“Kenya is more of a Wild West than Ethiopia” is what news agency Bloomberg wrote down at a nursery in Ethiopia on the 24th of August. The reason for the report were the riots at the end of 2015. Only a week after Bloomberg published its report, the next incident happened. Ten horticultural companies outside the town of Bahir Dar were confronted by population groups that disagree with the government. Esmeralda Farms was hit worst. A ten million investment literally went up in smoke. The company closed down.
by Hans Neefjes
hneefjes@hortipoint.nl
With regards to safety and corruption, Ethiopia is a better place to run a business than Kenya, is what growers told the Bloomberg news agency. But after the events of the beginning of week 35, when anti-government groups attacked ten horticultural companies and destroyed them, things have changed. “The next ten years, no one will dare to invest in Ethiopia anymore. Banks, governments and other parties will also operate with a lot more caution,” says grower Huub van der Burg from Herburg Roses Ethiopia.
Peter Barnhoorn from Sher Ethiopia says: “Ethiopia is a stable country, it has been and still is. Although these kinds of incidents may have you think otherwise. It is definitely not a country where a civil war is taking place. Flowers that are grown here will still be exported and hopefully, this will all be over soon. Nobody likes the current situation. The government is definitely trying to stop it too. But we, as a company, don’t want to, and won’t, get involved in any of this business or protests. We are here to grow flowers and not to get involved in politics.”
Barnhoorn is based in Ziway, around 800 kilometres away from Bahir Dar, the town northwest of the capital, Addis Abeba, where the riots took place. The events are the talk of the town amongst employees and other people. Special attention is given to security of the greenhouses and warehouses now. The government is organising extra soldiers and there are more police patrols than before. “But if you’re attacked by the kind of group that came to Esmeralda Farms, there’s not much you can do,” said Barnhoorn.
Hit worst
Esmeralda Farms’ CEO Loui Hooyman describes Ethiopia as one of the most peaceful countries in Africa and according to him, it actually still is.” It was just unfortunate that we were hit by the local opposition, just like nine other horticultural companies with Belgian, Italian, Israeli and Indian owners.”
Esmeralda Farms was hit worst in the beginning of week 35. Hooyman: “Everything is gone. A ten million investment as well as lots of time and effort, all went up in smoke within a day. There was no way to defend ourselves and you can’t get any insurance to cover this kind of damage.”
The company, founded by the recently deceased American Peter Ullrich, produced on 500 ha solely in South and Central America until last year and has their head office in Miami. It acquired 150 ha in Ethiopia to produce flowers, mainly for the European market. The first 25 ha went into production at the end of 2015. The 17 ha of polytunnels were mainly used to grow spray roses and the main crop in the group of summer flowers grown outdoors was gypsophila. Flowers were sent to Aalsmeer.
CEO Loui Hooyman: “We received flowers from our location in Ethiopia three times per week. That was 30 to 40% of our turnover in Aalsmeer, the rest comes from our companies in South America.”
The shed and cold storage facilities were built in accordance with the expansion plans that the company had in Ethiopia. Just like tractors, lorries, containers, packaging material etc., they all burned down. All irrigation pumps were destroyed, so the plants are withering. This huge loss made the American mother company decide to pull the plug on Esmeralda Farms Netherlands a week after the catastrophic events took place. Dismissal procedures were started for the fifteen employees in Aalsmeer, including Hooyman. All six hundred employees in Ethiopia are losing their jobs.
Violence
“The Ethiopian authorities are taking the matter very seriously, also with the wider economic relationship with the Netherlands in mind,” says Marjolein Busstra, spokeswoman for the Minister for Foreign Trade and Development Cooperation.
The embassy describes the violence against Dutch and other foreign companies in Ethiopia as very serious. Busstra: “We have been concerned for a while now about the turmoil in the country, which has already taken too many lives.”
She’s not only referring to the three Dutch agricultural companies that were targeted by violent protesters at the end of 2015. Ethiopia is struggling with some fierce protests against the government, which is held responsible for an extremely authoritarian leadership style and the theft of local farmers’ land to literally make space for foreign investors and to expand the capital city of Addis Abeba. The anti-government protests haven’t been this strong since 1991. Ethnicity often plays a role in these protests.
The Oromo and Amhara people, both large in number, seem to be working together now against the relatively smaller group of Tigrayans, many of whom hold important positions in various governments. More than 500 people have already been killed in protests this year. Both Ethiopian entrepreneurs with government connections and foreign companies have been confronted by rebels.
Busstra: “Our first concern is the safety of Dutch people in the area. The Dutch embassy is in close contact with all affected companies and with the Dutch people in Ethiopia,” said Busstra. Last Friday, the embassy organised a meeting with Dutch companies in Ethiopia in order to discuss the situation and find the best ways to support them.
Sales
Esmeralda took care of its own sales. But four other nurseries that were attacked last week, were affiliated with Royal FloraHolland.
Rinus Bouwman, CEO of Bouwman Snijder Importservice, has two rose growers from the Bahir Dar area amongst his customers. “They are Agrilake Roses with five hectares and Tana Flora with 40 ha. We have 12 customers from Ethiopia. Most of the rose growers in that country who don’t take care of packaging and auction preparations themselves, hire us to do it. Up until the Friday in week 35, everyone auctioned. The two affected companies couldn’t deliver for the auctions of last Monday and Tuesday, but I understand that we’ll receive another load on Tuesday the 6th of September. They have made new bookings and can be reached by telephone and internet again.”
Tana Flora started its business in 2008. It received 124 ha of land from the government for a period of 25 years, to grow 40 types of roses as well as fruit and vegetables. Their damage was mostly found at the pump house. This allowed them to get production back on track relatively quickly.
Their neighbour, Arini Flowers, hadn’t yet begun production. This company was only just started, so it suffered relatively little damage. Material for the first greenhouses – 10 ha – is still arriving. Esmeralda cultivated the first 1.3 hectares of phlox cuttings for them. They were going to be grown outside, but they’re all gone now.
It isn’t clear yet what Arini Flowers is going to do in Ethiopia, and when.
Grower Huub van der Burg knows the area around Bahir Dar pretty well, because he’s looking for potential places to expand. “Around Ziway, the population consists of a mix of different ethnic groups. This means that there are different interests and cultures. In the area around Bahir Dar, the population used to be more loyal towards foreign entrepreneurs like us. But at the moment, other groups are rebelling there. Ethiopia seems to be growing too fast and the interests are too diverse. For the time being, we’re not that aware of the riots, but the current situation is bad for everyone of course.”
Questions
All growers who have been producing in Ethiopia for a while, were contacted by their buyers almost immediately after the news about the events was reported. How are you doing? Are there any flowers on the way? Those kinds of questions. Esmeralda’s customers are totally confused. A spokesman: “Some of our customers order huge numbers and others take only a few boxes. All of them will experience a lot of disruption. This situation is really bad, both for us and for our customers.”
In the meantime, politicians are getting involved in the situation, both in the Netherlands and in Ethiopia. The Dutch embassy thinks that there’s a more deep-rooted conflict of population groups that feel ignored by their government. Busstra: “The Netherlands calls on the Ethiopian government to start a discussion with the opposition groups, in order to find a peaceful resolution.”
Elbert Dijkgraaf, member of the Christian political party SGP, asked minister Lilianne Ploumen Parliamentary Questions about the destruction of Esmeralda Farms’ nursery in Ethiopia. Answers will follow soon. One thing is already clear for everyone though: Ethiopia’s image has been severely damaged.
Former ceo of Esmeralda in the Netherlands, Loui Hooyman sits under a tree with Ethiopian workers. He still calls Ethiopia a relatively peacefull country.
