Wondwossen's Note: This report doesn't provide details as to what percent of the said amount would be invested in coffee vs. oranges. If this plan is executed as publicized, which is very doubtful given the investor's past records, it may have an impact on the livelihood of smallholder coffee farmers, particularly if the company resorts to selling coffee beans to domestic markets which often fetch higher prices than export markets. This too needs to be scrutinized. I will try to provide soon a few details and insight into what this plan means, if anything, to the troubled coffee sector.
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By William Davison
September 21, 2014
Horizon Plantations Ethiopia Plc,
majority-owned by Saudi billionaire Mohamed al-Amoudi, plans to almost double
annual revenue within three years by investing at least $500 million in coffee
and orange projects.
The agriculture company will train
workers, improve roads and replace washing units at the Limmu
and Bebeka coffee plantations, which together have over 18,000 hectares (44,479
acres) under coffee, General Operations Director Kemal Mohammed said in a Sept.
17 interview in Addis Ababa, Ethiopia’s capital. The development is part of a
five-year program to invest in projects that also include Upper Awash
Agro-Industry Enterprise, the country’s largest orange grower with 1,200
hectares of citrus, he said.
“We are sure because of the
initiatives we have now, because of the inputs and techniques we’re applying,
the productivity will increase to the maximum at the end of the five years,”
Kemal said.
Ethiopia, Africa’s biggest coffee
producer, may see earnings from shipments of Arabica coffee rise 25 percent to
about $900 million in 2014-2015 as prices rise because of shortage caused by a
drought in Brazil, an exporters’ association said last month. Horizon bought
the two coffee farms for 1.6 billion birr ($80 million) last year from the
Ethiopian government, which is seeking investment in projects that process
agricultural products.
Horizon has a sales target of 500
million Ethiopian birr by 2017, Kemal said.
Bebeka, in southwest Ethiopia, is
the world’s biggest unfragmented coffee estate with 10,030 hectares under
plantation, according to the company’s website. Limmu, 350 kilometers (218
miles) southwest of Addis Ababa in the Oromia region, has 8,000 hectares under
coffee and produces 5,000 tons a year of the beans.
Foreign Investor
Al-Amoudi, born in Ethiopia in 1946
to an Ethiopian mother and Saudi father, is one of the country’s largest
foreign investors and operates its biggest cement factory and only large-scale
gold mine. He also runs construction and oil operations in Saudi Arabia, Sweden
and Morocco and is the 143rd richest person in the world with a net worth of
$8.6 billion, according to the Bloomberg Billionaires Index.
Investment in Limmu may help double
production to about 1.5 tons a hectare by 2018, Kemal said.
Bebeka Coffee Estate doubled
production to about 1.4 tons of coffee last year, according to Kemal. Around 90
percent of the company’s coffee last year was directly sold to buyers in
countries including the U.S., Germany,
South Korea and Japan, Kemal said.
Horizon, which is part of
al-Amoudi’s Midroc group of companies, is looking for a foreign partner to
invest in the Coffee Processing and Warehouse Enterprise on the outskirts of
the capital. The plant was bought from the government last year for 228 million
birr, Kemal said.
“We need very good, genuine partners
who can work with us and support us” to make competitive processed and packaged
coffee, he said. “To penetrate the foreign markets is not an easy task.”
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To contact the reporter on this story: William Davison in
Addis Ababa at wdavison3@bloomberg.net
To contact the editors responsible for this story: Antony
Sguazzin at asguazzin@bloomberg.net
John Bowker, Randall Hackley
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