A newly formed horticulture cooperative is to set up provision of cargo freight services to members on a cost recovery basis.
Horticulture growers have long complained about the amount they pay for cargo freight services for their exports and input supplies, like chemicals and fertilisers, as being too costly. Six months ago, horticulture growers met at the conference hall of the Ethiopian Horticulture Development Agency and appointed a steering committee. That led to the establishment of the Ethiopian Horticulture Cooperative (EHC) on May 12, 2010.
Currently, only two companies, Ethio Horti SC and Flower Port Cargo Plc, provide freight forwarding service for 1.7 dollars to two dollars per kilogramme using cargo planes that they have chartered from Ethiopian Airlines. This rate is considered too steep by exporters.
The new cooperative would provide cargo freight services to its members only at a cost recovery rate, it said at a ceremony held at Hilton Hotel on June 24, 2010, attended by Abera Deressa (PhD), minister of Agriculture and Rural Development (MoARD) and several stakeholders. A feasibility study is said to be underway to determine how the non-profit scheme could be realised.
"The cooperative's immediate plan is to charter a cargo plane from Ethiopian Airlines to provide freight forwarding service to its members," said Tesfaye Gebrehiwot, shareholder and general manager of Tinaw Business Plc, who was a member of the steering committee and is now the chairman of the cooperative.
The cooperative also plans to provide supplies to its members at cost, according to Yonas Tsegaye, secretary and board member of the EHC. The cooperative hopes to be financed by member contributions and assistance from foreign donors.
"We at least have more options now, so it will be more advantageous for us," Selam Retta, farm manager at Roshanara Roses, said.
But, those already providing freight services to the sector are very sceptical as to the viability of the cooperative’s plan to provide the service at cost. They also doubt that they will lose their clients.
"There are various costs that should be taken into account, handling costs, bank interest, cargo rate, and administrative costs," said an official at Flower Port Cargo.
Flower Port Cargo charters seven flights per week from Ethiopian Airlines and one flight per week from EgyptAir charging 1.7 dollars per kilogramme with a one week credit system and a fine of 0.05 cents per week levied for late payments. The rate had exceeded two dollars when the price of petroleum spiked, two years ago.
"They [the EHC] are still undertaking the ]feasibility study, but they do not pose a threat to our business, as we have our own marketing strategy as well," he said.
Ten to 12 chartered flights per week are required for the next year to meet the demand, he said.
Flower Port was established in 2008 by Sher Ethiopia and Trade Path International. Ethio Horti was the first provider of the service after its establishment in mid 2004 by various horticulture producers and exporters.
Currently, there are more than 85 horticulture producers operating in the country.
The horticulture industry has secured 153.6 million dollars from exports during the last ten months, according to reports from the Ethiopian Horticulture Development Agency.
