In a narrow room where he has piled up bags and bags of salt, each measuring 50Kg, Gashaw Guade has made a booth to serve as his work station in Merkato Chew Berenda. It was there that he was sitting and talking to his customers over the phone while his workers carried the bags and arranged them on the open spaces when Fortune visited his place on Thursday February 19, 2015.
Gashaw has been in the business of salt trading since 2011, taking over from his father. He receives the salt from distributors who bring it from Afdera, a salty lake in eastern Ethiopia, 820km from Addis Abeba in the Afar region, the major salt producing region in the country.
“I receive up to 400ql of salt every two weeks from two of my suppliers from whom I buy a quintal for 310 Br and sell for 320 Br,” he says.
He has constant customers who come from different parts of the country to buy from him and they take from 20ql to 100ql at a time.
The salt that he sells is labeled with an expiration date and place of production.
It was following the independence of Eritrea in 1993 that Ethiopia began searching for alternative sources of salt that could replace the 200,000tn of salt, which was obtained from the Red Sea for human consumption as indicated in the Ministry of Mines (MoM) website. This resulted in the immediate discovery of three potential areas of salt production in the country- all in the eastern part Ethiopia.
The first one is Afdera Lake, which, according to a data from the Ministry of Trade (MoT), with a potential for 292 million tonnes. The lake’s area is 117sqkm while the average depth of the lake is 25mt. The amount of water in the lake is 2,920.1 million cubic metres.
The second potential place, Dobe, is also located in the same region as Afdera. Dobe is able supply 113,200tn of salt a year. The third one is in the Somali region’s Erkale Lake.
Afdera takes 75pc of the market share with 270,000ql of salt a month. Dobe follows with 16.25pc of shares with 65,000ql of salt a month and Somali, 8.75pc with 35,000qtl supply to the market.
In order to allow the production of salt domestically, four producers were licensed by the federal government and more than 2,500 by the the regional government to operate in the Afdera Lake,according to Ali Seblele, Afar Region’s Mines Bureau head.
Out of the licensed 2,500 in Afdera, only 565 are operating in the area, according to Ali, because the rest could not begin operation as per the license they took. They renew their licenses through relatives and friends giving reasons for their delay, according to Ali.
“But if they do not start within 10 years, their licenses will be revoked and their land will be given to other interested producers,” Ali told Fortune.
The licensed producers in Afdera are divided into three; higher, medium and traditional (small scale) producers. The higher producers are licensed at the federal level while the remaining two are licensed at regional levels.
The higher producers are given three to five square kilometres of land based on the amount of money they invest for the production. They need to invest more than 6,000 Br.
The medium level producers are given 20,000sqm to 80,000sqm of land and they invest between 500,000 Br to 600,000 Br while the traditional producers are given less than 15,000sqm of land.
In Afdera in 2007, there were 321 production sites from which 2.1 million tonnes of salt were expected to be produced yearly as data from the MoT indicate.
In 2006, the price of salt fell to the extent of being sold at 50 cents in the market because of the producers’ uncontrolled production and supply to the market. Then an association called Afdera Salt Producers Support Association was established in order to stabilize the market. The Association has 450 member producers and the only criterion to become a member is being a producer.
“There were also people who withdrew from the business, some who died because of stress and some whose houses were held as collateral by banks,” remembers the vice chairman of the Association, Tesfay Berhe (Major).
“But after the establishment of the Association, it set a quota for the producers to supply to the market according to their production and those whose houses were held as collateral were given incentives to sell their products without quota and their houses were returned,” he added.
The Ethiopian market demand for table salt is 300,000tns to 350,000tn of salt a year. This number is calculated according to the production of each producer and the quota for the supply to the market is determined.
The produced salt at the place is surveyed and the quota to each producer is assigned according to the demand in the market. Currently, it is estimated that the produced salt at the place is piled up to be 11 million quintals and the association, after calculating the quota of each producer, announces a bid and selects three wholesalers. These wholesalers are given 100,000qt each. And these wholesalers distribute to distributers that are 15 in number in the country according to data from the MoT.
Two of the distributors are in Tigray, three in Amhara, two in Addis Abeba, as well as one for Adama, Arsi and Bale, two for Dire Dawa and Harar, two for Jimma and Wollega, as well as three for Awash, Walaitta and Arbaminch.
The wholesalers buy the salt from the sites for 150 Br as set by the MoT and they sell it for 210 Br to the distributors after considering their profit margin and transportation costs. The profit margin ranges from 10pc to 20pc. Then the retailers buy for 310 Br and sell it for 320 Br. The transportation cost is calculated to be 80 Br to 90 Br per quintal.
But the quota system also came with its own problems that no one has tried to currently resolve. There is more salt that has been produced than there is demand for, which is accumulated in the open without any protection, leading to a loss or “waste of resource”, according to Ali, Afar’s Mine Bureau head.
One of these producers at Afdera is Mile Salt Production Plc, headed by Berhe Nega (Major). Their company, which has 11 shareholders and started production in 2003, has 10 production sites from each of which they produce an average of 16,000ql. But last year, a flood destroyed four of the sites and they are rebuilding them again this year.
The salt they produce is supplied to people who will buy it through a bid. But the price that is set for the producers considering the production cost is not right according to him.
“We do not sell all the salt that we produce. The production cost is for the whole but the amount we sell is only four to five percent of the produce we have on our hands,” Berhe told Fortune. “Therefore, the price is not fair.”
But the MoT disagrees, refuting the aforementioned claim and stating that the price set by it is in consideration of the benefit of all the parties in the process. The MoT further states that the salt should not be expensive in the market as it is an abundant resource in the country.
“The price of salt was set without precluding any of their expenses and by discussing with the producers themselves. The ones that complain over the price are the ones who want to benefit much from small trade activity,” Ali Siraj, state minister of Trade told Fortune. “We have to keep the interest of the consumers.”
When producers like Mile Salt Production Plc came into being, the country’s salt was not iodized and in 2011, a proclamation that compels the producers to iodize the salt they produce came into effect. This came with an additional cost for iodization. The Ministry of Health (MoH) supplied the producers with potassium iodate, a chemical that is used for iodization of salt.
The MoH supplied the chemical for free for the first year, after which it started availing sale, according to Birara Meles, Nutrition Case Team Coordinator at the MoH.
“All the salt that is produced for consumption in the country is iodized and control on the products is made on checkpoints from the production site to the retailing sites,” Birara said.
As data from the MoT indicates, from 308 samples taken at Semera checkpoint in 2013, 40pc was found to be iodized less than required level, 27pc more than required level and only 33pc was properly iodized.
Per each kilogram of salt produced, there needs to be 34mg to 66mg of potassium iodate according to Food, Medicine, Healthcare Administration and Control Authority (FMHACA) table salt directive.
The cost of iodization for a quintal of salt is 8.3 Br; the producers are supplied with 29ql of potassium iodate monthly, with a kilogram of potassium iodate being used to iodize 147ql of salt And the cost goes to the consumers.
The coverage of iodized salt in the country in 2011 was only 15pc whereas it has now grown to 88pc, according to UNICEF, Global Alliance for Improved Nutrition (GAIN) and Micronutrient Initiative (MI) report on February 7, 2015. The Growth and Transformation Plan (GTP) for Ethiopia is to reach 95pc by the end of 2015.
The amount of salt that was iodized in 1998 was one of the highest in Africa standing at 80pc. The figure failed consecutively in the following years being 28pc, 19pc and 4.2pc in 2000, 2005 and 2008 respectively. Although the figure now is at 88.8pc, the amount that is properly iodized is 23pc according to the report.
Because of iodine deficiency, the total goiter rate in the country is 40pc for children and 36pc for mothers. Iodine deficiency also causes up to 50,000 still births a year, according to the report by UNICEF, GAIN and MI, which added that the country has lost as much as 64 billion Br as a result between 2005 and 2015.
The salt producers in the country have no mechanized way of producing iodized salt except for one company that is semi government owned- Afar Salt Producers S.C. It was established by the government, which invested 50 million Br and Endowment Fund for Rehabilitation of Tigray (EFFORT), which invested 10 million Br.
They have invested 70 million Br on the machine and they produce salt that is up to the standard according to the offices officials. The machine they have has a capacity of iodizing 100,000ql of salt a month while they were limited only to 25,000ql so as to give the other producers opportunity. The share company is not considered in the quota system, which the others are governed by.
The company has 100 workers, out of which 75 work on the production site in Afdera. But, as the officials from the company have stated they have not sold their products for seven months because of complications that came after the establishment of a new share company by the producers, which is to be the wholesaler of the products at the place.
The new share company called Kadaba had many of the producers as members and many were willing to join it and supply their products to the share company without bids because of the higher price it offers for their products by lowering its own profit. The price it offers for a quintal of iodized salt is 165 Br while the market is set to be 150 Br.
“This is to be encouraged as it benefits the producers; but it will be problematic if this comes with a change in the market price of salt,” Ali Siraj told Fortune.
Afar Salt Producers S.C. was not willing to supply its products to Kadaba because of two reasons. The first one is because of the equal status of the two share companies and the other is the illegality to sell without a bid.
“We are both share companies, so how can we be under the newly formed one? We also hold financial records and report our losses and profits, which require us to sell our products through bids,” a high level official from Afar Salt Producers S.C. said.
The MoT, in concert with Ministry of Mines (MoM), Ministry of Industry and Ministry of Health (MoH) is preparing a directive for the trading of salt in order to solve all the problems that are observed in the trading of salt en route. The directive is also said to solve the problem of wastage of salt that occurs during the production and distribution process.
“We have asked the federal government to prepare a directive that can determine the amount of salt that the producers should produce, but there was no reply,” said Ali Seblele in a phone interview with Fortune.
Having this amount of salt resource in the country, Ethiopia imports iodized salt, especially from Djibouti and Yemen. As a report by the United Nation’s Commodity Trade Database indicates, although the figure has declined from 603,037 dollars in 2005, the import of the country’s salt was 225,182 dollars in 2011.
“The importation of salt is waste of foreign exchange and an unwise use of the resource we have,” says Ali Siraj.