A consortium of Dutch companies, Flying Swans, is active in Ethiopia. The aim is to launch refrigerated transportation by train of fruits and vegetables from the Ethiopian hinterland to Addis Ababa to the port in Djibouti. This requires considerable investments, for example in the construction of cold storage centers and agro transhipment terminals.
Pioneering with an integrated approach is done in Ethiopia by private partners with the goal of developing agricultural chains. The Dutch consortium Flying Swans focuses on increasing agricultural (fresh) production in Ethiopia, cooling logistics by rail to Djibouti and efficient handling in the port of Djibouti. This will have a major impact on all links in the chain and make a significant contribution to the Dutch aid and trade program.
The railway line with planned branches. The green circles are important agricultural areas.
Food security and employment
The development of the horticultural sector in Ethiopia is of great importance for economic development, food security and employment in the country. The sector consists of many small businesses with a low yield, the infrastructure is poor and the sales markets are difficult to reach.
The integrated approach of Flying Swans, in which private parties are working together from the very beginning of a project, is currently bearing fruit. Large market players as Frugi Venta, Boskalis and Port of Rotterdam cooperate to create a movement in the entire chain.
From the Dutch sectors of horticulture, water and logistics, the need is felt for increased cooperation to remain world market leader. This is done through the development of agro logistic corridors, such as the Green Ports in Netherlands.
Artist impression of a national cool logistic overlay.
Ethiopian agriculture is not competitive
Currently, fresh produce from Ethiopia is not competitive in the international market. The volumes are small and the transportation costs are high. Investments in the cold chain, coupled with the newly opened railway from Ethiopia to Djibouti, will improve this situation.
Recently, the final stretch of the railway from Addis Ababa to Djibouti was opened officially. This reduces the transport time of fresh produce from three days to 12 hours. This will lead to more investments in Ethiopia and thus brings in more foreign currency that the country needs. By bringing this together with the needs of Djibouti, which is a competitive port on the container 'highway' between China and Europe, Djibouti can, with Ethiopia as a customer, benefit from increased transhipment and transit in the port.
Reduction of transportation costs
Transport costs are halved when fresh produce can quickly be transhipped from railway to ship whereby empty containers can be loaded with imported goods. For the Netherlands this approach provides opportunities to import fruits and vegetables from Ethiopia, to more export of fresh products including flowers and also investments in refrigerated logistics and port development.
New railway near Mojo
Cooperation Netherlands-Ethiopia
Even though the Netherlands is not the biggest player in port development, infrastructure and agricultural development, high-level agreements are made with stakeholders in Ethiopia and Djibouti, both with national governments and with market participants. The integrated approach is an important benefit of the Netherlands and is greatly appreciated, especially in Ethiopia, where a railroad was built by Chinese investors.
That line will really become profitable if the train is also used to carry goods, such as agricultural products. This facilitates the increase of agricultural production, and products will become competitive because transport costs are halved: no containers will return empty to port, but these will be filled with fresh produce from Ethiopia. In addition, the integrated approach includes also the creation of jobs in agriculture, processing and handling.
This requires efforts in several areas:
- increase of production of fruits and vegetables of sufficient quality in Ethiopia
- development of a refrigeration center near the capital to collect products and keep them in cold storage
- investments in the existing railway line Addis-Djibouti in order to make the transport of refrigerated containers possible
- development of a terminal in the port of Djibouti to transfer fresh produce from rail to ship quickly
Role of the Government
That a consortium of private parties cannot operate alone in countries like Ethiopia and Djibouti is clear. Governments are strongly represented in the economy and should be involved in order to give a project a chance to succeed. Government-to-Government relationships are in Africa often the hub of chain development. Embassies play an important role and also in The Hague the Ministries of Foreign Affairs and Economic Affairs work together. The Ministry of Economic Affairs acts as the founding father of the consortium and thinks along the different aspects of the project.
Many challenges
The project sees many challenges. Firstly the coordination on the Dutch side. It depends on the joint efforts of the involved parties whether the project represent the ‘Company The Netherlands’ actually. The challenge is to develop an approach whereby all parties benefit. There is no blueprint for the Flying Swans approach, it is tailor-made to suit the conditions in the region.
Also funding is a major challenge. There is no ready-made funding available. Here is a role for the Dutch government. In third place obviously the political and economic situation in Ethiopia is important. Stability is a precondition for achieving the goals of the consortium.
Source: Agroberichten Buitenland