With COVID-19 disrupting supply chains, industries, and markets across the globe, we’re checking in with GAFSP Private Sector Window clients to see how the health and economic crisis is affecting their businesses and the smallholders in their supply chains. In this installment of our “COVID Conversations” series, we talk with Tesfalidet Hagos, the founder and general manager of Luna Export Slaughterhouse, one of Ethiopia’s largest meat processors. IFC and GAFSP are working closely with Luna on a four-year program to train farmers on methods to improve the quantity and quality of the company’s goat and sheep meat supply. IFC is also advising Luna on rigorous hygiene, marketing, and distribution strategies, improvements that recently won Luna a Global Food Safety Initiative award. Hagos spoke to us about the challenges of transporting animals during lockdown, the surge in international demand from the Middle East, and how COVID restrictions are slowing operations at his sprawling abattoir south of Addis Ababa.
Question: How is COVID impacting Luna?
Demand has been steady, but the restrictions have slowed our production. At the beginning of COVID, people were very worried. At our retail stores in Addis Ababa, turnover was high, and shoppers bought as many fruits, vegetables, and meat as they could. But we’re not as productive as we want to be. We’ve reduced the number of employees working in the factory by about 50 percent because social distancing means having fewer people on the factory floor. We also provide transportation from our employees’ homes to the factory and we’ve needed to reduce bus capacity, also by about half. Many of our employees are now on paid leave and those who are still working need to work longer hours, which means we are also paying overtime. We have mandatory temperature checks at the gates and have purchased personal protective equipment—gloves, face masks, and sanitizer. We are prioritizing the safety of our staff, but all of this has meant incurring extra costs. The sales are still solid though and so I can’t complain.
Question: Have restrictions impacted your export business?
We used to rely on passenger flights to export meat and we’ve needed to shift to cargo flights, which leave every other day—and not daily. It has been a minor disruption, but we’ve been lucky, and haven’t faced problems with our cargo getting through customs. We export our meat mostly to Middle Eastern countries, mainly the United Arab Emirates and Saudi Arabia, and demand there continues to be high, especially during Ramadan. We’re also seeing growing demand from countries like India, where production stopped because of the lockdown there. And because the supply of meat from India to countries like UAE has decreased, we are seeing a supply gap in the market.
Question: Have you been able to keep up with this surge in demand?
To increase production, we need to be getting new animals every day. Particularly at the beginning of the pandemic, there were movement restrictions for people, but also goods and items and so we couldn’t get enough animals to our slaughterhouse. We were only getting animals from the surrounding district and not from further areas, and so production was down. We were busy, but not as much as we wanted.
Question: How have the smallholders in your supply chain been impacted by these disruptions?
Luna has more than 1,200 smallholders under the outgrower program who receive training and coaching on animal health and improved forage development. Though they are not impacted by COVID directly, they have been affected by movement restrictions: Luna community facilitators and technical experts were not able to travel provide technical support to the farmers and instead, needed to rely on phone support, which is not as effective. People from rural areas couldn’t go to urban areas and people from urban areas couldn’t go to rural areas. The number of COVID cases in rural areas has so far been negligible, but the fear is that if it starts spreading there, it will be very difficult to contain. Many farmers have been unable to take their animals or other farm products to market and though restrictions are starting to loosen up, the farmers we work with still need permits to move between districts. Disruption has had a real impact: things were at a complete standstill for a while and though we are getting a supply of animals again, we’re still not able to get to the numbers we had before, especially from pastoralist areas.
Question: How has COVID affected the agriculture sector in Ethiopia more broadly?
Compared to sectors like tourism, construction, and transport, the agriculture sector has been only mildly affected. But as you know, these sectors are all interrelated and so we are seeing that the availability of agricultural inputs is more limited because of transport disruption. Tourism has been severely affected; our supply to hotels has fallen by about 75 percent. Everything is interlinked and the government is doing a good job balancing between controlling the spread of disease on one hand, and the controlling economic impact of the disease, on the other hand. But I worry about the economic impact this will have on Ethiopia’s development.