Developing an integrated cattle feedlot and abattoir in Ethiopia is a promising opportunity for investors with expertise in feed, feedlots, abattoir, meat processing, or retailing. Here we feature an example of an investment-ready business on the ground today, in which an investment in the range of $USD 1-5 million in a newly-formed integrated cattle feedlot & abattoir would be likely to realize an IRR of 30-40% and a cash-on-cash return of 3-4x over five years.
The global beef trade is growing at 4% per year, and consumption is expected to exceed 55 million metric tons globally by 2015. The Middle East and North Africa are the largest food-importing regions in the world, with the Middle East food service industry alone exceeding $USD 31 billion in 2013.
The Ethiopian cattle sector has massive potential, with over $USD 200 million in direct export earnings and meat exports growing at 25-30% per year. Livestock comprises as much one-sixth of overall GDP and contributed nearly 8% (or $USD 211 million) of export revenues in 2011.
Oromia Region, in central Ethiopia, presents particular opportunity for investment. Near to Addis Ababa and the soon-to-be completed rail line to Djibouti, home of the renowned Borena breed of bull, Oromia is a prime region for investment.
WHY INVEST IN ETHIOPIA?
Geographic proximity to key consumer markets :- The Middle East imports 50% of its food and 90% of its beef. India, Pakistan, and Australia currently fulfill most of the region’s beef demand, yet Ethiopia has a geographic advantage, offering lower costs and longer shelf-life. Ethiopian meat can be on shelves only 5-7 days after production, boosting retailer margins versus Latin American or Asian products that can take 2-3x as long. There is potential for Ethiopia to capture market share.
Abundant stock at low prices :- Ethiopia has the largest livestock inventory in Africa and sixth-largest in the world, but its share in the global meat export market is barely 1% – presenting enormous scope for growth. Furthermore, the cost per kilogram of calves in Ethiopia is half the cost of most countries in the world, making it one of the most attractive countries to produce in.
Get in touch
The Agricultural Transformation Agency is an initiative of the Federal Government of Ethiopia Off Meskal Flower Road, across from Commercial Graduates Association