FROM GRASS TO GRACE: How EHPEA put Ethiopia’s floriculture on the world map

Tewodros Zewdie, President of the Ethiopian Horticulture Producers and Exporters Association (EHPEA).

Tewodros Zewdie, president of the Ethiopian Horticulture Producers and Exporters Association (EHPEA) reflects on the past nine years at the country’s sole trade association for horticulture and reflects on what the future might hold in an interview with FCI November 2022.

Tewodros Zewdie is well-known as president at EHPEA; industry insiders tell FCI that under his ‘reign’, EHPEA has grown into the country’s leading and professionally led trade organisation, serving as a shining example for other sectors of the economy.

However, recently, EHPEA and its members have had to absorb the shocks of the global health crisis and the logistics disruption that followed while dealing with the ongoing threat of ethnic tensions and violence.

Zewdie is proud of the proactive work EHPEA has done, championing the interests of the country’s horticulture sector and working with the support of members, the government, and all other stakeholders within the industry. EHPEA has provided a voice for the sector during rapid market changes.

FloraCulture International: What’s your view on the health of Ethiopia’s flower industry?

Tewodros Zewdie: “The Ethiopian floriculture industry though young, has kept on scoring glittering achievements. Ethiopia is now the second-largest African flower exporter and among the top four exporting countries globally. It has also become a strategic industry at the national level as it is the second leading FOREX generator in the country, next to coffee from the agri-sector and the third leading export item nationally, next to coffee and gold. It has created relatively decent employment opportunities for Ethiopians as well. Most of the employment opportunity beneficiaries, nearly 80 per cent, are females. Thus, it is also contributing to the empowerment of women. We can talk a lot about the trickle-down effects of the industry.

The sector is guided by mandatory regulation from the government and a voluntary Code of Practice with different tiers of compliance levels.

The synergy among the government, investors, EHPEA, academic and research institutions, development partners, standards and the like has helped to lay solid foundations for Ethiopian-based flower growers’ competitiveness and sustainability.

We should remember that Ethiopia has a competitive and comparative advantage for producing and exporting flowers. In addition to the favourable agroecology, generous incentives, and other pertinent factors, the cost of doing business is relatively better than in other countries. This is helping to lure more investors into the industry.”

What are the longer-run consequences of the pandemic to our industry?

“Initially, the pandemic posed an existential threat to the industry. Especially between March and April 2020, it was a critical period as demand and prices crumbled substantially. Then, after we had made a scenario analysis and presented our proposal to the government to contain any possible damage to the industry, almost all our requests were addressed. When borders started reopening, Ethiopian flowers were all over Europe, and farms became resilient. Due to the proactive engagement of EHPEA with the government, we have substantially reduced the potential adverse impact on the Ethiopian floriculture industry.

If you draw a comparison, Ethiopian-based growers were better resilient than other countries. There was no increment in airfreight, no interruption of cargo freighters to Europe and other timely decisions helped a lot. There was, for example, no layoff of workers.

Covid-19 has impacted perishable logistics. There is some tendency to move from airfreight to sea freight in Kenya, for example. The cost of input has also skyrocketed due to the disruption in the supply chain. The cost of doing business has increased while the price is relatively static. We have also witnessed delays in the deliveries of containers. Though Covid-19 has disrupted many supply chains and livelihoods globally after its peak, it was a blessing in disguise for the usual down seasons.”

Superlative epithets, such as Africa’s second largest and the world’s fourth largest flower exporter, are used to describe Ethiopia’s flower industry. How justified is the use of such superlatives in representing today’s industry?

“Ethiopia is a late entrant into the supply chain of flowers. If numbers talk, in 2004, the total export value of flowers was around 20 million USD. In the last couple of years, Ethiopia is generating more than half a billion USD annually from the export of flowers. Relatively, it is a breakthrough. In line with this, Ethiopian Airlines has also boosted its capacity to uplift and handle perishable logistics. In the past, its operation was with 757 and MD 11 freighters. Now, it operates more than ten 777 cargo freighters, and you can find flowers in many of the bellies of Ethiopian passenger aircraft. The flower industry’s relationship with Ethiopian airlines is symbiotic.

It is a solid fact to say Ethiopia is Africa’s second-largest exporter of cut flowers, and it is also among the top four leading exporters in the world. In the assertion, I do not see any mountain making out of a molehill.”

May we invite you to dive deeper into the stats?

“According to the government data, Ethiopia has managed to generate 541 million USD from the floriculture industry. We do have a total production area of nearly 2,000 hectares. The industry has also created employment opportunities directly and indirectly for 20,0000 Ethiopians. It has also helped in the knowledge transfer of modern agriculture. The sector contributes to the mushrooming of micro and small enterprises in different floriculture clusters and more than 10 per cent of the national export value.

Product volumes have increased substantially in the last fifteen years. In 2004/2005, the total stem of flowers exported from Ethiopia was 83 million, worth 12.6 million USD. In the 2021/22 Ethiopian fiscal year, the total value generated from the export of flowers was 541 million USD, and billions of stems were exported, according to our Ministry of Agriculture. In the last years, floriculture export has shown exponential growth.”

What changes do you see in the geographical concentration of farms?

“The highest concentration of farms is in the rift valley, mainly in Oromia regional state. Other farms are clustered in Sebeta, Holleta and Sululta, which are on the outskirts of Addis. We have farms operating in the country’s Amhara regional state in the Northern part. Some of the farms are in the Southern part of the country. As a country, we have many areas suitable for flower production. We have quite adverse agroecology ranging from more than 4,000 metres above sea level to 150 metres below sea level.”

In 2019, the Ethiopian government revealed plans to expand the country’s flower-producing area with 500ha in Kunzilla, 300 km north of Addis. What is the state of that project?

“Kunzilla is located in Amhara, about 600 km from Addis. It is about 53 km from Amhara’s regional capital. The designated land for floriculture in Kunzilla is 500 ha, with the potential to expand on thousands of hectares. Currently, two of the farms have started production, and the others are in preparation. When Kunzilla and Bahir Dar area farms start, full-capacity production airfreight service is expected from Bahir Dar International Airport. The area is super fit for the production of flowers. Many of the top-notch industry experts have commended it.”

You have been critical of the federal and regional authorities regarding land provision; why was that?

“Had it not been for the support of federal and regional authorities, the industry would not have scored such achievements. The land tenure system in Ethiopia is different from other countries. According to the mother law of the land, i.e., the constitution, the land belongs to the people and the government, and the actual administration is with the government. So, the government plays a pivotal role in land provision. It also determines the lease rate, which has been quite attractive for investors as the prime intention is to catalyse investment and job creation. It is not to collect lease money from the land.

We have proactively structured platforms with the regional and federal governments to discuss sectoral issues, including land. There is also a voracious appetite from our members to expand. Thus, we press on the regional government to provide more land.”

In Ethiopia’s floriculture industry, the queen of flowers, the rose, continues to reign supreme. But what important changes have you seen regarding crop diversification?

“In addition to roses, now you can find different types of flowers, including carnations, Hypericum, Alstroemeria, Gypsophila, Veronica, Hypericum, Freesia, Statice, and the like. Ethiopia is amazingly blessed to grow a wide variety of flowers of superb quality. The diversification is ongoing.”

Is your client base changing?

“Well, the primary market is Europe. Nearly 80 per cent of the total export is destined for Europe, basically to the Netherlands. Some market diversification is going on to reach the Northern hemisphere countries, i.e. the USA and Canada. Our members are also exporting to Far East countries like Japan and Korea.

The Middle East market is also showing growth in the last five years. Ethiopian-grown flowers are also delivered as far afield as Malaysia and Australia. The Chinese market was developing well before the pre-pandemic but has not grown. Ethiopian Airlines operated more than 36 flights to China to different locations, which was quite an interesting opportunity. Ethiopian Airlines is a blessing to the industry as it can deliver flowers to more than 100 destinations globally.

Thus, the lion’s share of the exports is still going to Europe. We are also beneficiaries of the Everything But Arms (EBA) Scheme of the European Union. It is a scheme to encourage export from developing countries without tariff and quota.”

What strikes you most when evaluating Ethiopian cut flower pricing over the past 20 years?

“There has been a noticeable improvement in the quality of Ethiopian-produced flowers, and the price has also increased in the last 20 years. Special attention is given to quality. As a result, better price is secured by the flower farms. Ethiopian-based growers are raising quality standards in many parameters, reflected in the certification audit results. As the saying goes, “What is Measured, Counts.

These days, however, the cost of doing business is increasing with the substantial increment in input costs, but the selling price remains almost static, affecting the farms.”

Traditionally, the Netherlands has played an important role as a logistic hub for flowers from Ethiopia. Will it continue to stay in this dominant position?

“The Netherlands is an important hub for the flower trade internationally. The market platforms are correctly organised with guaranteed payment systems. There is an innovative and efficient perishable logistical arrangement. The private and public stakeholders work in a golden triangle or triple helix model. There are well-designed platforms for the cross-fertilisation of knowledge and experience in the floriculture industry. This has helped Ethiopian-based growers a lot. Many Dutch growers brought their deep knowledge, experience, market linkage and technology to Ethiopia. There has also been broad support from the Netherlands government to ensure sustainable growth of the floriculture industry in Ethiopia.
All these factors combined give the Netherlands a competitive advantage, which will continue in the years to come. We should not forget that some countries are also trying to set up similar market platforms like the Netherlands.”

An estimated 90 per cent of Ethiopian-grown ornamentals are being sold at Royal FloraHolland. What are the risks of such strong dependence on a Dutch marketplace?

“Many of the flower growers in Ethiopia are members of Royal FloraHolland. They have also grown by working with the auction. It is an important platform. Direct sales are also increasing from Ethiopia as well. New market destinations are also coming into the picture. What is important is working in synergy with Royal FloraHolland and other pertinent supply chain actors to create more demand for flowers globally. Ethiopia has ample potential to supply volumes to Royal FloraHolland and other destinations. All the supply chain actors should work together to create more flower demand. We must focus on the millennials as their consumption pattern is changing. We see more aggressive promotions for chocolate and other items, not flowers. All supply chain actors should join hands to promote flowers. If that is the case, we can avert the risks.”

When FCI magazine interviewed former EHPEA chairman Tsegaye Abebe in 2009, he said the country aimed to boost flower exports to one billion USD in five years. What is the main reason this target hasn’t been reached yet?

“Well, the 2008 economic depression shocks, the political turbulence that we passed through starting from the end of 2015, Covid-19 and other factors have hampered the realisation of the one billion targets.”

On 26 February 2009, EHPEA presented the first ten certificates to Ethiopian flower farms that complied with the Code of Practice for Sustainable Flower Production (CoP) requirements. You are also a proud member of FSI. Why are sustainably grown flowers so important, and what important steps have been made since?

“We are firmly committed to advancing sustainability as it helps improve the quality of life for all, protects our ecosystem and preserves natural resources for coming generations. We have made remarkable achievements in reinforcing the capacity of EHPEA to design and execute initiatives targeted at sustainability.

Within EHPEA’s organogram are dedicated work units with top-notch sustainability experts. In addition, we have also incorporated several parameters into our Code of Practice to ensure sustainability in a very structured manner. To reduce the water footprints of flower farms, we have built 36 used water treatment plants so far, and ten are now under construction. The constructed treatment plants have treated nearly 60 million cubic meters of water. Currently, the highest concentration of constructed used water treatment plants or wetlands is found in Ethiopia. Moreover, we have also played a crucial role in developing a national standard for horticulture effluent. On top of that, we have trained more than 100 professionals on used water treatment plant design, construction, and maintenance. We have actively promoted and implemented IPM technologies to reduce traditional pesticides. Our interventions have contributed to the industry’s registration and application of several biological beneficials. The coverage of IPM, particularly biological control, has increased to nearly 60 per cent in the industry, and in the major flower-producing clusters, it is more than 75 per cent. We have also executed CSR projects with EHPEA, having trained 50,000 farm workers and management staff on sustainability issues over the past 15 years.

We have executed everything I mentioned in collaboration with our partners, including the Embassy of the Kingdom of the Netherlands, FSI, IDH, bbw and others.”

With a population of over 108 million, Ethiopia is Africa’s second most populous nation. Located in the Horn of Africa, it has a total land area of 1.14 million km² with over 11 million hectares of irrigable land. The country’s vast surface and groundwater resources make it ‘The Water Tower of East Africa’. Meanwhile, the UN has warned that there’s an urgent need to feed people in the drought-stricken Horn of Africa. What do you think the country’s horticulture industry can do to help fight the food crises in a meaningful way?

“You have raised a very crucial question. I can say we have all the natural variables to ensure nutrition security. Nonetheless, we have challenges in knowledge, experience, and financial resources. The horticulture industry is an important instrument to ensure nutrition security and food sovereignty as it contributes to better livelihoods of households. Relatively farmers can earn better income from horticulture crops than grains. We have stunting challenges, and horticulture can contribute to overcoming them. Ethiopia has an exceptional comparative and competitive advantage for producing and exporting horticulture produce. This will help to fetch better, more hard currency and bridge the imbalance in our imports and exports. Thus, horticulture has a multitude of benefits for us. The government has also invested more than 25 billion birrs in constructing Integrated Agro-Industrial Parks (IAIPs) in different parts of the country. The processors in the parks are looking for a consistent supply of horticulture inputs. These all will contribute to better nutrition security with affordable prices.”

Ethiopia is currently confronting three economic challenges: its debt burden, foreign exchange woes stemming from poor sector performance, and a decline in remittances. One could argue that the benefits from 10 years ago have turned into disadvantages. This begs the question of whether Ethiopia’s flower industry is an interesting option to invest in for new companies.

“Irrespective of the various challenges at this juncture, the cost of doing business for the floriculture industry is quite competitive in Ethiopia. It is worth it for investors to invest in Ethiopia. Energy cost is skyrocketing in Europe. In Ethiopia, you have sunshine throughout the year for free, electricity cost is among the cheapest in the world, investment incentives are quite generous, and proximity to European and Middle East market destinations is better than other locations. Floriculture is labour-intensive, and in Ethiopia, you can get a highly qualified and non-qualified labour force at a reasonable cost.”

Regarding logistics and floral shipments, good progress has been made in cold chain management with the opening of state-of-the-art perishables centre with a future 1.2 million tons capacity. What more is needed to boost the country’s logistic performance?

“Currently, Ethiopian Cargo Terminal is Africa’s largest and one of the high-tech fitted cargo terminals with more than one million tons annual capacity. The airfreight rate is also the cheapest in comparison with other flower-producing countries. The professionalism is also proved to be to the expectation of the flower growers. There are changes in the trends and patterns of perishable logistics, especially after the emergence of Covid-19 since airfreight cost has increased. Sea freight is coming into the picture. So far, our airfreight cost is competitive, and we are quite happy with it. But the world is dynamic. You never know what the future brings, and we are looking to trial sea freight with our partners. We are closely following the developments in the sea freight regarding perishables internationally.”

Regarding international trade flows, industry experts predict that trade will become increasingly direct by omitting the Dutch flower auctions and the Netherlands’ logistical hub. What’s your stand on this?

“Technology is changing the usual way of doing business. Floral e-commerce is increasing. Convenience and an easy way of doing business are important to consumers. The usual way of doing business has no future. I hope that the auction will swim with the technological tide. And that is important.”

What do you enjoy most about being EHPEA’s chief executive?

“Well, I enjoy creating a better business climate for horti-preneurs in Ethiopia. The support is not only for the investors. It is all about making Ethiopia competitive internationally. I am successful in that. But it does not mean that everything is a bed of roses. I am glad that I have led the professionalisation of EHPEA to cater quality service to members and non-members in the horticulture industry. It is one of the continent’s vibrant business membership organisations (BMO).

I am super happy to strategise the resilience of horticulture farms during the political turbulence starting from the end of 2015. During the Covid-19 peak period, the strategies I devised also helped to have resilient farms in Ethiopia. The sustainability initiatives that we designed have also become exemplary. I am proud of the cluster minimum wage schemes. We have significantly promoted the Ethiopian horticulture brand internationally. EHPEA is a learning organisation with energetic and talented young leaders and staff members. I am happy to work with them.”

What achievement are you most proud of?

“There are many achievements that I can mention, among others, by leading the evidence-based policy advocacy interventions as we have influenced several policies, regulations, and directives to create smooth functioning of the industry.

It is leading the professionalisation of EHPEA, upgrading its training department into an accredited Tech and Vocational Education and Training (TVET) Centre, designing the resilience of conflict-affected farms, and strategising the industry’s resilience mechanisms during the pandemic.

Finally, we turned the immense challenges posed by Covid-19 into opportunities. I am proud to strategically lead the sustainability interventions, including the used water treatment plants, biological control interventions, and gender interventions. We have comprehensive partnerships with several local and international institutions, which are imperative to give more muscle to EHPEA.”

How did the Ethiopian flower industry change the country’s image?

“Ethiopia’s name in the past was associated with wrongly constructed adjectives. The emergence of the floriculture industry, to some extent, has helped to promote the true image of the country. It has helped to promote a better country’s image as the flower industry emerged from grass to grace.”