/2020). This country has a clear view on how its economic and social development should occur and it has carved out a specific role for foreign investors.
You also need to be careful not to rely too much on assumptions, past experience and previous business models. Ethiopia is a very specific country and local knowledge is essential in order to do business efficiently in the country.
A new Customs Proclamation has recently been drafted, aiming at replacing Customs Proclamation 622/2009. ERCA took the initiative to present the draft new legislation to foreign investors, by organizing a meeting in the EU Delegation on June 1st, 2012. Following the consultation meeting, the EUBFE prepared a detailed commentary paper on the draft law, putting together concerns and recommendations expressed by the EU business community and European Commission experts.
As part of the strengthened dialogue between the Governement and the private sector, a research team from the Ministry of Industry met with representatives of the EUBFE and the EU Delegation on December 3rd, 2012 to prepare a study on the medium and long-term strategy for Ethiopia’s industrial development. The European business community was asked to comment on Ethiopia’s attractiveness, challenges encountered by the private sector and how to make the country more FDI friendly.
On December 1st, 2012, ERCA held a presentation meeting to launch its newly acquired Ethiopian Customs Valuation System which is the result of 3 year of joint work with the Indian Customs Authorities and the Center for Development of Advanced Computing. An ERCA representative introduced the system as “the most advanced system currently used in emerging market” for goods valuation.
The EU export help desk (www.exporthelp.europa.eu) is an on-line service of the European Commission providing support to companies from developing countries on how to export to the EU. A mission from the EU Export Helpdesk to Ethiopia is planned from 25-27 February. The mission will include a full day of product specific trainings (leather, organic coffee, oil and sesame seeds) on February 26th. Should you be interested in attending such a training, or if you would like to have more information, kindly contact the EUBFE's secretariat
