The price of every commodity hiking in Ethiopia, now salt

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In spite of no significant changes in the environment around salt mines and fields, the price of salt is putting a dent in consumers’ wallets across the country.

Six months ago, a kilo of salt was sold for 3.35 Br at Chew Berenda, in Merkato, but wholesalers like Gashaw Guade doubt whether customers would be willing to buy if the price doubled.

“It is a challenge we are all facing,” said Gashaw Guade, whose shop is paying 529.68 per quintal of salt, up from two months ago.

The price spike in salt was announced by Ministry of Trade, two months ago. The rising cost of fuel and transportation, labour and materials were the main reasons. However, there was also the motivation to support salt producers in the country.

“We lost our main customers from rural areas,” explains Gashaw, who has worked for 16 years in the salt market. “I used to sell 400qt of salt in a day. Now it has plummeted by four-fold to less than 100ql.”

Consumers are finding that the effects of the price hike meant to support producers are trickling down to much higher prices for them. The wholesale price of salt ranges between 570 Br and 625 Br at Chew Berenda, in the Merkato area, the main salt supplier for the City, depending on the producer.

The retail price of salt has shown a three Birr increase per kilo over the past two months, which has not just affected household consumers, but has also had an adverse effect on salt dependent businesses such as leather producers and restaurants.

Wendafrash Beyene, food and beverage manager at Fana Hotel & Restaurant has been working in the hotel industry for a decade. He agrees with Bedada. He believes that although the effect of the recent price increase has so far been moderate, it needs to be regulated to prevent further increases.

“The government needs to be careful in regulating the market,” Wondafrash says.

Bedada shares Wondafrash’s argument.

“We will just accept whatever price it is,” said Bedada Chale, manager of Dire Dawa Tannery Plc, which buys 400ql of salt every month.

Bedada’s company receives salt from suppliers in Afdera and Semera, in Afar Regional State.

Afar, where almost all the salt in Ethiopia comes from, has two salt producing factories, in Afdera and Semera. It is then taken to other factories for processing. There are other producers working under both factories, at various scales. The factories’ capabilities to process and iodize salt is limited due to persistent failure of machineries. The majority of the local salt producers use traditional methods of iodization, using knapsacks and manual sprayers.

In August of last year, SVS Salt, a new producer came on the scene in Semera. The company, which sits on 50,000sqm of land, became operational with a total investment of 300 million Birr. Founded by Ethiopian and Turkish investors, SVS has a production capacity of 250,000 tonnes of salt every year.

When it first began operations, the company ran into difficulties because of the price of salt from suppliers. It had initially estimated the price of salt at 80Br a ton. However, in reality, the figure was around three times higher than the estimates, making business much more difficult for the new factory.

Following the price adjustment, the Company is faring much better, with a profit margin of about 10pc. But some companies, including SVS, have complaints about the nature of competition in the industry.

Dobby, SVS, and Afar Salt Processing and Producing Company are the major players in Afar Regional State’s salt processing market.

Seife Kidane, board advisor to Afar Salt Production, a company established by Kadaba and Seid Yasin, believes the current price is fair considering the increasing price of machines, labour cost and fuel.

“Spending eight Birr for a kilo of salt is fair,” says Seife. “It is enough to feed five individuals for at least a month. The price increase can give producers some temporary relief.”

Besides the price hike, the issue of iodine found in the salt is also another alarming issue in the salt market.

In Ethiopia, iodine deficiency disorders are a cause of serious public health problems, with 52pc of women of reproductive age and 47.5pc of school aged children at risk of iodine deficiency disorder.

A research done by the government indicate that real coverage of adequately iodised salt in Ethiopia is 26pc. While the price increase may make increasing iodised salt coverage more difficult, the lack of proper machinery in factories for iodisation is also a big factor.

Two weeks ago, at a meeting held at Capital Hotel, the government urged salt factories to install proper machines within a period of a year. More than half of the salt produced in the country were not up to standard, a study presented during the meeting indicated.

Kadaba is one of the two salt producers in Afar. It is located in Afdera, and supplies 90pc of the country’s salt demand. It is one of the companies that was directed to buy salt grinding and cleaning machine.

“Since we clean the salt in the pond, there is no way it is hazardous to health,” explains Seife Kidane, advisor to Kadaba. “Nonetheless, we will install the machinery in the coming month, nine months ahead of the grace period.”

Kadaba provides iodised salt to local chemical industries, as well as aiming to meet local demand and bringing significant improvements to the export market.

Afar Salt Production, commonly known as Ezana Salt, is also among the companies directed to install cleaning and grinding machineries within a year. About seven months of the grace period has already passed.

“Even though, we don’t have these machines, we supply iodized and healthy salts to the market,” said a senior manager of Ezana.

However, despite many challenges in the salt market, higher prices at the shop counter does not seem to be taking any heat off demand for salts.

“After all we are very dependent on salt.” said Bedada, manager of a Tannery.

Source: Addis Fortune