Business Opportunity Report:

Oilseeds and Pulses

1
Contents Page
Colophon
The Oilseeds and Pulses Business
Opportunity Report 2015 is a
publication by the Netherlands-
African Business Council (NABC)
and FME-CWM. Commissioned by
the Netherlands Enterprise
Agency (RVO.nl), Ministry of
Economic Affairs and Ministry of
Foreign Affairs.
Authors
Mr. Thijs Ruters (NABC)
Mr. Auke Boere (NABC)
Ms. Daphne Willems (NABC)
Mr. Dawit Kidane (NABC)
Mr. Wannes Dolfen (NABC)
Design
Mr. Dawit Kidane (NABC)
Contact Details
NABC
Prinses Margrietplantsoen 37
2595 AM Den Haag
Postal Address
P.O. Box 93082
2509 AB Den Haag
The Netherlands
T: +31 (0)70 304 3618
E-mail: info@nabc.nl
www.nabc.nl
Contents
Executive Summary ............................................................................................ 3
Chapter 1: Introduction .................................................................................... 4
Chapter 2: Ethiopian business climate in brief......................................... 5
2.1 Ethiopian Economic Developments ....................................................... 5
2.2 Agriculture in Ethiopia ............................................................................... 5
2.3 Trade and Foreign Investment Regulations ....................................... 8
Chapter 3: Main trends and developments in the relevant
(sub) sector.......................................................................................................... 10
3.1 Importance of subsector to the economy .......................................... 10
3.2 Subsector in International Context...................................................... 14
3.3 Value Chain Structure ............................................................................... 16
3.4 Production and Geography ..................................................................... 19
3.5 Trade & logistics ......................................................................................... 26
3.6 Internal Market ........................................................................................... 27
3.7 Export ............................................................................................................. 30
3.8 Access to Finance........................................................................................ 34
3.9 Challenges in the Value Chain ................................................................ 35
Chapter 4: Institutional context ................................................................... 39
4.1 Sector policies and regulations ............................................................. 39
4.2 Public sector partners .............................................................................. 40
Chapter 5: Business opportunities.............................................................. 45
5.1 Vision .............................................................................................................. 45
5.2 Strengths and weaknesses analysis..................................................... 45
5.3 Opportunities .............................................................................................. 47
Interviews and References ............................................................................ 50
2
Executive Summary
The extensive quantity of hectares of arable
land, the profitable climate conditions, high
rural population and the high quality soil
lead to great potentials for foreign investors
to grow crops in Ethiopia. Also for oilseeds
and pulses specifically arable land is
extensive and by improving the method of
production, disposal can be doubled. The
major challenges are increasing yields,
reducing unit cost prices and increasing
income from exports.
In the past few years the government
started economic restructuring and
investing in road, telephone, and railway
infrastructure. Several initiatives
mentioned in this report have not yet been
achieved, but will be important to reach the
goals of the Agricultural Growth Plan (AGP).
Next to that, the stakeholders in the
oilseeds and pulses sector are willing to
increase exports and are looking for
financing incentives to improve
competitiveness. Seeing the vast tract of
land not cultivated yet, one can surmise
that Ethiopia will take a leading role in the
supply of oilseeds and dry pulse crops in
the international arena. However, core
interventions and enabling actions need to
be undertaken which can holistically
strengthen the Ethiopian pulses value chain
to be productive and stable, and provide
year round reliable transactions that supply
domestic and international markets.1
1 Chilot et al, 2010
3
Stronger linkages between exporters and
producers (smallholders) are currently
being forged, which will lead to a more
efficient value chain where demand signals
are clearly communicated to the producers,
and where inputs are available to ensure
proper production of oilseeds and pulses.
Developing the export sector will drive
foreign reserve earnings and will create a
steady demand for both oilseeds and
pulses, thereby acting as a catalyst for the
sector. Exporters should be supported
through a business environment more
conducive to investment and policies aimed
at bolstering exporters’ scale, knowledge
base, as well as business acumen.
Next to improving the structure of export,
the need to establish advanced cleaning,
hulling, roasting and extraction facilities in
Ethiopia is large. In Ethiopia there is a large
diversity of high value oilseed crops, which
covers a substantial part of the world
production in especially high quality
sesame seed and increasingly also other
oilseeds like linseed and niger seed.
In general, the Ethiopian government
focuses on doubling the agricultural
production. The AGP is providing the
regulations to reach those goals. The
Ethiopian government established new
warehouses, which is a positive step
towards complying with the EU regulations.
At the moment CBI is working with 12
exporters to prepare them to export
oilseeds to the EU. The result will be a
business opportunity for the potential and
active traders.
Chapter 1: Introduction
Ethiopia is a country with a very high
agricultural potential, which is
increasingly being met. Being dubbed by
many as Africa’s most promising food
basket and showing growth figures
unmatched by any other country, even in
Africa, Ethiopia is steadily on the way of
becoming one of the major agricultural
players in the world.
Within Ethiopian agriculture, oilseeds are
the most important export crop in terms
of volume and almost on par with coffee
in terms of export value. Pulses have
always been important for the domestic
market and are increasingly important for
export incomes as well. Oilseeds play a
significant role on the lives of the
Ethiopian agrarian community and
stakeholders in the national economy in
Ethiopia. Increasingly, sesame seed is
taking a significant role in the oilseeds
sector over the past years and has
become the most relevant commodity.
However, there is renewed interest from
Europe for linseeds and niger seeds.
Similarly, white-pea beans and chickpeas
are important crops within the Ethiopian
pulses sector.
Ethiopia’s potential as major oilseeds
exporter is a result of suitable climate for
annual and perennial oil plants,
4
availability of cheap labor force and huge
global demand for quality food oil.
Through these advantages, Ethiopia could
expand its foreign market presence
through increased production levels,
which will lead to at least doubling of its
current annual exports.
Consumption of oilseeds in Europe has
skyrocketed in recent years; and there is
high growing demand for quality and
organic varieties of seeds. Europeans are
some of the largest importers and
processors of edible oils. The various
usage potential of oilseeds makes them a
valuable commodity in Europe, especially
for the food industry, but also for
cosmetics and industrial purposes.
Moreover, Europeans (and North-
Americans) have an increased craving for
quality foods, super foods and the like, in
which group oilseed and pulses products
invariably seem to be categorized. This
enormous growth potential of the
Ethiopian oilseeds and pulses sector in
combination with Europe’s increasing
demand of quality oilseeds and pulses
products brings great opportunities.
These trends and opportunities will be
described in this Business Opportunities
Report on the Ethiopian Oilseeds and
Pulses sector.
Chapter 2: Ethiopian business climate in brief

2.1 Ethiopian Economic rural and urban informal sectors and

employment figures are less indicative
Developments than for countries in other regions in the
world like the Europe and North America.
Ethiopia, with a population of about 96.6
million (2014)2, is the second-most
populous country in Sub-Saharan Africa
2.2 Agriculture in Ethiopia
after Nigeria. Ethiopia has over the past
decade enjoyed one of the highest growth Ethiopia’s economy is largely based on
rates in Africa – between 8% and 10%. agriculture, which provides 80 - 85
The economy is expected to continue to percent of employment for the population
grow at a healthy pace aided with a as well as contributing about 43.5% of the
remarkable decrease in inflation that GDP and 61% of total export.7 Agriculture
stood at a high of 36% in February 20123, remains Ethiopia’s most promising
but has since dropped to 7.8% in January resource and potential for self-sufficiency
20144. and export development. Many other
economic activities depend on
Almost 25% of Ethiopia's population is
agriculture, including marketing,
under the age of 18.5 Over the past two
processing, and export of agricultural
decades, there has been significant
products. The agricultural sector plays a
progress in key human development
central role in the economic and social life
indicators: primary school enrolments
of the nation and is a cornerstone of the
have quadrupled, child mortality has been
economy. The correlation between these
cut in half, and the number of people with
two phenomena can also be identified in
access to clean water has more than
the trends in figure 1.
doubled. More recently, poverty
reduction has accelerated and the
(official) unemployment rate has
decreased from 26.4 % in 1999 to an all-
time low of 17.4% in 2014.6 However, it
should be noted that in a country like
Ethiopia many people work in the both

2 CIA Factbook, 2015

3 Worldbank, 2011
4 CSA, 2014
5 UNICEF, 2015
6 Trading Economics, 2015 7 State.gov, 2013

5
Figure 1. GDP (constant 2005 USD), Agriculture value added (constant 2005 USD)
Livestock and their products account for
about 20 percent of agricultural GDP.
Crops (mainly coffee, oilseeds, cereals and
pulses) account for the remaining 80 per
cent of the agricultural GDP, which
highlights their importance to the
Ethiopian economy. Smallholders, the
backbone of the sector, cultivate 95 per
cent of the cropped area and produce 90-
95 percent of cereals, pulses and
oilseeds.8
The total labor force in Ethiopia was last
measured at 45.145.776 in 2013,
according to the World Bank. About 80 -
85 percent of the people are employed in
agriculture, especially farming.9 This
8 FAO
9 Trading economics Ethiopia, 2015
6
implies that between 36.116.620 and
38.373.909 people are employed in
agriculture. Most recent statistics (2013)
provided by the UN show that more than
3 million farms (households) are already
involved in oilseeds production.
Production is overwhelmingly of a
subsistence nature, and a large part of
commodity exports are provided by the
small agricultural cash-crop sector.
Principal crops include coffee, pulses,
oilseeds, cereals, potatoes, sugarcane, and
vegetables. The commodities, coffee and
oilseeds are the largest foreign exchange
earner.
One of the key points being addressed by
the current Ethiopian government’s five-
year development plan (GTP I) is to
double agricultural production by 2020 to
ensure food security in Ethiopia. The
most important policy underlying
agricultural development is the
Agricultural Growth Program (AGP).
Apart from the AGP, the government has
also formulated a plan for accelerated and
sustained development to end poverty
(PASDEP) by promoting, among other
things, commercialization of agriculture
and growth of the private sector and
infrastructure (especially roads, energy,
and irrigation). The AGP aimed primarily
at increasing agricultural productivity in a
sustainable manner, enhancing market
performance and facilitating value
addition in selected targeted areas.
The AGP – AMDe (Agricultural Growth
Program – Agribusiness and Market
Development) vision for the sesame value
chain is to expand quality production to
increase Ethiopia‘s share in international
markets. AGP - AMDe is operational in 11
sesame producing Woredas in Tigray,
Amhara and Oromiya Regional States of
Ethiopia, and the core activities in these
Woredas include:
 Enhancing productivity of
farmers through provision of
training in management, finance,
and audit, business planning and
marketing to farmers’ cooperative
union management team
members.
 Technology transfer support by
working in collaboration with
research institutes in the
production, multiplication and
7
dissemination of improved Sesame
seed varieties like Setit 1 and
Humera 1 and acquisition of non-
shattering varieties, farm
machineries for row planting,
cultivating and harvesting.
 Enabling access to finance for
infrastructure support through the
provision of grants. AGP - AMDe
has constructed and delivered 4
warehouses of 5,000 mt capacity
each to date on a cost share basis
to four Farmers’ Cooperative
Unions (FCUs).
Ethiopia has a total area of 112 million
hectares of which about 15% is arable,
and only 1 % (of the 112 ha) is being
permanently cultivated.10 Overall,
Ethiopia’s natural resource base, the soil,
the climate, the relative humidity and the
vegetation types are promising for
agriculture.11
Ethiopia is the second largest sesame
exporter in the world after India and
sesame is second with coffee as first in
foreign exchange earnings. Ethiopia
earned 641.5 million USD in 2014 from
export of oil seeds.1296% of the Ethiopian
oilseed export is sesame seed. Ethiopia
produces more than 400,000 metric tons
of chickpea annually and is the sixth
largest producer of chickpea in the
world.13 Export of chickpeas in 2014
brought in 22.5 million USD.14 In addition,
10 World Bank, 2015
11 EPOSPEA.org
12 Trademap, 2015
13 Agribiz.et
14 Trademap, 2015
Ethiopia grows specialty seeds like
safflower seed and castor beans.
More than 3 million farms (households)
are already involved in oilseeds
production.15 Production is characterized
as labor intensive, low-input, and rain fed.
The potentials to increase the production
are huge. Only 20% of the total available
agricultural land is used, mainly in the
highlands, and of the total amount of
occupied agricultural land only 7% is
used for oilseeds. Productivity per ha can
be doubled with higher input levels like
fertilizer and improved seeds.16
2.3 Trade and Foreign
Investment Regulations
The government started economic
restructuring, invests in road, telephone,
and railway infrastructure and wants to
become a member of the WTO. Land is
state-owned and can be leased from the
government. To encourage private
15 Wijnands et al, 2009
16 Agribiz.et
8
investment, the Ethiopian Government
has developed a package of incentives
under Regulation No.270/2012 for
domestic and foreign investors engaged
in new enterprises and expansions, across
a range of sectors. The incentives that are
available both to foreign and domestic
investors are mentioned below.17
Below are some of the regulations
regarding import and export of these
products:
a. Customs Duty Exemption
A 100% exemption from the payment of
import customs duty and other taxes
levied on imports is granted:
• For investments in capital goods
and construction materials
necessary for the establishment of
a new enterprise, or;
• For the expansion or upgrading of
an existing enterprise as well as
spare parts worth up to 15% of the
value of the imported capital
goods.
Such investment capital goods may be
transferred to investors enjoying similar
privileges. Exemptions from customs
duties or other taxes levied on imports
are granted for raw materials and packing
materials necessary for the production of
export goods. All other goods and services
destined for export are exempted from
any export and other taxes levied on
exports.
17 Wijnands et al, 2009
b. Income Tax Exemption and
Loss Carry Forward
Any income derived from an approved
new manufacturing, agro-industrial or
agricultural investment is exempted from
the payment of income tax ranging from
2-8 years depending on the area of
investment, export volume and the
location in which the investment is
undertaken. Income derived from an
expansion or upgrading of an existing
manufacturing, agro-industrial or
agricultural enterprise is exempted from
income tax for a period of two years if it
exports at least 50% of its products and
increases, in value, its production by 25%.
Business enterprises that suffer losses
during the tax holiday period can carry
forward such losses for half of the income
9
tax exemption period, after the expiry of
such a period.
c. Remittance of Funds and
Investment Guarantee and
Protection
In Ethiopia, both the Constitution and the
investment Code protect private
property. Ethiopia is also a member of
MIGA (Multilateral Investment Guarantee
Agency), which issues guarantees against
non-commercial risks to enterprises that
invest in signatory countries. Besides,
Ethiopia has signed bilateral investment
promotion and protection treaties BITs
(Bilateral Investment Treaties) with a
number of countries.
Chapter 3: Main trends and developments in the
relevant (sub) sector

3.1 Importance of subsector but especially China, India and the

European Union. Sesame accounts for
to the economy over 90% of the values of oilseeds exports
from Ethiopia to the world. Ethiopia is the
Oilseeds subsector
second largest sesame exporter in the
world after India and sesame is second
A variety of oil seeds are grown in
only to coffee in foreign exchange
Ethiopia, of which sesame is by far the
earnings.
most important both in terms of volume
(see Figure 2), value and export earnings.
The oilseeds produced are supplied both
for the local and international market, in
which especially sesame has become a
major foreign currency earner for
Ethiopia with exports all over the world,

Figure 2. EPOSPEA, 2015: Oil seeds export trend Ethiopia

10
 Selet Hulling PLC – Sesame processing in Ethiopia

Although the processing of oilseeds in Ethiopia is most often confined to cleaning, if at all, a
few examples of more advanced processing in the country exist.

The most prominent example is Selet Hulling PLC, a Joint Venture between the Ethiopian Kaleb
Service Farmers House and the Dutch Tradin Organic Agriculture B.V., made possible through
the Private Sector Investment (PSI) Program of the Dutch government and established in
December 2007.

Selet Hulling PLC has 2 major production units; a production farm and a processing factory.
The production farm is located in the Humera District in the utmost North-West of Ethiopia.
Sesame is produced there on Selet Hullings’ own 300 ha farm and on the farms of families
which are connected to two outgrower cooperatives that Selet Hulling works with; Fana Limat
cooperative (1000 farming families) and Shewit cooperative 500 farming families). These
farmers also receive training and go through a certification trajectory.

The factory of Selet Hulling is located 20 kilometers outside Addis Ababa and consists of a raw
material warehouse, a sesame cleaning line, a sesame dry-hulling line and a finished product
warehouse. These facilities have been built according to international food standards and are
organic and ISO 22.000:2005 certified, with equipment for the cleaning line from Denmark
and for the hulling line from Spain, USA, the Netherlands and China.

Selet Hulling makes use of the dry-hulling method, which has advantages over wet hulling
methods because of lower water consumption and consequent less impact on the
environment. Furthermore, rainwater is collected in the factory for the hulling process, which
is consequently filtered in multiple steps and UV-treated before entering the machine line. The
type of sesame seed that is hulled in this factory is known as the Humera-type. This sesame is
popular on the world market due to:

1. White and comparatively large, uniform seeds

2. A sweet and nutty taste

3. A sweet aroma

Selet Hulling follows an integrated Internal Control System and works according to
international quality systems like HACCP. According to the factory’s website, Selet Hulling’s
mission is “to be the world food and bakery industry’s premier supplier of top quality,
competitively priced, certified organic hulled sesame seeds for a healthier living”.
Unfortunately Selet Hulling was not available to verify to what extent they can currently
adhere to that mission, but it is clear that they can be considered as the major sesame
processor in Ethiopia.

(Source: www.selethulling.com)

11
Given Ethiopia’s ability to produce large
volumes of high quality sesame, it is well
positioned to capitalize on the high
growth in the global sesame market by
expanding its downstream processing
activities.
Ethiopian sesame still has important
potential on the world market because it
produces high quality seed varieties that
are suitable for a wide range of
applications that are well known on the
world market. However, due to major
defaulting on contracts of especially
European importers in the period 2006 –
2008, many importers got reluctant to
source from Ethiopia (see boxed text).
Humera, Gondar and Wollega type
sesame seeds are varieties of sesame
seeds produced in Ethiopia that are well
known in the world market. They have
their own respective features, which
make them suitable for different uses.
Humera and Gondar type sesame seeds
are mainly suitable for bakery and
confectionary purposes, while Wollega
type sesame seed has a major competitive
advantage for edible oil production
because of its high oil content. The
Humera variety originates from the
Humera area in the North-West of
Ethiopia and constitutes about 70% of the
country’s annual sesame seed production.
The total area under cultivation is
450.000 – 500.000 ha, involving both
commercial and smallholder farmers.18 19
18 Oscar Geerts, SBN, personal
19 UN data
12
Price volatility of world market
Sesame in 2006-2008
Sesame is truly a world market product,
with producers and buyers in every world
continent. This contributes to a relatively
high price volatility, which in some years
is more capricious than in others. In the
years 2006 – 2008, with 2008 as the most
extreme case, the sesame price went up
majorly in a short period of time. The
following major factors caused this
situation:
- Increased demand from emerging
markets, not sufficiently met be
increased production
- Sharp rise in demand for bio-fuel,
making various producers shift
production from sesame to bio-fuel
- Bad harvests in different parts of the
world
The sharp and fast price rise of Ethiopian
sesame and increased interests from all
parts of the world meant that Ethiopian
suppliers could get much higher prices
than initially prospected. However,
importers from Europe already signed
contracts with Ethiopian suppliers in an
earlier stage, for a lower price. Certain
Ethiopian suppliers chose to default on
these contracts and sell their produce for
a higher price to other markets like China.
This situation has led to a decreased trust
under many European importers, which is
being rebuilt again slowly throughout the
years. It is up to all Ethiopian suppliers to
keep this trust now and adhere to already
made agreements with their importers.
Despite the high export figures of sesame,
Ethiopia is at the same time importing a
variety of oil substitutes. Especially palm
oil imported from Malaysia is widely used
for cooking, given its superior price to
quality ratio in comparison to
domestically produced oil. Dr. Daniel
Dauro from the Agricultural
Transformation Agency states:
“One policy that is hindering the domestic
processing of oilseeds is the duty free
importation of foreign edible oils. Palm oil
is not taxed, while locally produced oil is.
Imported palm oil from for example
Malaysia and Indonesia is duty-free in
order to make it affordable to the majority
of the population. Less than 5 % is
produced in Ethiopia itself.”
Thus, the need for affordable edible oils
cannot be met by domestic production
and has to be largely met through duty-
free import from Asia. At the same time
that hinders a transformation to
Ethiopian production of edible oils out of
oilseeds.
Some by-products from pulses and
oilseeds such as cake, a by-product
released during the extraction of oil from
oilseeds and pulses, are used for the
production of animal feed. It forms an
essential input for animal feed
production, and dairy farmers can even
directly use the cakes as feed for their
cows. However, due to a high demand for
these cakes among Ethiopian feed
producers, oilseed processors are
hoarding the product. Therefore the
Ethiopian government has recently put a
13
ban on the export of all oilseed cakes as a
temporary measure, in order to ensure
sufficient availability in Ethiopia.20 This
implies that there are opportunities for
production targeting the local market.
The sector provides potential for a
powerful product - market combination
in the specific niche market for organic
oilseeds and pulses. The low cost of
production and the climatic conditions
that allow the production of specific sub-
types such as Humera, Gondar and
Wollega sesame seed are important
potential success factors. Though the
industry has grown, more progress is
needed to increase yields, improve farm
gate prices, and increase income from
exports.
Pulses subsector
Like for oilseeds, cultivation of pulses like
chickpeas, red kidney beans and white
pea beans is common in Ethiopia.
Ethiopia produces more than 400,000
metric tons of chickpea annually and is
the sixth largest producer of chickpeas in
the world. Cultivation of pulses is carried
out in both the highland and lowland
areas of the country, mainly by peasant
farmers. Currently, the country exports a
large quantity of pulses to the
international market (see figure 3). There
are also a number of factories that
process pulses in the country.
Pulses, especially red kidney beans, are
produced through major cooperatives
20 Moti Cheru, Director Feed Department VDFACA
that exist along the major regions of
Ethiopia such as Tsehay Union in Oromiya
and Mercha Union in Oromiya. Chickpeas
on the other hand, are exported with
Figure 3 EPOSPEA, 2015: Pulses export trend Ethiopia
3.2 Subsector in
International Context
Edible oil and oil crops are among the
most widely traded commodities in the
world. However, the production and
export of oilseeds is dominated by a
group of producing countries. The United
States, China, Brazil, India, Argentina, the
EU and Canada are the world’s largest
producers and account for about 70
percent of global oilseeds output.21
Despite increasing production, erratic
climatic conditions in many countries in
general, and throughout the South
American continent in particular, have
21 Hoffman et al., 2009
14
contract-based linkage between large size
business and small farmer’s organizations
(unions) such as ACOS Ethiopia.
been affecting oilseeds production22.
Despite substantial growth in oilseeds
production in the past 25 years, and
recent gains in export volume, both
exporters and importers have been
engaged in trade distorting policies –such
as deferential export taxes and
production subsidies.
In Ethiopia as a result, many attempts
have been made to favor domestic
oilseeds production at the expense of
imports or to encourage domestic
processing of imported oilseeds versus
imports of oilseeds products.
22
http://www.oilworld.biz/app.php?fid=1090&fpar=0
&isSSL=0&aps=0&blub=99d5d4612ae78dfcf3f261cd
dd2f91a5
Demand for vegetable/edible23 oil has
consistently been moving up due to
consistent increase in consumption,
which is in turn caused by the increasing
population as well as increase in
disposable income in developing
economies. For example, world’s
vegetable oil production and
consumption for 2008-09 stood at around
133 and 130 million tons respectively.
For 2010-11 it showed 145 million tons of
production and 144 million tons of
consumption. China is the largest
consumer (around 25 million tons in
2008-09) in the world followed by India.
The EU (mainly Belgium and The
Netherlands), United States, Indonesia,
Malaysia, and Brazil are the other large
consumers. The international demand for
edible oil in 2008-09 was 56 million tons,
which is forecasted to grow up to 60
million tons in 2010-11. Indonesia and
Malaysia are the leading exporters of
vegetable oil. Argentina, Ukraine, Canada,
United States and Brazil are other
suppliers to the world market. Palm oil is
the major export for Asian nations while
soybean, sunflower and canola
(rapeseed) oils are major exports for
American countries24. China is the world's
biggest importer of vegetable oil followed
by India; EU-27, United States and Asian
countries are other major buyers.
Commodities’ share of the world’s edible
oil trade shows that palm oil is the
internationally most traded vegetable oil
23 Edible and vegetable oil are used interchangeably
24
http://www.agricommodityprices.com/futures_price
s.php?id=244
15
with more than 60% world market share
followed by soybean oil. Sunflower,
rapeseed and coconut oil are other oils
traded in the world market25.
Export of Ethiopian pulses – ACOS
Ethiopia P.L.C.
ACOS Ethiopia P.L.C. is Ethiopia’s leading
quality pulses export company. It has
introduced a number of new varieties,
aiming to enter the international market.
One of these varieties is ACOS Dube
which, due to its larger chickpea seed
size, has the potential to fetch premium
European market prices. Despite past
undeliverable experiences working with
cooperatives, with help from SNV/C4C-
program and with a better sustainable
business arrangement, ACOS scaled up its
operations providing more in kind Dube
Seeds to more unions.
The experience has also built the
confidence of the unions to take control
of their marketing. The experiences of
this progressive union and the lessons
learned will be shared with other unions
and their member cooperatives for
replication. Next year 3000 quintal of
ACOS Dube is expected to be harvested
and double that amount in 2016; truly an
enrichment of Ethiopia’s current chickpea
offering. At the moment however, most
of ACOS’ exports to Europe fill the gap
where Mexico cannot deliver. The lessons
learned from ACOS production and
exporting chain has been taken up by
25the chickpea cluster of Oromia.
http://www.agricommodityprices.com/futures_price
s.php?id=244
3.3 Value Chain Structure
The scheme below provides a general
overview of the different players in
various commodity chains in Ethiopia;
from farmers to traders to processors to
exporters to consumers. Still, for each
commodity a different value chain is in
place and in this chapter we will describe
the sesame value chain on behalf of the
oilseeds and the chickpea value chain on
behalf of the pulses.
The sesame value chain
Getting sesame from producer to end
(international) buyer in Ethiopia involves
a range of players most of the time, partly
depending on whether the sesame is
organic or non-organic.
Figure 4. Getahun Bikora – Ministry of Trade (2013): Sesame Value Chain
16
Figure 4 gives an idea of the value chain
for non-organic sesame. In one possible
chain, farmers sell their produce to the
primary market (also called spot market),
where all the sesame is bulked.
Sometimes there are traders in between
the farmer and the primary market,
although this is illegal practice.
In almost each Kebele (smallest
administrative zone in Ethiopia), a
primary market has been allocated where
legal trade may take place. From the
primary market the sesame goes to the
Ethiopian Commodity Exchange (ECX),
where the sesame is graded into different
quality groups (1-5). From the ECX the
graded sesame goes to the export traders,
who sell it to the international buyers.
Although the ECX provides producers
market price transparency, there are
various reasons to avoid selling through
the ECX:
- No differentiation is made
between various sub-regional
sesame varieties. Varieties that are
recognized as Humera type
sesame seeds are acknowledged at
the ECX when they are produced in
certain districts. Once the Humera
type varieties are produced
outside these districts, then the
seed may be reckoned as Wellega
type (for example). This also
happens the other way around.
Wellega type seeds produced in
areas that are considered to be
delivering Humera type seeds, will
eventually be traded and exported
as Humera type seeds
- No differentiation is made
between organic and non-organic
sesame
- The grading system of the sesame
at the ECX is not fully transparent
Another value chain, not shown in the
above figure, goes via the primary
cooperatives. In this case, farmers are
organized in a primary cooperative to
which they sell their produce. The
cooperative consequently sells to the ECX,
which means no differentiation will be
made for sesame type. The cooperative
can also sell to the Union, which can
directly sell to the international market.
Important examples of unions in Ethiopia
17
are Tsehay Union, Selam Union, Metema
Union, Dansha Union and Setit Union.
Only a small number of investor farmers
avoid the whole chain and sell their
produce directly to international buyers,
either before or after processing.26 The
Ethiopian-Dutch Joint Venture Selet
Hulling is an example of an integrated
investment, which includes production
and processing (cleaning and hulling),
after which their organic produce can be
directly sold to the international market
(See boxed text on page 12). A second
example is Dipasa Agro PLC which hulls
and roasts sesame for the export market
(see boxed text on page 27). Other
important processors are:
1. Ambasel Trading, which cleans
hulls and roasts white sesame,
produces sesame paste (tahini).
They export to Middle Eastern,
Asian and European markets27
2. The Ethiopian-Israeli Joint Venture
Sheba Trading in Gondar, which
makes food products from sesame.
Their plant has a processing
capacity of more than 250 tons
sesame seeds annually and their
major products are Tahini, Halva,
and hulled sesame seed.
26 Interview with Oscar Geerts, SBN-network, 10-07-
2015
27 Ambaseltrading.com.et
Figure 5. Chickpea Value Chain in Ethiopia
The chickpea value chain
For chickpea, one of the major pulses
grown in Ethiopia, the value chain is even
more complex than for sesame. First of
all, it is important to make a distinction
between the smaller chickpea types that
are used for local consumption, especially
in one of the country’s major dishes shiro.
This type of chickpea is normally not
exported outside Ethiopia. Here we will
focus on the value chain of the larger
chickpea type that was originally
imported from Mexico, at the same time
Ethiopia’s major competitor on the world
market for large chickpeas.
As can be seen from the figure, chickpea
farmers in Ethiopia can supply to
numerous amounts of stakeholders in the
sector, depending on accessibility to
either of them. According to Eyerusalem
Regassa from SNV’s Cooperatives 4
Change program, not more than 10 % of
18
the agricultural products are sold to
primary cooperatives and this holds for
chickpeas as well. Still, the far majority is
sold to traders / brokers, who
consequently sell to woreda wholesalers
or urban wholesalers. Most of the
retailers, both woreda and urban, get
their chickpeas from these wholesalers.
For the export market, the larger chickpea
type the value chain can be different still,
especially when larger companies like
ACOS have integrated most of the chain. If
the chickpeas are sold to the primary
cooperatives, then most often the
chickpeas are first sold to the unions, who
consequently sell them to exporters /
trading companies with an export license.
From there, the chickpeas are sold to
companies abroad.
Brokers/wholesalers/ECX
An estimation made by SNV mentions
over 300 wholesalers in sesame seed only
for the capital city of Addis Ababa. This
indicates that the number of collectors
and wholesalers for the whole country
might be running in the thousands. The
relative fragmentation, corresponding
transport costs and difficulties for
tracking and tracing systems might cause
difficulties for large-scale international
trade28.
In 2008, the Ethiopian Commodity
Exchange, ECX has been established to
facilitate trade between producers and
wholesalers and exporters, and to
increase transparency. The Ethiopian
Commodity Exchange is a marketplace,
where buyers and sellers come together
to trade, assured of quality, delivery and
payment. The vision of ECX is to
transform the Ethiopian economy by
becoming a global commodity market of
choice. ECX’s mission is to connect all
buyers and sellers in an efficient, reliable,
and transparent market by harnessing
innovation and technology, and based on
continuous learning, fairness, and
commitment to excellence. Sesame and
Red Kidney beans are both included in the
ECX29.
28 snvworld.org
29 ecx.com.et
19
3.4 Production and
Geography
a. Oil Seeds Sub-Sector
This section describes some
characteristics of standard agronomy
practice in sesame and linseed
production, and potential improvements
to increase the level and quality of the
output.
Among the important oil crops grown in
Ethiopia, sesame is highly adapted to arid
and semi-arid low land environment.
Main areas of production are located in
the semi-arid lowlands of North-West
Ethiopia which include Humera, Tsegede
and Wolkayit in Tigrayand Metema,
Quaraand Tach Armachiho, Mirab
Armachiho and Tegede in Amhara
Regional State. These production zones
account for more than 70% of the
national production30 (see Map 1).
Sesame production systems are
characterized as very labor intensive with
low external input use and generally rain-
fed. Reports on average land size and
production vary depending on which
source used, but range from 0.75 – 2 ha
for size of land and average yields of 400
to 600-800 kg/ha. The potential to
increase productivity per ha through
higher input levels and improved
technologies is huge. Moreover, arable
virgin and fertile lands are available that
offer good opportunities for organic and
sustainable sesame production.
30 Abera, 2009

Map 1. Sesame production areas in orange31
Sesame is fairly drought resistant and
about 300-750 mm of rainfall is
considered sufficient, but sesame can also
grow in areas with over 1000 mm. Too
high humidity will cause large problems
with leaf blight. In the Awash region, with
low rainfall, use of irrigation can more
than double the yield of sesame compared
to rain fed production: 1600 kg/ha with
irrigation and 600 kg/ha with rain fed
production with the best adapted sesame
variety. Sesame has a high temperature
requirement for germination: soil
temperatures should be above 25 °C and
sesame should be grown therefore in the
tropical climates of Ethiopia. Sesame can
be grown on altitudes between 500 and
1500 m, but higher altitudes are possible
if the temperatures are high enough for
good germination. Soils should be well
drained, but with good water retention
capacity.
31 Getahun Bikora, Ministry of Trade (2013)
20
Sesame requires a normal labor input for
land preparation and sowing, a similar
labor input for weeding as linseed and a
high labor input during harvesting.
Harvesting should be carried out in a 2-4
day window, and therefore in many
regions labor input from outside the
region is used during harvesting. Labor
input per ha for harvesting is about 30-40
person-days. Hand harvesting is needed
to prevent shattering losses, as the
Ethiopian varieties are shattering types,
and the seedpods need to be partially
open at harvest, since otherwise
threshing is difficult. In other countries
with higher labor costs, mechanical
harvesting is used, but this is only
possible with non-shattering types with
‘paper shell’ pods. These are currently not
used in Ethiopia, but introduction could
be an interesting opportunity.32
Challenges & opportunities
Crop protection
More attention to crop protection
improves yields of sesame. The yield loss
due to diseases and pests in sesame can
be very high. In high rainfall areas, full
crop losses can occur due to leaf blight. In
drier areas, leaf blight is no problem at all.
Insect pests can technically be controlled
using insecticides. Weed control uses a
high labor input as currently this is done
by hand. Opportunities will exist to
improve weed control by mechanization,
if sowing in rows is used. A major option
for yield losses is breeding for resistance.
32 Wijnands et al, 2009
Crop rotation: an opportunity for
oilseed crops
Crop rotation can be very beneficial for
producers of sesame. Data on effects of
mono-cropping of sesame have not been
found, but demonstrations of optimal
rotation schemes are being implemented
(e.g. by the Ethiopian Institute of
Agricultural Research and extension
services). The advised rotations contain
multiple crops (e.g. sesame-sorghum-
soybean-maize, or sesame-sorghum-
cotton-maize). The situation with sesame
is different from that for linseed, as the
farm income per hectare for sesame is
often higher with sesame than with other
crops leading to a situation of mono-
cropping of sesame.33 The Sesame
Business Network in cooperation with the
2-SCALE Program of IFDC also specifically
focuses on crop rotation and how to make
rotation crops marketable.34
Linseed
For linseed, the characteristics of suitable
agro-ecological zones can be summed up
as follows:
• Total rainfall should preferably be
between 500 and 1000 mm. If linseed is
grown in areas with a water supply of less
than 500 mm, the seed and oil yield
reduces and a there is a shift towards
more saturated fatty acids and more
protein in the seed.
33 Jacques et al, 2012
34 Oscar Geerts, SBN, personal
21
• Day temperature should be below 30 °C,
night temperatures above -5 °C during
seedling stage and above 0 °C during
flowering and seed set. Total temperature
sums are needed of 1600-1850 °C days.
Preferred average daytime temperatures
are between 19.5 and 24 °C. The total
crop duration is between 90 and 110
days. High temperatures and low rainfall
during flowering and seed set lead to
lower seed yields, lower oil content, lower
content of unsaturated fatty acids and
increased saturated fatty acids and
protein content.
• Linseed needs vernalization - a cold
period that induces flowering - which can
be realized with temperature of 2° during
5 to 20 days. Through vernalization,
flowering starts around two weeks
earlier.
• Linseed grows best on medium-heavy
soils. Unsuitable soils are dry sandy soils,
wet, compact clays and marshy soils, or
very acid soils. The preferred pH of the
soil is between 6 and 7. Linseed is
moderately tolerant to salinity. Linseed
often only gives a small response to
fertilizer application as it can produce
well on the residual nutrients that remain
in the soil after fertilized crops like wheat.
• Altitudes should be above 1200 m and
below 3500 m, but the main production
areas are between 1600 and 2000 meter
in the South-West of Ethiopia and
between 2200 and 2600 m in Bale and
Arsi. Agro-ecological zones suitable for
linseed have an area of about 2,500,000
ha.

The current practices in linseed primary

production are:35

• Linseed in Ethiopia only grows as an

oilseed crop (not as fiber). Farmers use
seed of previous harvest as sowing seed.
These mainly local varieties are not
uniform.

• Land preparation on the smallholdings

is done with oxen. Tillage of three times is
recommended to create a fine seedbed,
but in practice, labor and oxen are limited
during the sowing season. This often
leads to allocation of the ploughing
capacity to crops that have higher
economic yields like wheat. Often only
one preparation is carried out which
creates a coarse seedbed and a lower
initial development of linseed. Farmers
compensate this by higher levels sowing
seed -up to 80 kg/ha-, while with optimal
tillage establishment 25 to 40 kg/ha
sowing seed is sufficient. The large state
farms use modern equipment like
tractors and combine harvesters.

35 Wijnands et al, 2009

22
• Linseed is normally sown as the last
crop in a rotation, without fertilizer
application. With the average yields in
Ethiopia of 600-800 kg/ha, the crop will
take up in the above ground an amount of
50-75 kg N/ha, 10-16 kg P/ha and 40-60
kg K/ha. Care should be taken when
nutrients are exported from the field,
replenishment of the soil nutrients should
take place.

b. Pulses Sub-Sector

Figure 6,

Figure 7. Pulses production by pulse type (1994/95 to 2008/09) ,000s tons (Chilot et at, 2010)

23
While pulses are grown throughout
Ethiopia and account for 13 percent of
cropped land area, production is
concentrated in the Amhara and Oromiya
regions, which together account for 92
percent of chickpea production, 85
percent of faba bean production, 79
percent of haricot bean (including white
pea bean production), and 79 percent of
field pea production (see Figure 7).
Amhara region also brings forward the
largest producer of three out of the four
major pulses varieties in the country. The
primary producers of pulses are
smallholders with small and dispersed
plots under rain fed conditions. Women
are also heavily involved in production,
conducting the majority of on-farm labor
during both planting and harvest, with
additional activities in value-addition.
Significant potential for productivity
gains in the pulses sector are obvious.
Comparisons between current yields with
international and on-farm trial
benchmarks demonstrate that for both
chickpeas and faba beans, Ethiopia has
substantially lower yields than on-farm
trail and international yields would
suggest possible. For example, although
the Ethiopian average chickpea yield, at
1.2 tons per hectare is higher than
countries including India, farm tests on
experimental plots in Ethiopia have
achieved yields from 2.9 to 3.5 tons per
hectare. This implies a minimum
productivity gap of at least 150 percent.
At the farm level, productivity appears to
24
be severely constrained by three major
factors:
1. Limited or no use of chemical fertilizers
for pulses (e.g., phosphates) - Studies in
Ethiopia and elsewhere have
demonstrated the productivity benefits
for pulses from phosphate fertilizers (e.g.,
super- phosphates) in particular.
Fertilizer use in Ethiopia is comparatively
low, averaging 25 kg/ha of nutrients, and
much of this is currently applied on
cereals. Lack of fertilizer use can be
subscribed to a limited access to credit,
lack of import (especially of phosphate
fertilizers) into the country and lack of
awareness of the benefits of the use of
such fertilizers. The use of fertilizer is
especially important in light of multiple
Ethiopia-specific studies that assert that
soil fertility depletion is one of the
fundamental causes for declining per
capita production.36
2. Very limited availability of improved
seeds (most pulses are grown from
unimproved cultivars with low genetic
potential) - Despite the release of a large
number of improved pulse varieties
which are adapted to a wide range of
rainfall, soil and altitude regimes, the use
of certified improved seeds by farmers is
very low. A combination of factors explain
low adoption: on the one hand, supply
side constraints including extension, limit
the knowledge of smallholder on
production practices and benefits of
diversification; on the other hand, a set of
36 Chilot et al, 2010
market-led demand constraints,
particularly the price instability in 2008,
led to diminished trust in the pulses
sector for small producers after declining
market returns.

3. The use of conventional agronomic

practices (e.g., sub-optimal crop rotations,
poor seed bed preparation) - While
agronomic practices such as the timing of
plowing, fertilizer and insecticide
applications, crop rotation, and weeding
and harvesting are critically important to
achieve optimum productivity, many
farmers seem unaware of their benefits.
Limited knowledge of best practices for
overall agronomic practices and post-
harvest management has resulted in poor
quality, low yielding pulses.

In particular, the lack of crop rotation is a

key issue with respect to farm
management practices. Currently, 13
percent of the land area used for grain
production in any one year is devoted to
pulses, suggesting a significant portion of
the remaining cultivated area for grain is
under mono-cropping. The adoption of
optimal rotations, besides increasing the
productivity of pulses and the subsequent
cereal crop through improving soil
fertility, can increase farmer income as
area devoted to pulses increases.37

37 Chilot et al, 2010

25
3.5 Trade & logistics
Ever-Improving Transport Grid
Ethiopia has the potential to be a new
origin for sesame seed. The national
transport grid is improving year by year
and the new railway to Djibouti opens up
new avenues for transport. More railway
lines are on the way and quality road
infrastructure is increasing rapidly,
including an already finished highway
between Addis Ababa and Adama. Easier
and less time-consuming transport will
soon be available.
Intermediaries (middlemen, collectors,
traders, wholesalers and retailers) are
active between producers and consumers.
The time aspect refers to the inventory
and sourcing functions. Due to seasonality
of agricultural production patterns and an
even seasonal demand pattern for edible
oil, storing products bridges the time
between harvest and consumption.
Wholesalers have the function of bulking:
collecting large quantities of oilseed for
the processing plants. Trucks mainly do
transport of oilseeds from the producing
region to the port of export, mostly
Djibouti and Port of Sudan. Most of the
exporting companies have well-
maintained or new IVECO trucks. The
distance between the sesame production
regions and Djibouti is about 1,500km:
for instance, the distance from Bahir Dar
in the Amhara region to Addis is 560 km
and from Addis Ababa to Djibouti 900 km.
26
Although road density is very low in
Ethiopia, most of the main roads are in
good condition. Transport costs to
Djibouti port are indicated at 50 USD per
ton. Moreover, distributors are bulk
breakers and varieties assemblers:
providing retailers or consumers with
small quantities of a large number of
products. Intermediaries provide services
in the marketing channel that enables
producers to focus and to specialize. In
addition, the above-mentioned functions
(collecting, storing, logistics, bulk
breaking, assortment assembling) they
perform also functions for instance like
quality control, financing stock, price
negotiation, invoicing or matching supply
and demand.
Key Findings
1. The collector´s cost of sesame seed
amount to ETB56/100 kg and is
around 10 per cent of the
producer´s value.
2. The collector´s and export trader´s
gross margins (rent for own labor
and capital) are 2-3 per cent, the
rest are direct costs,
3. The exporters´ cost without
logistics are between ETB38 and
56/100kg.
4. Logistic costs are around ETB
0.05/10kg/km38
38 Journal of Economics and Sustainable
Development, 2015
 Dipasa Agro PLC

Dipasa Agro PLC is one of the Dipasa groups and established in April 30, 2008 as a
joint venture company between Dipasa Europe B.V from the Netherlands and Agro
prom International PLC from Ethiopia. The company has established a modern sesame
seeds processing factory that meets quality requirements of high value markets. It is
located in Ethiopia, Oromia Regional State at Burayu town, which is 15 km west of
Addis Ababa.

It is engaged in the hulling and roasting of sesame seeds for export to various
countries worldwide and the Far East, Middle East, North America and European
countries in particular. Dipasa has its own farmland in Humera and is working
intensively in cooperation with sesame seed out-grower farmers associations since
March 2012. Through this out-grower scheme, it tries to source traceable, organic and
conventional sesame seed.

Dipasa is processing the Humera type of sesame and is currently engaged in exporting
the following processed products of this type of sesame:

 Cleaned natural sesame seeds

 Mechanically hulled sesame seeds
 Hulled and roasted sesame seeds

Dipasa Agro PLC has an organic certificate from BCS OKO-GARANTIE – a German
organic certifier.

3.6 Internal Market

Oil Seeds Sub-Sector
Despite the large production of sesame
and linseed, Ethiopia still imports large
amounts of edible oil, mainly palm oil.
Palm oil is mainly imported from
Malaysia, Singapore, and the United Arab
Emirates. Local production is only able to
meet about 5 % of the demand.39 Only 15
oil-processing plants are annually
processing 40,000 tons good quality
edible oils; otherwise 850 informal, small
and micro scale cottage oil seed
processors are extracting crude oil.40
In the high-end market, especially in
Addis Ababa, sesame seeds are sprinkled
on bread, bagels, and hamburger buns.41

39 Daniel Dauro, ATA, personal

40 ESAI, 2013
41 ESAI, 2013

27

What can Dutch private sector do?
Value addition is largely absent in the
Ethiopian sesame sector. There are plenty
of opportunities for cleaning, hulling and
sterilization companies and investments
for sesame and niger seed.
Moreover, there are very few oil
refineries in Ethiopia that crash oil seeds
and extract crude oils for consumption,
and most do not match a quality that can
be used for human consumption. As crude
oil mills are prohibited to continue supply
of unrefined oils, the need for oil
refineries is immense.
Linseeds are crushed and used locally in a
dish called Telba. Niger Seeds are mainly
used for oil extraction. Soybeans,
groundnuts, cottonseed etc. are entirely
used domestically. The oilseed crushing
and refining industry produces for the
domestic market. Most of the oil is
consumed as crude oil for cooking.42 Oil
that has been crushed through small-scale
manufacturing is used mainly in the
urban areas. Similarly, crushing of seeds
for oil, at home, is also a very common
activity in less urbanized areas.43 Oilseed
cakes are furthermore used as animal
feed (ingredients), while soya is one of
the two major raw material inputs for
animal feed together with maize.
The estimated actual domestic production
of edible oil ranges between 5,000 and
8,000 tons annually for the medium and
large-scale enterprises. This production is
42 Wijnands et al, 2009
43 Oscar Geerts, SBN-program
28
less than half of the full capacity. This
provides an opportunity to increase
production for domestic consumption as
substitution for imports.
Taking into account that the small-scale
producers have a market share of two
third, the total available production is
between 15,000 and 24,000 tons
annually. Ethiopia imported between
15,000 and 160,000 tons edible oil in the
period 2001-2008 and in the years before
between 10,000 and 20,000 tons. That
means that in the last 5 years the imports
are 10-15 times the domestic production.
This results in an available amount of
edible oil of less than 0.5 kg per capita in
2000 to around 2.0 kg per capita in 2009.
The increase of import suggests a
potentially large domestic market, with
rising incomes. Main import of edible oil
is palm oil. Substitution of these oils by
domestic production from especially
sunflower, soybean or maize oil seems
feasible, encouraged by high domestic
prices. Imports show large variations
between years, which can partly be
explained by food aid of specific edible
oils.
Pulses Sub-Sector
Pulses, which constitute approximately
13 percent of cultivated land and account
for approximately 10 percent of the
agricultural value addition, are critical to
smallholder livelihoods in Ethiopia.
Pulses contribute to smallholder income,
as a higher-value crop than cereals, and to
diet, as a cost-effective source of protein
that accounts for approximately 15
percent of protein intake. Moreover,
pulses offer natural soil maintenance
benefits through nitrogen-fixing, which
improves yields of cereals through crop
rotation, and can also result in savings for
smallholder farmers from less fertilizer
use.44
Traditionally pulses, such as chickpeas,
are processed at home to make Shiro
stew. However, there are two companies
that sell humus (processed peas): La Viva
Fresh and Ambasel Trading. Additionally,
Guts Agro and several other small to
medium sized enterprises called Baltinas,
process chickpeas locally into Shiro for
local supermarkets.45
Oil millers
Sesame oil is hardly being produced
locally, since the export price of seed is
usually very attractive and sesame oil is
hardly locally consumed. It is seen as a
business opportunity to increase the local
capacity to produce sesame oil for export,
increasing added value and foreign
exchange.
The main challenges for the oil-crushing
sector in Ethiopia are to ensure adequate
and steady supply of oilseeds and to
compete with world market prices. Local
production of oilseeds and local crushing
exceeds world market prices. A great
concern for Ethiopian oil millers lies in
44 Chilot et al, 2010
45 Eyerusalem Regassa, SNV, personal
29
the unequal taxation of edible oils.
Whereas palm oil can be imported
without import tax and VAT, domestically
produced oil is liable to pay VAT. Another
reason for low competitiveness lies in the
high value of the Ethiopian Birr (ETB) to
the USD and Euro. IMF and World Bank
estimated in 2009 that the ETB is 40-50%
overvalued and needs gradual
depreciation. This depreciation has taken
place in 2009 by 25%. Further
depreciation of the ETB in the period
from 2010 until 2013, respectively 8.12%,
33.00%, 23.33% and 8.07% improve
export competitiveness in oilseeds and
gives more incentives for import
substitution (mainly in palm oil)46.
The association of Oil Millers in Addis
Ababa (AAOMA) increasingly looks for
ways to enhance the existing refining
capacity at the 9 bigger factories
(currently lower than 20% due to critical
shortage of oilseeds), while at the same
time promoting a cooperative, joint
refinery for 40 of its smaller members.
What can Dutch private sector do?
Production needs a boost. There is a high
demand for more quality sowing-seeds,
pesticides and farm equipment. Similarly,
applicable machinery for non-shattering
varieties needs to be implemented for
large-scale production.
46 allafrica.com
3.7 Export
Oil Seeds Sub-Sector
Ethiopia exports almost all of its produce
and is the second leading sesame-
exporting country in the world47. China is
the number one importer of Ethiopian
seeds, but in smaller quantities countries
from all over the world import oilseeds
from Ethiopia, including Israel, Vietnam,
USA and Turkey.
47 Agribiz.et
30
In the past years, demand for sesame has
been high, but incentives for quality
production and value addition are weak.
Global production has increased, and a
price decline is anticipated with increased
competition and greater demand for
quality.48
Mr. Asrat Balcha from Ki Hedam Trading
PLC states:
“China takes large quantities, but it wants
products as cheap as possible. And sales of
organic farming cannot be sustainable
with China, as its focus is more on price
than on quality.”
48 SBN, 2014
Figure 8. Oilseed Export from Ethiopia in 2012 (Precise Consult (Sesame Deep Dive Analysis)
2013)
The Sesame Business Network is trying to
help various cooperatives to sell to
European importers. At the moment most
cooperatives are too weak to sell to
Europe. They lack basic business
knowledge and European market
knowledge. The government wants
organic seeds to be bought directly from
cooperatives. The product from ECX is not
organic and lacks traceability. The policy
31
of the government is for cooperatives and
companies to add value to the seeds,
before they export. However, the
cooperatives currently do not have the
capacity yet to reach a quality level that
meets European demands. Export to
Europe therefore currently mainly takes
place via investor farmers and processors
and through ECX.
The following chart shows the institutional sesame export structure:

Export Support and Regular

follow-up Structure

Regional export support

National Export coordinating committee
coordinating committee

Customs & Logistics support coordinating sub-committee (Revenue &

Customs Authority)

Supply and marketing coordinating sub- committee (Ministry of

Agriculture)

Infrastructure support coordinating sub-committee (Ministry of

Industry)

Credit facilitation sub-committee (Ministry of Finance and Development)

Figure 9. Ministry of Trade, 2013

The Dutch development agency CBI,

What can Dutch private sector do?
With plenty of arable virgin and fertile
lands in Ethiopia and an ever-increasing
demand for organic oilseeds and pulses in
Europe, there are opportunities for good
organic and sustainable oilseeds and
pulses products. Dutch companies can
invest in the production of certified,
organic oilseeds and pulses.
specialized in making companies in
emerging economies ready to supply to
high-end markets like the EU, has a
program with 12 oilseed exporters in
Ethiopia. CBI takes an approach that can
make exports to the European Union
market happen for these companies within
2-3 years. Lessons from the 2008 defaulting
on contracts are being taken into account
to shape these companies to create the
potential to export to Europe. Out of the
12, seven exporters want to export without

32
interference of the ECX, while the other 5
trade through ECX. Jim Fitzpatrick from CBI
states:
“Sesame always had demand from Europe;
linseed is now becoming an interesting
prospect as well. The consumption of
linseed has gone up high in recent years
worldwide. Sesame and some pulses have a
volatile world market but the market for
linseeds is not. And increasingly, companies
in Europe are looking for exporters in that
sub-sector.”49
Most companies importing sesame are also
active in import of other oilseeds and pulses
like white-pea beans. According to Rene de
Baaij, colleague of Jim Fitzpatrick at CBI,
quality is not the issue with imports from
Ethiopia:
51 Jim Fitzpatrick, CBI, personal
33
“Logistics, default on contracts and import
duties, relationships on long term contracts;
basic, general business practices are the
major hurdles. Some Ethiopian producers
seem to expect that European importers will
just line up to buy, but that is not the
case.”50
Pulses Sub-Sector
The most important export pulses include
haricot beans, chickpeas (large type), faba
beans, lentils and field peas. Ethiopia
exports pulses to many countries in Africa,
the Middle East, Europe, Asia and America.
Pulses, especially the haricot peas, are
exported through major cooperatives from
Tsehay Union in Amhara and Mercha Union
in Oromiya. Chickpeas, on the other hand,
are exported with contact based linkage
between large size business and small
farmer’s organizations (unions) such as
between ACOS Ethiopia P.L.C. and their
suppliers (see boxed text on page 15). At
the moment, most of the ACOS exports are
to Europe in the gap where Mexico cannot
meet European demand.51
50 Rene de Baaij, CBI, personal
51 Eyerusalem Regassa, SNV, personal

3.8 Access to Finance
Oil Seeds Sub-Sector
Shortage of working capital in both
primary cooperatives and unions is a
chronic problem that limits the size and
profitability of sesame marketing by
cooperatives. As there are limited loan
facilities available at primary cooperative
level, farmers are obliged to enter into
contract with informal moneylenders
with an estimated annual interest rate of
up to 400%.52 The credit supply of
informal moneylenders is infamous
especially for this sector.
52 GDC, 2014
34
The challenge is acknowledged at
multiple levels, but large-scale concrete
actions to tackle this issue have not been
performed. Lack of working capital has
not, however, affected purchase of seeds
or fertilizers. Seeds are readily available.
Especially for sesame, most farmers use
seeds from previous seasons, or can easily
get them from the Ethiopian Institute of
Agricultural Research. Other oilseeds,
specifically niger seeds, can be purchased
from local seed producing cooperatives.
Similarly, fertilizers can be purchased free
from import tax and are subsidized by the
government.53
Banks cannot easily invest in small-scale
producers, but microfinance institutes
have an increasing reach. However, they
may find it difficult to reach everywhere
with sufficient credit and primary
cooperatives sometimes are not strong
enough to handle their loans.54
Furthermore, the working capital loan
disbursed through the loan guarantee
scheme of Regional Governments is not
timely production-wise in the case of
Tigray and insufficient to meet the sizable
demand of cooperatives in both the
Tigray and Western Amhara region. Even
so, commercial banks realize the
importance of working with cooperatives
provided these cooperatives fulfill the
basic requirement set by commercial
banks.55
53 Oscar Geerts, SBN-network, personal
54 Oscar Geerts et al, 2015
55 GDC, 2014
Pulses Sub-Sector
For pulses, availability of inputs such as
quality seeds, fertilizer and credit is
crucial for an efficient and effective
marketing system. However,
consultations with primary cooperatives,
unions and government officials indicated
that only about 1 percent of primary
cooperatives and 10 percent of the unions
have access to credit. This suggests that
aggregating and trading activity is limited
by constrained access to finance, at least
for smaller marketing actors. Larger
traders in the major cities, however, are
able to access formal credit to finance
their business.56
3.9 Challenges in the Value
Chain
Oil Seeds Sub-Sector
Although Ethiopia’s major export product,
the oilseeds sector is for the largest part
far from efficient. The major challenges
for a sector that wants to be world market
competitive are:
 Access to finance for small-holder
farmers and primary cooperatives
(see Chapter 3.8)
 Infrastructural challenges include
insufficient or limited rural feeder
roads and transportation and very
56 Chilot et al, 2010
35
limited modern warehouses and
facilities.57
 Some of the challenges related
with production include low level
of improved input utilization; high
postharvest loss, high dependency
on rainfall58 and limited
availability of inputs like quality
seeds and fertilizers.
 Storage facilities need to be
improved in many cases;
vulnerability of storage to pest,
moisture and to rodents is
common.59
 Unreliable contracting due to
volatile sesame prices on the
world market.
 Lack of institutional capacity:
there is a quality check through
ECX-trading, but it is not infallible.
However, there is an office and
mechanism for complaints when it
comes to quality; still complaints
are not processed in a timely
manner. Inside trading and
hedging are other problems that
exporters have to deal with when
trading through the ECX.
Insufficient functioning of the ECX.
The ECX aim is to streamline the
purchase of sesame and to provide
producers with better prices for
their sesame.
57 Getahun, 2013
58 Getahun, 2013
59 Wijnands et al, 2009
Dr. Daniel Dauro from ATA states:
“Producers can sell either to
cooperatives or certified traders or sell
to the ECX. It shortens the value chain
and creates more transparency.”
 One key challenge commonly is
access to traceable and
homogeneous raw sesame seed.
This has mainly to do with ECX
sourcing, which reduces access to
traceable, homogeneous and high
quality raw sesame seed for
processing.60
 The ECX’s website is open to the
entire world. This has created a
problem of foreign buyers gaining
the upper hand. Ethiopian
exporters do not have much
bargaining power on the
international market because of
that.
 For oilseeds processors: lack of
spare-parts and skilled manpower
for the maintenance of processing
machineries in the country.61
60 Precise Consult, 2013
61 Precise Consult, 2013
36
What can Dutch private sector do?
The ECX has been playing an important
role in market transparency, quality, and
aggregation for exports. So far, exporters
associations and other relevant agencies
have been assuming the responsibility of
tracking both domestic and international
markets. This gives opportunities to
provide adequate market to the exporters
and farmers. The new tracking options
will increase the business opportunities
for traders.
Pulses Sub-Sector
The pulse values chain in Ethiopia is far
from efficient and fraught with
challenges. It is not well integrated, does
not function as a unified system in a way
that maximizes the welfare of all actors
involved from production up to
consumption and it is filled with informal
actors and multiple traders and middle–
men.62
Some of the major challenges within the
sector are:
 Lack of continued supply because
of low productivity as a result of
crop failure because of limited use
of improved inputs, small
fragmented plots, marginal soils,
limited use of improved varieties
and inadequate farm management
practices.63
62 Eyerusalem Regassa, SNV, personal
63 Chilot et al, 2010

What can Dutch private sector do?
Improved planting materials are scarce
and most of the farmers are sowing last
season crops of their own and yield is not
satisfactory. The existing private sector
and state owned seed agencies cannot
satisfy the seed demand. Improved
planting material multiplication is one of
the areas of attraction. This would be an
opportunity for sellers of seed.
 Lack of seed supply, while the
seeds that are provided by the
Ministry of Agriculture are not the
type that are in high demand for
export. The ministry and the
Ethiopian Institute of Agricultural
Research (EIAR) do not supply
tailored-made packages or
different varieties to producers of
a specific type of pulse.64
 Agro-climatic conditions: while
agronomic practices such as the
timing of plowing, fertilizer and
insecticide applications, crop
rotation, and weeding and
harvesting are critically important
to achieve optimum productivity,
many farmers are unaware of their
benefits. Limited knowledge of
best practices for overall
agronomic practices and post-
harvest management has resulted
in poor quality, low yielding
pulses.65
64 Eyerusalem Regassa, SNV, personal
65 Chilot et al, 2010
37
 Across the value chain the
perception about quality of
products is low, including a lack of
concerns relating to food safety
standards and working conditions.
 The complexity of the chain
implies that: (a) the quality of the
product is reduced through
excessive handling; and (b)
multiple middlemen separate
producers and exporters, so
smallholders are unknowledgeable
about the quality and type of
demands in end markets.66
 Prevalence of mixed varieties in
supply that negatively impacts on
the quality of export products.
 Similarly, prevalence of storage
insects and pests seriously affects
quality of export products.67
Limited storage facilities have
constrained the efficiency of
market actors involved in pulse
aggregation and trading. Lack of
adequate storage facilities
contributes to post-harvest crop
losses at about 15 to 20 percent of
all pulse production.68
 Lack of reliable information on
prevailing international market
prices for all ranges of
commodities. In terms of market
information, market participants
typically have either no or flawed
information on prevailing grain
prices, supplies, stocks and inter-
66 Chilot et al, 2010
67 Kassahun, 2013
68 Chilot et al, 2010
 regional grain flows. A source of
market information for importers
and exporters is limited.69
 Mechanization of pulse production
is seen as a farfetched & ambitious
plan by most experts involved in
this sector. This connects to the
lack of government attention that
is given by the Ethiopian
government to the sector, which
favors support of cereals
production. 70

 Limited market access leading to

less commercialization (as the
production areas are further away
from main urban centers and
seaports, leading to limited access
to both domestic and international
markets).71

69 Chilot et al, 2010

70 Chilot et al, 2010 ; Eyerusalem Regassa, SNV,
personal
71 Chilot et al, 2010

38
Chapter 4: Institutional context
4.1 Sector policies and
regulations
a. Oil Seeds Sub-Sector
The Government is dedicated to clarifying
policy and reducing bureaucracy for
potential investors through the
development of a Project Management
Unit housed in the ATA. Efforts to
increase access to financing, improve
infrastructure along sesame supply
chains, improve the security and
reliability of high-quality raw materials,
and build the capacity of cooperatives and
smallholder farmers are already
underway. The Government is also
committed to improving key
infrastructure in order to facilitate
agribusiness activity, as part of its five-
year Growth and Transformation Plan.
These investments include increased air
connectivity, improved road networks,
and expansion of the electricity supply.
b. Pulses Sub-Sector
In recent years, to develop the potential of
the sector to supply high quality products
for both the domestic and export market,
various policy initiatives have been
undertaken to increase the
competitiveness of smallholder farmers.
These policies paved the initial path for
private sector participation in the pulse
sector, contributing to improvements in
39
production and exports. The initiatives
seek to promote improved pulse
production technologies with high
yielding varieties, adoption of
recommended fertilizer application rates
and crop protection practices, and the
promotion of pulse export trade and
financing incentives to enhance the
competitiveness of pulse exporters. In
large part, these farm level efforts have
fallen short of achieving the key goals of
increasing smallholder productivity,
maintaining steady and high quality
production, and ensuring consistency in
export volumes, primarily because of the
lack of inputs and effective agencies to
implement a cross-sectoral vision for the
sector.72
c. Challenges with regulations
Regarding the pulses sector, a general
problem seems to be the limited focus of
the Ethiopian government for the sector,
despite its potential for export and
foreign currency inflows. Eyerusalem
Regassa from SNV states:
“The Ethiopian government has a clear
focus on cereals production, and research
centers are very much geared in that
direction. Support of pulses production
receives minor attention”
For oilseeds specially, an important
government policy is the duty-free import
72 Chilot et al, 2010
of edible oils from abroad, for example
palm oil from Malaysia. According to Dr.
Daniel Dauro of ATA, this constrains local
production of edible oil from oilseeds
especially:
“The duty free importation of foreign oils is
hindering local production. Palm oil is not
taxed, while locally produced oil is. This
should make it affordable to the majority
of the population, since there is such a
huge deficit of edible oil production in
Ethiopia itself.”
4.2 Public sector partners
a. Research and Education
Ethiopian Institute of Agricultural
Research (EIAR)
The agricultural research in the Ethiopian
Institute of Agricultural Research (EIAR)
is divided in federal research institutes
and several regional research institutes.
Recently, the focus has been shifted to a
more thematic and interdisciplinary
approach and to the impact on the
sector.73
The EIAR has divided up and allocated its
resources among its major centers across
Ethiopia to specialize in one specific
study.74 Such examples include:
 EIAR in Humera and Werer
for Sesame Seed
73 Wijnands et al, 2009
74 Daniel Dauro, ATA, personal
40
 EIAR in Debre Zeit for
Chickpeas and Lin Seed
 EIAR in Holeta for Horse
Pea, niger Seed and Rape
Seed
b. Ministry of Agriculture
The government also formulated a plan
for accelerated and sustained
development to end poverty (PASDEP) by
promoting, among other things,
commercialization of agriculture and
growth of private sector and
infrastructure (especially roads, energy,
and irrigation). Towards the goal of
reducing poverty and food insecurity in
the country, it is imperative that growth
in the agricultural sector is proportional
with the growth in domestic demand for
food. Significant investments are being
made to address these underlying causes
of chronic food insecurity in Ethiopia
through programs like the Agricultural
Growth Program (AGP).
AGP Sesame Activities
AGP- (Agricultural Growth Program-
Agribusiness and Market Development)
uses a value chain approach to strengthen
the agriculture sector, enhance access
to finance, and stimulate innovation
and private sector investment. The
project was able to:
 Reach over 750,000 farmers,
influenced farm-gate sales
worth $100 million, and
facilitated approximately $90
million in agribusiness loans
  Help farmers achieve export
sales worth over $120 million
and make investments of $4
million
 Build lead farmer networks
delivering training in agricultural
skills, helping farmers with over
150,000 hectares to use improved
techniques and management
practices
 Achieve, through training and
strategic investments, increased
the capacity of 51 farmer
cooperative unions representing
over 2,550 primary cooperatives
and 1.9 million members
c. Development Partners
Agricultural Transformation Agency
(ATA)
The ATA coordinates in identifying
bottlenecks in the sectors and proposing
solutions enacted by the relevant
stakeholders, which in this case are the
Ministry of Agriculture (MoA) and the
Ethiopian Institute of Agricultural
Research (EIAR).75 Dr. Daniel Dauro
illustrates:
“ATA has been focused on this sector since
its establishment. We work with
researchers, ministries and other
stakeholders in the sector.”
Some of the key strategies the ATA has
put forward are:
75 Daniel Dauro, ATA, personal
41
Sesame Sector Strategy: Sesame
production and marketing is an important
agribusiness sector in Ethiopia. The crop
is selected as one of the six priority crops
in the Agricultural Growth Program
(AGP). Although it already has a
significant turnover, the sector has
substantial potential for further growth
and development.
Chickpea Cluster: ATA is developing a
strategic roadmap to address systemic
issues in the chickpea value chain, while
also recommending a set of immediate
interventions.76The ATA is looking
forward with an agricultural cluster
approach. Each region is now equipped
with an Agriculture Commercialization
Cluster (AAC) secretariat, with the support
of ATA under the direct supervision of the
regional government. The Program is
focused on strengthening access to
markets through capacity building efforts
of selected cooperative unions, helping
them to secure forward contracts with
large local and international chickpea
buyers.77 The ACC looks furthermore for
successful pilots. The lessons learned from
the C4C program, for example on large size
chickpea (ACOS Dube), has been taken up
by the chickpea cluster of Oromia,
facilitated by Oromia ACC.78
SNV
SNV Ethiopia, in partnership with Agriterra,
is implementing the Cooperatives for
76 Agribiz.et
77 Eyerusalem, Regassa, SNV, personal
78 Eyerusalem, Regassa, SNV, personal
Change (C4C) program, which seeks to build
the capacity of cooperative unions and their
member cooperatives in output marketing,
improve their business performance and
enable them access more profitable
markets. The program will achieve this
through the establishment of pilot business
arrangements with buyers and service
providers, an increase in inputs,
technologies and other services, and
building critical capacities to meet the
market requirements, ultimately resulting
in improving the livelihoods of smallholder
farmers’ households in Ethiopia. The
program works with 16 farmer cooperative
unions in Amhara and Oromia across
cereals, pulses and oilseed crops.
Key Activities
 Establish business clusters around
the business relation between
union and buyer involving public,
research, private and financial
actors.
 Develop business clusters and
implement action plans
 Conduct sub-sector, value chain
and market analyses and share
with stakeholders.
 Operational finance and
investment capital opportunities
for the unions developed and
innovation risks (e.g. value
addition) by unions/processors
are shared by the investment fund.
 Develop, test and finance service
models involving service providers
for gender inclusiveness, informal
and private improved seed supply,
42
appropriate technologies,
public/private extension
modalities, and business and
financial services.
 Jointly undertake baseline, mid-
term and end-term reviews, and
develop 20 case studies in support
of the agricultural cooperative
development strategy.
Sesame Business Network (SBN)
The SBN is largely an informal innovation
network in northwest Ethiopia that is
driven by local entrepreneurs and other
stakeholders working in the sesame
production and business sector. Building
blocks of the SBN are Sesame Business
Clusters (SBCs). Participation in the SBCs,
and within the SBN, is voluntary.
Improved performance and benefits are
the motivation for stake-holder
participation.
The overall goal of SBN is: stakeholders of
the SBN jointly develop more competitive,
sustainable and inclusive sesame value
chains. To achieve the overall goal of the
SBN, the following specific objectives are
pursued:
 Sesame business clusters are
vibrant, provide internal
services and navigate their
business
 Farmers, linked to agro-input
and financial markets, improve
production, yields and quality
 Sesame chain actors create
more added value and more
 profitable access national and system in between them. These
international markets. measures will result in better
 Stakeholder networks traceability and quality in trade
exchange and learn, and in the value chain. It will
address strategic sesame however raise transaction
business challenges. costs.79

CBI  The focus of collaboration could

be on the 12 exporting
Currently CBI is running four Export companies, members of
Coaching Programs (ECPs) in Ethiopia. An EPOSPEA, participating in the
ECP guides the participating small and CBI coaching program, of which
medium enterprises in the different 7 are interested in value
phases towards exporting to the creation (processing) and to
European market. open a supply chain outside the
CBI is working on a program that started ECX system.
in 2013 and will run until the end of 2016  The focus would be on
with focus on export development and developing new value chains
promotion to the EU market with 12 and innovative business
selected exporting companies and the models, for which there are
EPOSPEA. several options:
The CBI ECP program will focus on  Linking farmers’ cooperatives
“exporters” like exporting companies and to processors as suppliers of
processors. These entities have a sesame for processing and
“trading”, logistical, commercial and value export.
addition role in the value chain.
 Linking of cooperatives and
The most important area of cooperation is Unions to exporters. This would
export development, cost price reduction imply another role for
and quality improvement. The former is exporters, e.g. handler and
CBI’s core competence; the latter two service provider.
ones are for SBN a major area for
development.  Both Private companies and
Unions (farmer-owned business
 With CBI, SBN could focus most organizations) could be
on perspectives for establishing member of EPOSPEA, as they
more direct relations between are part of the Ethiopian
exporters and producers, which sesame production, processing
are now actually ‘living in
different worlds’, with the ECX
79 Oscar Geerts, SBN-Network, personal

43
 and marketing system. Their
exporting modalities remain
part of the ‘sesame marketing
landscape’.
CBI has included a train-the-trainer
component in activities with the
EPOSPEA. The idea is that the participants
will be available for EPOSPEA, but can
also be hired through other organizations.
ECX
In 2008/09 Ethiopian commodity
exchange was established with the
objective of institutionalizing commodity
trade like coffee, sesame and other
products. ECX has established a directive
that dictates how and on what basis
sesame transactions are undertaken. The
directive includes specifications and
criteria’s that cover various aspects of
sesame transaction.
ECX has established its outlets at major
sesame production areas to which
farmers and cooperatives directly provide
their product and first stage transaction
takes place at these outlets. Relative
44
closeness to major production areas and
access to road facility are the major
requirements to establish outlets. The
raw sesame collected in these outlets then
supplied via licensed providers to the ECX
market from where sesame processors
and exporters buy. ECX classifies the
sesame it trades as reddish, whitish or
mixed based on color and as Wollega and
Humera or Gondar based on where it’s
produced.
4.3 Private sector partners
Ethiopian Pulses, Oilseeds and Spices
Processors Exporters Association
(EPOSPEA)
Most major Ethiopian oilseed and pulses
exporters are member of the Ethiopian
Pulses, Oilseeds and Spices Processors
Exporters Association (EPOSPEA). This
association is working hard to improve its
market information system. EPOSPEA
also organizes workshops together with
SNV and the Private Public Partnership
(PPP) on Oilseeds to share knowledge
within the supply chain in order to better
anticipate on critical market issues.
Chapter 5: Business opportunities
In this Business Opportunities Report, the
opportunities for Dutch and European
companies in the Ethiopian oilseeds and
pulses sectors are explored. The aim is to
set up sustainable export chains, improve
production and processing and increase
exports that benefit Dutch companies as
well as the Ethiopian oilseeds and pulses
sectors in particular. The identified
business opportunities in this report are
derived from desk research and
interviews with the companies listed in
the annexes.
5.1 Vision
The Ethiopian oilseeds and pulses sector
has a potential for European businesses
involved in the production and processing
of oil crops, extraction of food oils, trade
and investment. The Dutch and European
state-of-the art technology and solution
based mentality, the advanced quality of
seeds, the elaborate trainings on
sustainable production and the
experience in marketing and business
management could be beneficial to the
Ethiopian oilseeds and pulses sector. On
the other hand, the high quantity of
available arable land, the good climate for
oilseed and pulse production and the
improved infrastructure and diversity of
varieties could be an opportunity for
European companies to start doing
45
business with the Ethiopian oilseeds and
pulses sector.
At the moment, there are still challenges
to overcome. In this chapter possible
business opportunities are highlighted,
but they need further individual research
by the Dutch and European companies. In
the next paragraph, an analysis of the
strengths and weaknesses will be
provided and consequently followed by
opportunities for the related European
actors. Besides initiatives from NGO’s and
some frontrunner companies, there is still
much potential to focus on sustainable
production and processing of Ethiopian
oilseeds and pulses. Already several
European organizations (e.g. CBI,
Agriterra, SNV, Sesame Business Network
and Royal Tropica Institute etc.,) are
active in providing information and
trainings on this topic.
5.2 Strengths and
Weaknesses Analysis
Below we have created an overview of the
strengths, weaknesses and related
opportunities for Dutch and European
companies in the Ethiopian oilseeds and
pulses sector. The information listed
below is obtained from the previous
chapters and the interviews with Dutch
and Ethiopian companies and
organizations active in the sector.
Strengths

•High quantity of arable land in Ethiopia. 45% of the total 112 million hectares is
arable, but just 1% was irrigated in 2011.
•High quality soil
•The prevalence of diverse agro-climatic zones makes Ethiopia a number one
choice for production of a wide array of pulse crops. (Kassahun, 2013)
•Large diversity of varieties of sesame seeds (organic) including the world
famous Humera type
•Cheap labor and high rural population
•Research in progress for the development of non shattering mechanisation
•New warehouses have been established by the government (quality control)
•Dutch hulling companies are present in Ethiopia called Sellet Hulling (joint
venture with Dutch Tradin Organic) and Dipasa Agro.
•ECX will play an important role in market transparency, quality, aggregation for
exports, but is also a weakness for the producer regarding the listing of prices
•The CBI programme trains 12 exporteurs in oilseeds and pulses, the Sesame
Business Network is improving access to finance together with TerraFina and
capacitating Primary Cooperatives and Unions together with the Cooperatives 4
Change Program from SNV and Agriterra
•The government started economic restructuring and investing in road,
telephone, and railway infrastructure
•The Ethiopian government focuses on doubling the agricultural production
through the ambitious Growth and Transformation Plans

Weaknesses
•Default of contracts by Ethiopian sesame suppliers in the period 2006 - 2008
•Middle men are able to set speculative prices in various parts of the value
chains
•Low quantity of HACCP certified products
•Some Ethiopian producers do not meet the codis alimentaris (food security
standards)
•EU standards are difficult to be reached for producers and processors
•Still mostly use of backward technologies (e.g. oilmillers) and production
methods (row planting still has to be developed and use of fertilizer is very
limited)
•Distribution networks need to be further developed
•Packaging and bottling machinery not present
•The price of the raw sesame is almost equal to the price of
crushed/processed sesame seeds, which means there is a low potential for
value addition
•Increasing demand for palm oil
•The fragmented smallholders need to unify to be able to produce more in
Ethiopia
•The indigenous production needs more attention (Eric Daniels, ED Organics)
•Particular legislation/regulation hinders the sector
•Administrative hassle for exporting oilseeds (experienced by ED Organics)
•Volatile commodity market (surplus oil and demand for by-product)
•Prices not determined by supply and demand, but by speculative brokers

46

5.3 Opportunities
In this paragraph the strengths and
weaknesses are converted into
opportunities for European actors in the
oilseeds and pulses sector. The
opportunities are divided into four
categories; producers, processors, traders
and investors. Some of the opportunities
are relevant to multiple players. More
information regarding the listed
opportunities below can be found in the
previous chapters.
Producers
 Among others, SBN, SNV and
Agriterra are focused on
improving the production side of
the Ethiopian oilseeds and pulses
sector. This means more quality
products and varieties for buyers.
 There is a high demand for more
quality sowing-seeds, pesticides
and farm equipment. However, the
sector lacks financing. Special
seeds, like niger seeds, could be
sold as bird feed.
 Applicable machinery for non-
shattering varieties needs to be
implemented for large-scale
production.
 Production needs a boost. This
could be done by improving the
technology of production and
processing equipment (Eric
Daniels, ED Organics); New areas
47
that can be cultivated on large
scale with cheap and abundant
labor.
 Improved planting materials are
scarce and most of the farmers are
sowing last season crops of their
own and yield is not satisfactory.
The existing private sector and
state owned seed agencies can not
satisfy the seed demand. Improved
planting material multiplication is
one of the areas of attraction. This
would be an opportunity for
sellers of seed (e.g. Rijkzwaan or
Bejo Zaden).
 The demand for organic oilseeds
and pulses in Europe, specifically
in the Netherlands, is growing. It
would be interesting to produce
more certified organic oilseeds
and pulses. Arable virgin and
fertile lands are available that offer
good opportunities for organic and
sustainable sesame production.
 New areas that can be cultivated
on large scale with cheap and
abundant labor.
 High imports of palm oil, capacity
for oil processing is present, but
not fully utilized
 Cooperatives are providing regular
quantities of produce. This still has
to be improved, but several
initiatives to raise awareness on
the advantages of supplying to
cooperatives have been started.
 Special seeds, like niger seeds,
could be sold as bird feed.
  Applicable machinery for non-
shattering varieties needs to be
implemented for large-scale
production.
Processors
 Opportunities for cleaning, hulling
and sterilization companies for
sesame and niger seed. The overall
production capacity of especially
hulling and sterilization is still less
than 10% of all exports;80
 Adulteration of oilseed. Oil seed
cleaning facilities have
important role to facilitate the
local and exportable oil seed
cleaning and form a large business
opportunity.
 Most of the oil mills have got
cottage industries that crash oil
seeds and extract crude oils for
direct consumption. This is
unhealthy and below
standards for human consumption.
In general, there are very few oil
refineries in Ethiopia. As crude oil
mills are prohibited not to
continue supply of unrefined oils
the need for oil refinery is
immense.
 Potential for the production of oil
extracts for the local market (e.g.
oilcake)
 Refining companies work at 20 per
cent of their capacity, so
opportunities abound
processing companies to expand.
80 Wijnands et al, 2009
Traders / importers
 Transport is improving in the next
few years. A new railway to
Djibouti is being constructed, more
railway lines are on the way and
quality road infrastructure is
increasing rapidly, including an
already finished highway between
Addis Ababa and Adama.
Easierandless time-consuming
transport willsoonbeavailable.
 Providing adequate market to the
exporters and farmers. The ECX
an will play an important role in
market transparency, quality, and
aggregation for exports. However,
exporters associations and other
relevant agencies assume the
responsibility of tracking both
domestic and international
markets. The new tracking options
will increase the business
the opportunities for traders.
 Quality, because four warehouses
provide organic varieties
 Ethiopia could be interesting to
Dutch/European importers to
produce sesame seed as a new
origin country.
Investors
 There are not enough local credit
facilities for farmers;
for
48
 Investments in the organic
oilseeds and pulses value chain
 The high quantity of available
arable land is interesting for
investors interested in the
production of oilseeds and pulses.
 Improving the proficiency of the
suppliers, by training and
providing them with better
technology
 Various initiatives and programs
from NGO’s and civil society.
 There are already some joint
ventures active in the sector (e.g.
Selet Hulling)
 The Ethiopian government focuses
on doubling the agricultural
production (AGP)

49
 Interviews

1. Asrat Balcha, General Manager - Ki Hedam Trading PLC. Interviewed by Dawit Kidane on May
1, 2015
2. Daniel Dauro, Ph.D. Director – Pulses and Oil Seeds Value Chain Program Agricultural
Transformation Agency. (2015) Interviewed by Auke Boere and Dawit Kidane on June 23,
2015
3. Assefaw Yohannes. General Manager – Ethiopian Pulses, Oil Seeds and Spices Processors
Exporters Association. (2015) Interviewed by Auke Boere and Dawit Kidane on June 23, 2015
4. Rakeb Abebe. Managing Director – GAWT International Business P.L.C. Interviewed by Dawit
Kidane on June 23, 2015
5. Eyerusalem Regassa. Value Chain Development Advisor – SNV Ethiopia. Interviewed by Auke
Boere and Dawit Kidane on June 24, 2015
6. Hareg Atakilt. Marketing Officer – Kalme P.L.C. Interviewed by Dawit Kidane on June 24,
2015
7. Kassahun Bekele. General Manager and CEO – ACOS Ethiopia P.L.C (2015) Interviewed by
Dawit Kidane on July 03, 2015
8. Jim Fitzpatrick. Rene de Baaij. CBI (2015) Interviewed by Auke Boere and Dawit Kidane on
July 7, 2015
9. Oscar Geerts. SBN (2015) Telephone Interview by Dawit Kidane on July 07, 2015
10. Peter Keijnemans. Mostert Oilseeds. Interview by Wannes Dolfen.
11. Rolf Leutscher. Cebag. Interview by Wannes Dolfen.
12. Bas van Drooge. PUM. Interview by Wannes Dolfen.
13. Eric Daniels. ED Organics. Interview by Wannes Dolfen.
14. Thijs Pasmans. MVO Nederland. Interview by Wannes Dolfen.

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Websites

Agribusiness Support Facility - http://agribiz.et/

Agricultural Transformation Agency - http://www.ata.gov.et/programs/value-chains/pulses/

CBI - http://www.cbi.eu/market-information/oilseeds

Ethiopian Pulses, Oilseeds & Spices Produces & Exporters Association (EPOSPEA) -
http://epospeaeth.org/

Embassy of the Kingdom of the Netherlands in Ethiopia - http://ethiopia.nlembassy.org/

Ethiopian Ministry of Agriculture - http://www.moa.gov.et/home

Sesame Business Network (SBN) - http://sbnethiopia.org/

SNV Ethiopia - http://www.snvworld.org/en/countries/ethiopia/

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