Ethiopia: Assela Malt prepares for expansion, production to double

The only malt-producing factory in the country, Assela Malt Factory (AMF), is preparing for expansion work, worth 150 million Br, which will double the company's malt production capacity, according to Addis Fortune, February 21.

The expansion proposal it had submitted to the Privatization and Public Enterprise Supervising Agency (PPESA) was approved in November 2006. A tender for procurement and contracting is to be issued in the following three months, an official from the Malt Factory told Fortune.

Established in Assela town in the Oromia Regional State, close to 167Kms south east of Addis Abeba, with a capital of 9.2 million Br, the Factory has the capacity of producing 150,000qnts of malt per annum. The expansion project aims to increase productivity by 50pc.

The decision to expand came about to satisfy the growing demand for malt by breweries, who have experienced production increases in the last few years, sources from AMF told Fortune.

In early 2006, AMF failed to supply its product to Dashen and BGI due to shortages, which resulted in both breweries being forced to import the entire volume of raw material for higher prices. Those breweries that were still receiving malt were also pressed to import as all five, excluding the state-owned Bedele Breweries, went through expansion activities.

By September 2006, Assela stopped its operations as it was encountering problems in barley supplies that it formerly received from farmers. The reason for the scarcity occurred when bakers as well as local liquor makers started demanding more of the grain. Farmers, seeing a demand for the raw material they were providing, increased their prices. The Assela management however, was not willing to pay these new, higher fees. Hence, farmers stopped supplying it.

As a result Assela Factory met with four state farms and begun discussing barley supply possibilities in November 2006. It made deals with two of the entities, Arsi and Bale Agricultural Development Enterprises for the supply of 20,000quintals of barley. Moreover, the Factory's management decided that it would buy the remaining necessary volumes from farmers for the prices demanded.

Although a study has not been done on the overall demand for barley in beer production in the country, currently, all five breweries have the overall capacity to produce 3.5 million hectolitres of beer annually.

Meta Abo Brewery, established a little over 40 years ago, is a state-owned company that began its expansion work, worth 90 million Br, in September 2006. It is expanding by 40pc and currently produces 400,000 liters a year.

Similarly, BGI, which was established in 1998, is a private-owned company that invested 600 million Br for its expansion projects in Kombolcha and Addis Abeba. Their monthly production is currently 10 million liters with an overall income of 380 million Br during the fiscal year 2005-2006.

Dashen Brewery, another private-owned company, finished its 100 million Br expansion work in October 2005 and has since increased its production capacity from 26.2 million to 75 million liters.

The state-owned Harar Breweries, the only enterprise that manufactures non-alcoholic beer in the country, was established in 1984. It finished its expansion project, which was worth 80 million Br, in December 2006. It has a capacity to produce 70 million beer bottles a year.

In November 2006, representatives from all beer breweries participated in a meeting with AMF managers in Assela, on barley malt development, quality and marketing. Breweries' increase in expenses due to shortages of malt and subsequent importations, were raised during the discussion.

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