Invest in Ethiopian
Agro-processing

ANIMAL FEED

Developing a compound animal feed processing plant in Ethiopia is a promising opportunity. Here we feature an example of a greenfield opportunity, in which an investment of $3 million in a new animal feed plant could establish a processor with an installed capacity of 30,000 metric tons per year and an estimated IRR of 35-40% over 10 years.

MARKET OPPORTUNITY

Animal feed processing presents a near-term and large-scale opportunity, with a significant domestic demand gap and potential for future exports to regional markets. Assuming proper use of feed, the estimated 2015 demand gap for feed was over 120,000 metric tons for poultry meat alone, indicating that in 2015, there was a greater than $157 million opportunity in feed – this is growing rapidly.

This is in itself a highly conservative estimate: not only does it only consider poultry meat alone, but it does not consider planned growth. If Ethiopia achieves even 10% of Livestock Master Plan targets to increase meat production to 1.93 million MT and egg production to 3.9 billion by 2020, the demand will grow significantly faster than over the past few years.

Furthermore, Ethiopia is well-positioned to serve the ~$2.9 billion animal feed imports market in North and East Africa. Egypt, Morocco, and Algeria alone comprise 79% of this market, presenting particularly promising target markets. European markets are the main suppliers of meal for animal feed for Morocco and Algeria – Morocco imports feed from Spain, while Belgium is the main supplier for Algeria. Ethiopia has existing export relationship with Egypt amounting to a total of $34.5 million in 2015 across product types, making it a ripe market for Ethiopia to enter in animal feed as well.

WHY INVEST IN ETHIOPIA? 

Strong supply of raw inputs :- Maize is Ethiopia’s leading cereal in terms of production, (64.9MN qt. in 2013/14), 40% higher than wheat, the second highest produced cereal. Production has been growing at 9.5% over the past seven years, driven by increase in acreage and increase in yield (yields have been growing at 6% annually). In particular, there is potential to connect with Ethiopia’s Agricultural Commercialization Clusters (ACC) initiative. The identified Oromia Maize Cluster has the second-highest maize production in the country, as well as significant soybean production through rotational and inter cropping. Nearly half of the cluster’s production (46%) is already available as marketable surplus.

SPOTLIGHT ON A POTENTIAL GREENFIELD INVESTMENT

A ~$3 million investment has the potential to deliver an IRR of 35-40% over the next ten years. We propose a model that involves a phased investment: first in a compound feed processing facility, with initial sourcing of inputs from traders and other processors, and in years two and three in soy extrusion and contract farming relationships for sourcing raw soybean.

The Agricultural Transformation Agency is an initiative of the Federal Government of Ethiopia Off Meskal Flower Road, across from Commercial Graduates Association

Tel:+251-115-570-678

Fax:+251-115-570-668

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