Being one of the three sugar factories in Ethiopia, which was created long time ago, could you give to our readers a brief historical background about Meterhara Sugar Factory?
Meterhara Sugar Factory is located on the eastern part of Addis Ababa, about 200 km away. The estate is located at 940 meter above sea level. The average rainfall is about 600mm, so the area to be irrigated is 100%, for crops to grow. It is located in the Oromyia region. The establishment history tells us that, it was established on the agreement between the Dutch company called HVA, and the Ethiopian government on share basis. In 1969, the factory started its first operations, that is crashing canes. At that time, the crashing capacity of the factory was 17 000 quintal a day, or 1 700 tones a day. Gradually the factory took its expansion. In 1973, the first expansion program has been implemented, enabling the factory to crash 24 000 quintal of cane a day, or 2 400 tones a day, and producing 2 400 quintal of white sugar plantation. In 1975, the company was nationalized by the military government. At that time, it was purely Ethiopian sugar factory, and not a share company anymore. It was administered by Ethiopian Sugar Corporation. In 1976, the second phase of the factory took place. In this level, the factory was to crash 30 000 quintal or 3 000 tones of cane a day, and produced 3 000 quintal of sugar a day. In 1980, the last expansion took place, this time the factory was able to crash 50 000 quintal or 5 000 tones a day, and producing 5 000 quintal of sugar a day. This is the capacity the factory owns at this time. This is one of largest sugar factory even in Africa. Simultaneously, along with the expansion of the factory, the expansion of the cane area was also conducted. During the beginning of the company's crashing, the cane area was 2 700 hectares. This time through many expansions, it has reached 10000 hectares of cane area. We produce plantation white sugar, and cane molasses as by produced. After the company has been nationalized, all the employees were Ethiopians, and through all its historical progress, the factory has shown ups and downs in the level of production, due to many reasons, specially during the past government. This happened, due to acute shortage of spare parts, impossibility to produce up to the capacity level. There was also lack of important chemicals for cane, like agro-chemicals, their timely application, and sometimes their access. Finally, after the change of the government, and the dissolution of the cooperation took place, the company got its autonomy. It can buy, and sell its spare parts, and its products. Secondly, the board of management was established and the management was to discuss with the board and decide shortly. The chain of command is short, the problems are easily understood and solved. The factory has planned and decided the rehabilitation program, seven years ago.
Which are the main guidelines of this strategy?
According to our program, the first area of attention was the agricultural sector, because this was the sector, where many problems were manifested, and the cane production capability area was sharply declining from 8-9 years ago. We focused on our first phase of rehabilitation program in this area. All the problems mentioned above were to be solved, we had to change the structure in the agricultural sector, and the chain of command was highly cut down. We focused on the motivation, and on giving rights to the lower class of workers. They have to feel loyalty to the organization. For instance, if our cane per hectare valuation is 1 800 for a year, and if any group produce more than this, they will share this extra amount of cane. Then, their interest is to produce more, and motivation is gained. This time, our cane per hectare is 180 tones, which is the highest in the world.
Could you give us status about you financial results, in terms of turnover, and in terms of profit?
As far as the production is concerned, I might discuss it later on. Last year, the net turnover of the factory was more than 400 million. The factory share is 250 birr per quintal, and from this we got 100 million of profit. Our production was 1 110 000 quintal.
Do you mainly sell your products in Ethiopia, or do you export them? If yes, which are your main export markets?
As far as sugar supply is concerned, now the third factory has started production. This year, the volume that we produce is not enough for the country consumption. Previously, before the change of the government took over, we wanted to export about 300 000 quintal of sugar, just for the sake of getting foreign currency. This does not mean that the sugar supply was enough for the country. This time, we sell sugar locally, on auction basis, but if somebody wants, he is free to export, as it is a free market. However, we do have plans to export in the near future, because the third factory has started production, and the factories are rehabilitating and developing their production. As far as Meterhara is concerned, our intention is to export more sugar, as of next year. We are exporting molasses to Europe, specially to Germany. We annually produce about 400 000 quintal of molasses, which is purely for export, and not for local sale. Our aim, for the future is to export.
Which are the latest investment you have done, in order to modernize your infrastructure?
As I said the first program of rehabilitation, and reconstruction was focused on the agricultural sector, and then we will shift to the rehabilitation of the factory. Technical audit has taken place, and in this area we have replaced the centrifugal parts, the pump parts, and the processing parts. In the factory area, the aim of rehabilitation is not focused on only replacing the old machines, but also on the introduction of the latest technology, and on the better means of doing things. We have also to change the attitude of the workers too, to familiarize them with the modern technology, and time efficiency. That is part of the rehabilitation program. During the past regime, they did not focus on efficiency and productivity. The participation of the workers on plan settings, and working towards the fulfillment of their annual target is higher this time. We have seen a lot of changes. In any developing country the problem is the productivity or the efficiency of the workers. A machine by itself can not produce, it has to be operated properly, and used properly. We have also achieved cost reduction. If the machines are properly handled without breakage, and mishandling, there will not be much cost for spare parts. The losses in introducing sugar, which were deliberately neglected during the processing of sugar have been minimized.
Where do you see the best opportunity growth, in the future growth of Meterhara Sugar Factory?
The future Meterhara Sugar Factory production status is bright. As I told you, this time we have enough money to buy spare parts, and we do not have problems. We can get foreign currency through auctions. The attitude of the workers, their interest in the work towards their achievements, their participation are very encouraging. The management group, and the workers discuss together and solve the problems. Last year, we produced 1 120 000 sugar, that is nearly about 95-98 build capacity of the factory. We are now approaching to the company's designed capacity. This year or by next year, we hope, we will be able to produce to the designed level capacity. We have also to focus on the diversification. | Are you implementing like a research, and development center to create specialty products?
So far we have expanded the factory, and we have solved the problems that we were facing. We are just trying to produce, to the designed level of the factory. Now, it is maximization of the production or optimization. After keeping this status for a certain period of time, we have to go to the diversification, supported by our research. The management outlook is working towards that. The question to know, if we are going to keep on producing to the design level and stay there was raised. If the answer is yes, the cost will end up, and the production will be stagnant, that will not be good for the re-processing factory. We have to diversify it. This diversification may be focused on the reinforcement of molasses. On the other hand, with some changes of equipment, we can increase the designed capacity of the factory. Now the designed capacity of the factory is 1 200 000, but with slight changes we can take over that capacity.
Which are the main competitive advantages, Meterhara sugar factory has in comparison with its main competitors?
The two other factories, do not really compete with us, as they are governmental owned enterprises, and we sell together. Our sugars have some differences. The Meterhara Sugar Factory because of its location, and other things, has more right whiter than the Wonji Sugar plantation white. However, our programs differ, and the chances of expansion, modernization, and diversification are different from one to the other. The chance for exporting sugar is more for Meterhara, than for any other, because we have a railway directly from and to our factory site, to Djibouti. The transport facility is good, and now we are exporting molasses, through Djibouti. We have our own tankers.
Which are the new markets, you are looking for?
In the sugar world, there are many areas of sugar markets. Previously, we used to export to the Arab areas, and now we are exporting to Europe. The brokers for sugar sales have already contacted us, and still the program is going on. In the Far East also, there is a sugar market. They might want to reprocess it. Our market areas are in the Far East, in the Middle East, and in Europe.
Our readers are always interested in new business opportunities. In which area of your activities, and investments, are you interested to attract partners?
As I told you, there are developments of the factory itself, in agriculture, and in human resources too. We want to work with experts, and consultants. When we expand the factory, and started the technical audit of the factory, study was conducted with the collaboration of foreign consultants. In this regard, we are happy to work with them. As far as molasses are concerned, we sell with agreements, on venture basis. We are going to work more with foreign experts, when we start with the diversification phases. In that case, we will definitely contact them. After we finalize our proposal, we will start contacting them.
In the United States contacts, might end with contracts. What is Meterhara Sugar Factory going to do, in order to encourage greater contacts?
We have contacts with many sugar industries in the United States, such as in Louisiana, in Hawaii, and in Florida. We have very good and close contacts with the research centers in Mauritius, and in South Africa. As far as our contractual agreement is concerned, that will be determined in the long run.We have visited them, and they have visited us. In that regard, the only thing we are concerned, is to keep in touch with them regarding the introduction of new technology, long age, and assistants.
We also came to interview you as a businessman. Could you give us a brief historical background about your own professional experience?
By profession, I am an agricultural engineer. I have participated in various courses, such as in finance, economics, agricultural, and managerial courses locally and then abroad. I have worked in the sugar industry for about twenty two years. I started to work in Meterhara Sugar Factory as a research person. Then, as agricultural engineer expert for farm machinery and equipment. I also worked as agricultural manager for the sugar industry, and as deputy general manager for operations. Now, I am the general manager for sugar factory. I have the experience in working with workers, and my working condition allow me to know my organization needs and problems. I will not let the problems to mature, rather I will immediately take prompt measures. For example, the sugar industry integrates farm, as it is an agro industrial complex. As agricultural part, the most important teller or achievement is mainly concerned in the cane production. We use to get about 1800 tones per hectare, that means we could cut down more cost. If with the same manpower, and with the same material location, we could produce more cane per hectare; for sugar factory it will be good. In the factory, sugar is only processed, it is created in the field. The sugar should also be very good, with the increase of cane per hectare, otherwise the cost will be higher. My experience helped me to integrate these farm achievements with the factory achievements. You can not cut down costs, just by giving directions. The most important thing is the integration, and correlation of the farm with the factory.
As a more personal issue, being an expert in the sugar factory, what has been your most satisfying achievement, since you are the general manager?
What I really appreciate, and what I am really happy, and proud is the rehabilitation program we took over. It was a very good achievement. Previously, it was hardly possible to produce 700 000 sugar in Meterhara, before the rehabilitation program. After the rehabilitation took place, we are now able produce 1 million quintal. We are continuously producing 1 100 000 quintal. However, it is not wise and healthy to produce constantly a level of production. Whether, you have to go straight up to the designed capacity, or you have to diversify it. We have reached some results, and that makes me really happy.
As a final issue, what will be you final message to our readers?
I am very happy that you have contacted me, to introduce my organization to the rest of the world. For some of the countries, our factory might not clearly be known. You have to communicate what I have said,and to work closely with experts and financial personnel. Secondly, we will keep in touch in the future, and provide all the necessary information. I appreciate you, and your organization. I hope many people will contact me in the future, after recognizing the good conditions we have in the factory. |
