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(By: William Davison – Bloomberg)

Ethiopia, Africa’s second-biggest flower grower, is offering expanded tax breaks and more land in a drive to more than double export revenue from the crop to $530 million annually by the middle of 2015.

The country, which has already attracted growers with free land, tax concessions and inexpensive labor and power, is considering longer tax holidays, more growing space and expanded duty-free vehicle exemptions, Horticulture Development Agency Director General Haileselassie Tekie said.

“We will go the extra mile by giving them exceptional benefits,” Haileselassie said in a June 13 interview in the capital, Addis Ababa.

Ethiopia has forecast flower export revenue to rise by 30 percent from a year earlier to $245 million for the fiscal year ending on July 7, Haileselassie said. The government wants the area where flowers are farmed doubled to 3,000 hectares (7,413 acres) by mid-2015, part of a five-year plan to transform the economy of Africa’s second-most populous nation, he said.

The government has identified three 500-hectare (1,236-acre) greenhouse locations near Koka, Weliso and Debre Berhan, he said. The government will loan as much as 70 percent of the total investment cost and keep electricity, telecommunications and customs offices on-site, Haileselassie said.

Tax Changes

Around 30 growers met with the agency on June 1 to discuss a change in taxes and the performance of Ethiopian Airlines since it took over ground-handling and logistics, Tilaye Bekele, executive director of the Horticulture Producer Exporters Association, said.

The government now charges $3.68 a kilogram (2.2 pounds), instead of 10 cents a stem, for flower exports, Haileselassie said. More than half of exporters oppose the change since bulkier varieties are losing money under the new formula, Tilaye said in an interview in the capital on June 13.

Ethiopian Airlines always flew the regular cargo flight to the Belgian city of Liege and now has started doing logistics for it, he said.

The “knowledge, experience and the proper technology of handling perishable items is not there,” Tilaye said.

The horticulture agency asked the state-run airline to manage the freight service after growers complained about the cost when the previous cargo handler raised its fee and jet fuel prices climbed, Haileselassie said.

* Originally published on Bloomberg, on June 15, 2012, titled ‘Ethiopia Offers More Investor Incentives to Boost Flower Farming’ authored by journalist William Davison.

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