ASSESSMENT OF CROP VALUE CHAINS/MARKET ... - USAID

ASSESSMENT OF CROP

VALUE CHAINS/MARKET

SYSTEMS

FINAL REPORT

FOR CATHOLIC RELIEF SERVICES/ETHIOPIA

i | Page

CONTENTS

1. Executive Summary ............................................................................................................... 1

2. Introduction and background ............................................................................................... 3

Purpose and Objectives .................................................................................................................................... 3

Crops selection ................................................................................................................................................... 4

3. Overarching Findings ......................................................................................................................................... 7

4. Findings from Wheat ........................................................................................................... 12

Wheat Value Chain Map ................................................................................................................................. 12

Overview ............................................................................................................................................................ 12

Study Findings .................................................................................................................................................... 13

Conclusion and Recommendations .............................................................................................................. 17

5. Findings from Groundnuts .................................................................................................. 19

Groundnut Value Chain Map ......................................................................................................................... 19

Overview ............................................................................................................................................................ 19

Study Findings .................................................................................................................................................... 20


6. Findings from Onions .......................................................................................................... 25

Value Chain Map of Onions ........................................................................................................................... 25

Overview ............................................................................................................................................................ 26

Study Findings .................................................................................................................................................... 26


7. Findings from Cabbage ........................................................................................................ 33

Value Chain Map of Cabbage ......................................................................................................................... 33

Overview ............................................................................................................................................................ 33

Study Findings .................................................................................................................................................... 34


8. Findings from Red Chili Peppers ........................................................................................ 38

Value Chain Map – Red Chili Peppers ......................................................................................................... 38

Overview ............................................................................................................................................................ 38

Study Findings .................................................................................................................................................... 39


9. Findings from Potatoes and Sweet Potatoes .................................................................... 44

Value Chain Map for Potatoes ....................................................................................................................... 44

Overview of Potatoes ...................................................................................................................................... 45

Value Chain Map for Sweet Potatoes .......................................................................................................... 46

ii | Page

Overview of Sweet Potatoes ......................................................................................................................... 46

Study Findings for Both Potatoes and Sweet Potatoes............................................................................ 47


10. References ............................................................................................................................ 52

11. Annexes ................................................................................................................................ 53

Annex 1: Toolkit ............................................................................................................................................... 53

Annex 2: Study Methodology......................................................................................................................... 55

Annex 3: Study Woredas ................................................................................................................................ 57

Annex 4: Business Plan Models: .................................................................................................................... 58

Wheat Model Business Plan for Households .............................................................................. 58

Groundnuts Model Business Plan for Households .................................................................... 60

Onion Model Business Plan for Households ............................................................................... 62

Cabbage Model Business Plans for Households ......................................................................... 65

Red Chili Pepper Model Business Plans for Households ......................................................... 68

Potato Model Business Plans for Households ............................................................................. 70

Sweet Potato Model Business Plan for Households .................................................................. 72

Maize Model Business Plan for Households ................................................................................ 74

Haricot Beans Model Business Plan for Households................................................................. 76

Annex 5: Financial Analysis Graphs .............................................................................................................. 78

Annex 6: List of People Interviewed ............................................................................................................ 80

Annex 7: Findings from Maize........................................................................................................................ 84

Maize Value Chain Map .................................................................................................................... 84

Overview ............................................................................................................................................. 84

Study Findings ..................................................................................................................................... 85

Conclusion and Recommendations ............................................................................................... 90

Annex 8: Findings from Haricot Beans ........................................................................................................ 92

Haricot Bean Value Chain Map ...................................................................................................... 92

Overview ............................................................................................................................................. 92

Study Findings ..................................................................................................................................... 94

Conclusion and Recommendations ............................................................................................ 100

Annex 9: Coolbot .......................................................................................................................................... 102

iii | Page

Tables

Table 1: Crops Selected by Woreda and Recommended Level of Intervention................................................ 5 Table 2: Released onion varieties - Ethiopian Institute of Agricultural Research ............................................ 27 Table 3: Yield Potential and Other Characteristics of Improved Potato Varieties ......................................... 47 Table 4: Profit Margin and Net Income ...................................................................................................................... 78 Table 5: Seed varieties for Haricot Bean ................................................................................................................... 94

Figures

Figure 1: Wheat Price ..................................................................................................................................................... 16 Figure 2: Universal Nut Sheller .................................................................................................................................... 24 Figure 3: Onion Prices .................................................................................................................................................... 30 Figure 4: Photo of Vegetables Stored in a Coolbot ................................................................................................ 32 Figure 5: Major Types of Peppers Grown in Ethiopia ............................................................................................. 39 Figure 6: Value Chain Tool Kit Road Map - Key Milestones ................................................................................. 55 Figure 7: Profit Margin for All Crops .......................................................................................................................... 78 Figure 8: Net Income (ETB) for All Crops (1 HA) .................................................................................................. 79 Figure 9: Costs and Net Income for the Top 5 Investment Crops on 1/4 HA ................................................ 79 Figure 10: Haricot Beans Seed Display at Ethiopian Seed Enterprise ................................................................. 94 Figure 11: Production in Quintals of White Haricot Beans .................................................................................. 95 Figure 12: Production in Quintals of Red Haricot Beans ....................................................................................... 96

file:///C:/Users/mmatl/Desktop/CRS%20LRO%20DFSA%20VCA%20-%202272018_formatted.docx%23_Toc507574048

file:///C:/Users/mmatl/Desktop/CRS%20LRO%20DFSA%20VCA%20-%202272018_formatted.docx%23_Toc507574050

iv | Page

Authors’ Affiliations Rashmi Ekka, Consultant for Connexus Corporation

Fekadu Tilahun, Consultant for Connexus Corporation

Dereje Legesse, Consultant for Connexus Corporation

Solomon Tilahun, Consultant for Connexus Corporation

Yonas Degefu, Consultant for Connexus Corporation

Acknowledgements The team would like to thank the invaluable assistance that we received from Meki Catholic Secretariat

and Hararghe Catholic Secretariat staff for their logistics and planning work. Special thanks to Ian De La

Rosa, Katie Morris, Jefferson Shriver, Haile Dolango and Desalegn Akati for their support, guidance and

review.

1 | Page

EXECUTIVE SUMMARY

Catholic Relief Services commissioned a value chain analysis for two USAID projects - Feed the Future

Ethiopia Livelihoods for Resilience - Oromia (LRO) and USAID’s Office of Food for Peace-funded

Development Food Security Activity (DFSA), also known as the Ethiopian Livelihoods & Resilience

Program (ELRP). The analysis will guide prioritization of interventions within and across the target value

chains.

The analysis focuses on how the projects can work to increase smallholders' incomes, offer nutritional

benefits to rural households while taking into account the targeted woredas, impact on women farmers,

market demand, and growth, and the opportunity to develop market-driven interventions that build upon

recent and current donor and private sector investments. The analysis also provides an overview of the

structure and functions of each value chain, identifies priority end markets and constraints to realizing

their benefits, and recommends potential value chain upgrading strategies. The results provide a

foundation on which more detailed intervention strategies can be developed.

Major results are summarized for each value chain below.

Wheat. Wheat has a high-income potential and one of the

highest profit margin crops that was studied (second only to

groundnut). Improving access to improved seed can help

farmers who already have a competitive advantage to further

boost their production and increase their marketable

surplus. The project should also work to create market

linkages between farmer groups and millers and agro-

processors to help farmers get a higher share of the end

market value. Lastly, linkages to financial institutions to invest

in technology (seeds and other inputs) will help to boost

farmers’ productivity as well as smooth cash flow needs.

Groundnuts. Groundnut production in Eastern Hararghe is dominated by smallholders, with women

being very active in the value chain, including production. The region is famous for its groundnuts, that are

prized for eating versus those that are used for oil extraction. Groundnuts have high financial margins and

are also highly nutritious, though high aflatoxin levels undermine their nutritional value and have halted

exports. Upgrades include intensifying production, appropriate harvesting and post-harvesting practices

with the intent of mitigating aflatoxin levels and reducing postharvest losses, promoting alternative shelling

technologies, facilitating aggregation and small-scale value addition.

Horticulture. Onions, cabbage, red chili peppers, potatoes and sweet potatoes offer significant income

potential to smallholder farmers, however barriers to entry are high. Vegetables are produced by many

farmers especially women farmers in the target woredas, but on a kitchen garden level, and they typically

sell relatively small shares of what they produce. The most promising end-market opportunities are for

fresh vegetables to go to urban centers and selling vegetables off-season. Major constraints are lack of

irrigation, unplanned/non-market lead production, and limited capacity of farmers to take on financing,

given the capital-intensive nature of vegetable farming. Limited availability of quality seeds, technical and

management capacity and lack of post-harvest facilities are also major challenges for vegetable producers.

Interventions to develop the vegetable value chain should be directed toward higher capacity Productive

Safety Net Programme (PSNP) farmers who are located in proximity to target markets, have access to

The focus woredas, by zone are:

• East Shoa - Adami Tulu Jido

Kombolcha and Boset

• Arsi - Sire, Dodota, Ziway

Dugda

• West Arsi - Arsi Negele,

Heben Arsi, Shalla, Siraro

• East Hararghe - Babile, Deder,

Midega Tola and Melka Balo

• Dire Dawa Administrative

Council

2 | Page

water, and have the capacity to bear the significant financial risk and investment requirements. It is also

important to coordinate interventions such that production increases respond to market demand in order

to avoid local gluts that depress prices and exacerbate price fluctuations.

Maize. Maize is a staple crop for PSNP households in the project areas in the Rift Valley and in East

Hararghe. It is the number one crop in Ethiopia in terms of annual production and is widely consumed.

PSNP households, because of their low access to finance, small pieces of land, and low knowledge of good

agricultural practices are able to farm maize on a subsistence basis only. The crop is important for the

food security of these target households, however sale of marketable surplus (which is low) is not very

profitable. Farmers also are in a cash crunch after harvest and end up selling their produce at the lowest

prices of the year. The maize that they save at home for household consumption and later sale to the

market, is prone to pest infestation. Because of the low profitability factor, we recommend that farmers

intensify maize production for household consumption needs on a smaller piece of land and diversify to

other crops (such as wheat and vegetables) for income.

Haricot beans. Development of the haricot beans value chain offers potential for improving smallholders'

nutrition as well as soil health (inter-cropping is a traditional practice. The primary end market opportunity

for haricot beans is exports to European and American markets. Increasing farm-level productivity while

enhancing farmer's access to markets is important, for this to be a profitable crop. Because of low market

prices (influenced by world market prices), and disease such as rust, the crop is not a good investment

for smallholders, however the crop has benefits for soil health, employment generation and nutrition.

3 | Page

INTRODUCTION AND BACKGROUND

Purpose and Objectives

This report presents the findings from a joint value chain/market system analysis for two new projects -

Feed the Future Ethiopia Livelihoods for Resilience - Oromia (LRO) and USAID’s Office of Food for Peace-

funded Development Food Security Activity (DFSA), also known as the Ethiopian Livelihoods & Resilience

Program (ELRP). Both programs are implemented in Oromia regional state, with CRS’ DFSA also working

in Dire Dawa Administrative Council. The two projects share four woredas.

Livelihoods Resilience of Oromia (LRO)

LRO is a household and community resilience building activity implemented by CRS and Meki Catholic

Secretariat (MCS), which runs from February 1, 2017 through January 31, 2022.

The key objectives/purposes of the activity are:

• Increased income and diversification through crop and livestock market opportunities;

• Increased income and diversification of off-farm livelihood options;

• Increased income from gainful employment; and

• Increased innovation, scaling and sustainability of livelihood pathways.

Climate change, nutrition, gender and youth are addressed as cross-cutting issues.

The LRO project is implemented in nine woredas from three zones of East Shoa, Arsi and West Arsi in

Oromia regional state. The LRO target woredas are Arsi Negelle, Shalla, Siraro, Adami Tulu Jido

Kombolcha (ATJK), Ziway Dugda, Dodota, Sire, Heben Arsi and Boset. The project aims to reach 30,624

PSNP households in five years.

Development Funded Security Activity (DFSA)

CRS’ DFSA is a FFP supported initiative to sustain and build upon the previous food security improvements

achieved under the Government of Ethiopia’s (GoE) framework of the Productive Safety Net Program

(PSNP). PSNP IV is the most recent iteration and has expanded from its traditional emphasis on food and

cash transfers for work and maternal, child health and nutrition (MCHN), to now include Gender, Youth,

and Economic Livelihoods (on-farm, off-farm, and employment pathways). The goal of the CRS DFSA is:

Food, Nutrition and Livelihoods Security of Households (HHs) and Communities Improved and Sustained.

The DFSA is from September 30, 2016 through September 29, 2021. The DFSA has three Purposes -

PSNP Systems, Economic Livelihoods, Health and Nutrition, and the cross-cutting Sub-Purpose - Gender

and Youth.

The key objectives/purposes of the activity are:

• Women and youth have increased access to and control of community and HH resources (Cross-

cutting)

• GoE and community systems respond to reduce communities' and households' vulnerability to

shocks (Purpose I)

• Households improve their sustainable livelihood and economic wellbeing (Purpose II)

• Pregnant and lactating women and children under five have improved nutritional status (Purpose

III)

CRS’ DFSA is implemented by CRS, Mercy Corps, Meke Catholic Secretariat (MCS) and Hararghe Catholic

Secretariats (HCS). The DFSA is implemented in three zones - Arsi, West Arsi and East Hararghe - of

Oromia regional state and Dire Dawa Administrative Council, in nine target woredas - Deder, Melka Belo,

4 | Page

Midega Tola, Arsi Negelle, Ziway Dugda, Shalla, Babile, Dire Dawa and Heben Arsi. The project operates

in four livelihood zones, and plans to serve 48,125 PSNP HHs over five years.

The two programs overlap in four woredas - Arsi Negelle, Shalla, Heben Arsi and Ziway Dugda. Besides

geographical overlap, the two projects have many technical overlaps in thematic areas such as livelihoods,

gender, nutrition and market systems. The two projects are closely working together to manage the

geographic and technical overlaps.

Objectives of the crop markets systems/value chain/analysis

The crop value chain/market system analysis intends to provide both programs with a road map to guide

implementation of the crop value chains/market systems development in target areas of Oromia region

and Dire Dawa Administrative Council of Ethiopia. The value chain development and upgrading strategy

will enable livelihood groups (LGs), youth livelihood groups (YLGs), and income generating activity (IGA)

groups to develop inclusive, competitive and resilient value chains (gender and youth sensitive as well as

nutrient-rich value chains). This will help producers (men, women and youth) and groups become market

ready and engage with sustainable value chains and markets for economic growth and poverty alleviation.

Specific of objectives of the crop value/market/chain analysis:

1. To identify potential crop value chains suitable for project beneficiaries (especially women and

youth).

2. Identify and analyze the business opportunities and potential of the crop value chains

3. Identify and analyze constraints/bottlenecks across the crop value chains

4. Identify key actors/stakeholders/supporters/ of the crop value chains from input supply to

consumption.

5. Suggest strategies for developing and upgrading the value/market chains of the selected value

chains

6. Develop model business plans for HHs to engage in identified crop value chains

7. Identify actionable interventions for project to improve competitiveness of the crop value chains.

8. Analyze the regional (Oromia, Dire Dawa) and national policy frameworks for crop value/market

system/ development.

Crops selection

The research team used, CRS’ new value chains prioritization matrices to select crops for the study. The

research team facilitated a workshop with CRS and its partner staff to select the crops for the value chain

analysis. The workshop used two matrices to rank the crops on various indicators. The first matrix used

had nine impact indicators – Nutrition, Profit Potential, Climate Smart/Resilience, Youth friendly, Gender

friendly, Potential for Job Creation, Potential to influence sector, food security and scalability. Once the

crops were ranked according to the impact indicators, the groups went over the highest ranked crops

and ranked them on the feasibility matrix. The indicators on the feasibility matrix are: CRS presence in

target territory, value chain services in territory, defined/growing market demand, extent of smallholder

inclusion, upgrading potential, strong implementing partner/NGO presence, existing organized farmer

groups, CRS staff/local knowledge of crop, enabling environment/alignment with government policy and

donor/investor interest. Details about the matrices have been provided in Annex 1. The study

methodology is presented in Annex 2. The map of study woredas is available in Annex 3. List of people

interviewed is presented in Annex 6.

Selected crops with presence in focus districts is shown in Table 1. Within the focus districts, we have

looked at the crops and given a High, Medium or Low rating for where the projects should focus their

5 | Page

attention. The ratings are based on the prioritization workshop conducted and researchers’ observations

from the field.

Table 1: Crops Selected by Woreda and Recommended Level of Intervention

Meke Catholic Secretariat Woredas Hararghe Catholic Secretariat

Woredas

Sire Do

dot

a

Ziw

ay

Dug

da

Bos

et

Ada

mi

Tul

u

Arsi

Neg

ele

He

ben

Arsi

Shal

la

Sira

ro

Dir

e

Da

wa

Bab

ile

Mid

ega

Tol

a

Mal

ka

Bal

o

De

der

CEREALS

Wheat H H H L M M H L

Maize H H H M L M M M L L L L L L

PULSES/OILSEEDS

Groundn

ut

H H H H H

Haricot

Beans

M H H M H M M H H H M H H

HORTICULTURE

Onions H L H H H H H H M H H M M H

Cabbage L L M L H H H L H H L L L M

Red Chili

Pepper

L L L L H H M L M M M M H M

Potato/S

weet

Potato

H H H H H M H H H

Key: L is for Low, M is for Medium and H is for High

Overall, the above eight crops present PSNP farmers with a mix of cereals, pulses and horticulture with

a focus on high-value crops that PSNP households are already cultivating or can easily diversify into. These

selected crops offer stable demand and prices (maize, wheat), opportunities for commercialization/high

income (onion, sweet potato, potato, red chili pepper, cabbage and groundnut) as well as nutrition goals

and women-friendly crops (cabbage, red chili peppers, sweet potatoes, haricot beans). It is also to be

noted that most crops selected offer farmers with a double dividend of profit as well as nutrition. For cash

crops, such as red chili peppers and onions especially, nutrition goals can be achieved through increased

income as well as women’s empowerment.

The primary reasons behind selection of the individual crops are:

1. Wheat - Wheat was selected, as farmers in some focus woredas in the Rift Valley have a

competitive advantage in growing wheat and there is high demand from mills. There are

opportunities to organize farmers and link them to processors.

2. Maize - Maize is prevalent across all focus woredas and presents opportunities for value addition

and linkages. It is a food security commodity and is consumed by almost all households.

3. Groundnut - Farmers in East Hararghe have a competitive advantage in growing groundnuts, which

are prized for eating (and get a higher market price than those ground nuts used for oil extraction).

Opportunities exist for small-scale value-added processing and marketing, especially for women

and youth.

6 | Page

4. Haricot beans - High value export crop with opportunities for market linkages as well as nutrition.

Provides jobs for women especially in processing. Haricot beans also has a short season and is

relatively drought resistant.

5. Onions - Grown in all project woredas with strong profit potential. Regional export opportunities

exist.

6. Cabbage - Market oriented, nutrition, gender-friendly and high profit potential crop.

7. Red Chili Pepper - Market oriented, high profit potential crop that is gender friendly.

8. Potato/Sweet Potato - Market oriented, high profit potential crop, gender friendly with high

nutritional value.

The study conducted a full analysis for all the above crops. The study found that maize and haricot beans

have low profit potential, hence it is recommended that these crops are not prioritized for project

interventions. The full analysis for these crops is available in the annex.

Staging of crop interventions

The study team recommends that the projects roll out crop specific interventions in two stages:

• Stage 1: Onion, Cabbage, Groundnuts, Potatoes. This stage can build on the work done by the

GRAD project on onions and potatoes. As cabbage farming will often be done by the same farmers

who are also farming onions, it is recommended that cabbage and onion interventions go hand in

hand. Groundnut interventions are primary for East Hararghe, so it is recommended that these

are rolled out in the first stage as well.

• Stage 2: Red chili pepper, Wheat and Sweet Potato. The second stage can be spaced 9-12 months

after stage 1, giving the project enough time to determine strategies, build partnerships and gather

resources.

During roll out of interventions, we recommend that plans be tailored to the plot sizes of the farmers. In

the focus groups conducted by this study, we found that the PSNP farmers in the Rift Valley woredas have

on average 2 hectares of land and PSNP farmers in East Hararghe have an average of half a hectare of land.

Wherever possible, it is recommended that farmers devote at least a fourth of a hectare of land for high

value vegetables and then slowly increase land for horticulture over time. The study recommends that for

each crop, the intervention start as a pilot where the focus is on ‘troubleshooting’ all the potential

production-related constraints that a smallholder faces. At the end of the pilot, the program team will

have a better idea of the main issues that require capacity building.

7 | Page

OVERARCHING FINDINGS

This section covers overarching findings that were noted across the different value chains and reflect the

general state of agriculture in the woredas studied. These overarching findings, aim to cover the major

sectoral challenges that are crucial levers for making progress in all the agricultural value chains.

Inputs

Inputs largely flow through the government channels from the Ethiopian Seed Enterprise/Oromia Seed

Enterprise to Cooperatives and Unions and then to farmers. This system is inefficient, and farmers are

not able to access inputs especially seeds and agrochemicals in a timely manner. Farmers report being able

to access fertilizers, but usage rate varies. Integrated Pest Management knowledge is low, especially among

horticultural farmers. Counterfeit and poor-quality agrochemicals are present in the market. This reduces

the farmer’s confidence in using them. Farmers also report having to mix chemicals per their own

knowledge and intuition in the absence of formal information.

Some private input suppliers like Pioneer operate in the market. The government has recently allowed

private entrepreneurs to become agrodealers and start selling inputs – they are called Direct Input

Marketers (DIM). There is a huge potential to develop more Direct Input Marketers so that the demand

can be served.

Recommendations:

• Support farmer groups to produce high quality seeds

• Work with women’s group on seedling production

• Support innovative seed distribution models. Work to catalyze/support Direct Input Marketers

and increase their capacity to provide knowledge on the inputs they sell. Also work with Farm

Service Centers (FSC) to reach PSNP farmers.

Capacity building for producers

Overall, the study observed that PSNP farmers used traditional farming practices with low use of

technology and modern farming methods. Farmers do not have access to extension, especially women

farmers and horticulture farmers as Crop Development Agents are not specialized in horticulture. There

is also high turnover in the government extension system with many unfilled positions in the focus

woredas. It was also noted that there is a need for well-integrated efforts between research and extension

to promote adoption of improved and climate-smart agricultural practices.

There is no/low evidence that PSNP households have the ability to currently pay for capacity building

services at their current income levels. Capacity building should be done through channels, such as savings

groups, possibly with the facilitating NGO absorbing some of the costs.

Based on anecdotal evidence from CRS’s experience with SILC Private Service Providers, households are

more willing to pay for the services, if 1) they have previously worked with the Private Service Providers;

2) the project delivers early, deliberate and ongoing messaging about the value of paying for quality

services; 3) if government and/or NGOs are not currently providing similar services for free or at a

subsidized rates, and 4) discussed during financial education training. These assumptions will be further

tested during the roll out of the private sector provider model.

Recommendations:

• Train Direct Input Marketers in providing recommendations to producers

• Work with lead farmers and help them share their knowledge and experience with fellow farmers.

8 | Page

• The project should have a special focus on selecting and training women farmers to become lead

farmers. Women farmers who have been previously trained in homestead gardening and who

have been successful are good candidates for lead farmers. The project can provide incentives,

such as certificates and prices for the best performing women lead farmers.

• Train private service providers to provide capacity building services on a fee basis. For example,

ex-staffers of extension, cooperatives and irrigation experts can provide capacity building. Costs

can be lowered by offering agricultural knowledge at savings group meetings.

• Partner with the government extension service to provide targeted extension and fill gaps in the

capacity of the extension agents.

Production related constraints

PSNP farmers are exposed to climate change related shocks including droughts and floods, that can wipe

all income gains and keep them in the cycle of poverty and hunger. PSNP farmers lack training on modern

production practices especially production planning, land preparation, sowing, pest management,

harvesting and postharvest handling and storage. Farmers also suffer from having degraded soil with poor

moisture holding capacity.

Training on climate resilient practices including adoption of drought resistant and early maturing seeds

will be in making farmers resilient. Financial management with a focus on savings for emergencies are also

another lever for building farmer resilience.

Recommendations:

• Provide training in good agricultural practices to farmer groups with a focus on climate-smart

agriculture (conservation tillage, crop rotation, manure, compost, agroforestry etc.).

• Liaise with government to have active project involvement in natural resource management work

done by PSNP households. Advocate for projects that directly or indirectly support agriculture

such as integrated community-based watershed development covering activities such as soil and

water conservation measures, check dams, water harvesting and recycling for supplemental

irrigation, improved drainage in flood prone areas, conservation tillage where appropriate, and

water saving irrigation methods. Also advocate for the development of community assets such as

roads.

• Promote early maturing and drought resistant/temperature tolerant seed varieties.

• Livelihood groups should receive training on improving soil quality along with other agricultural

training that is focused on natural resource management and building climate resilience.

• Demonstrate site specific technology packages on farmers' fields or at Farm Training Centers or

Farm Service Centers (where demo plots are available) for adapting to current climate risks.

• Organize farmer visits to universities and research centers that have demo plots.

Postharvest storage and processing

FAO estimates that as much as 37 percent of food produces in Sub-Saharan Africa is lost between

production and consumption. While some work has been done to reduce losses in grains, much remains

to be done to reduce losses in horticulture. There is an urgent need to improve knowledge of farmers on

harvesting, post-harvest handling and storage, and in creating awareness among traders along the value

chain. Low levels of food processing and preservation lead to farmers having to sell at harvest, which lead

to supply and price fluctuation. Increases in harvest and postharvest capacity for producers and others

along the chain will increase produce standards (and clarify them), reduce losses significantly as well as

address issues such as aflatoxin risk (in groundnuts as well as maize).

9 | Page

Recommendations:

• Promote low cost technologies for managing temperature and cold storage such as coolbots and

Zero Energy Cool Chambers (see Annex 9 for details and photos)

• On-going efforts to promote local value addition (e.g. peanut butter production) need to be

strengthened

• Explore product development for new market opportunities

Resources:

• Reducing Losses and Extending Availability of Fruits and Vegetables:

http://horticulture.ucdavis.edu/event/nutrition-2017/mitcham-reducing-losses-fruits-

vegetables.pdf

• Video on how to make a Zero Energy Cool Chamber:

https://www.youtube.com/watch?v=enOjVc-kN7Q

• Coolbot - https://www.storeitcold.com/

Fragmented market with broker domination

The agricultural sector in Ethiopia is dominated by brokers. Brokers are typically knowledgeable individuals

who have strong and high-quality information at the kebele level of farmers and the crops they have for

sale as well as connections with wholesalers. Brokers use this information to connect farmers to

wholesalers via cell phones. Brokers provide market information and advice to wholesalers and are key

players in price discovery and setting. The wholesalers or buyer typically arranges for the transportation

of the produce and pick up at the farm gate. The broker makes up to 30% commission on each sale.

Brokers provide an easy way for farmers to market their produce, albeit at lower prices than the farmers

can get at terminal markets. Brokers sometimes also play the role of financiers to farmers.

Recommendations:

• Farmers need to be organized into groups and aggregate produce for better bargaining power as

well as ability to transport produce to markets or buyers themselves

• Cooperatives can play a role, but administrative and business capacity needs to be upgraded

Access to finance

Savings groups, Oromia Credit and Savings Share company (OCSSCO), RuSACCOs and MFIs

(Metemamen and Bussa Gonofa) are the main sources of credit. Farmers need financial literacy and

capacity building to take on bigger loans. Loan sizes and terms offered do not match with the demand of

farmers. There are no distinct products for different target groups, such as for women and youth.

Irrigation loans are offered. MFIs are also using land certification from DFID Land Investment for

Transformation (LIFT) project as collateral.

Insurance companies such as Ethiopian Insurance Corporation, Nyala Insurance, Oromia Insurance and

Africa Insurance company have all started working in crop insurance in partnership with Kifiya Financial

Technology. Further research is needed to understand the availability crop insurance services provided

and their value to farmers.

Recommendations:

• Increase linkage of savings groups to formal financial institutions

• Facilitate product development using human-centered design principles so that loans meet farmers

needs in a responsible manner

• Explore the promotion of mobile money and digital finance. Some PSNP farmers receive their

safety net payments through M-birr agents.

http://horticulture.ucdavis.edu/event/nutrition-2017/mitcham-reducing-losses-fruits-vegetables.pdf

http://horticulture.ucdavis.edu/event/nutrition-2017/mitcham-reducing-losses-fruits-vegetables.pdf

https://www.youtube.com/watch?v=enOjVc-kN7Q

https://www.storeitcold.com/

10 | Page

• Explore crop insurance in focus

woredas

Value chain finance

Value chain finance from large agribusinesses

such as agro-processors or off-takers is low.

Informal finance from traders/brokers to

farmers especially for irrigated horticulture is

prevalent. The mechanism for this type of

lending is described in Box 1.

Recommendation:

• Explore linkages with Lead firms and

possibility for contractual arrangements

such as buyer financing of produce or

formal finance based on buyer’s

contract.

Gender

Women are involved in most value chains – in production, harvesting, post-harvesting (cleaning and

sorting), processing and local retail. Women have control over sales for small everyday expenditures while

men tend to control overall sales for harvest.

Focus on horticulture is a boost for women farmers as they can incrementally expand production from

homestead gardens to more commercially oriented production.

Recommendations:

• Promote horticulture farming with focus on women

• Promote small-scale processing for women’s groups

• Promote labor saving technologies for women

• Build capacity in women’s groups for seedling production

• Facilitate gender dialogues with men, women and youth, to encourage women to be part of the

decision-making process on strategic household decisions on how to spend the profit of crops

that they contribute to

Youth

Youth are limited by typically smaller pieces of land. They do have farming experience as they participate

in farming with their parents. Youth prefer entrepreneurial aspects of farming with a bend towards

technology. Irrigation, pest management, cold storage and production of labor saving machines can be

appealing areas for youth in agriculture.

Recommendations:

• Train youth in irrigation installation, maintenance and repair service

• Pest management – spraying and fumigation services

• Engage youth in small-scale cold storage

• Train youth for horticulture – production, marketing and agribusiness

• Engage youth in production of labor saving devices such as the Universal Nut Sheller1

• Capacity building of farmers

1 https://www.thefullbellyproject.org/uns-1/

Box 1: Broker Financing Mechanism

The farmer is required to have irrigable farm land

and strong vegetable farming experience. The

broker commissions the farming season by investing

in inputs, preparation, production, harvest and all

other costs. When the harvest is ready, the broker

finds the market and conducts the sale.

The financial arrangement is as follows: Trader

takes Total revenue – Trader’s investment – 30% of

sale price/kilo (because of brokerage role). From

what is left, the farmer and trader share equally.

In case of crop failure – recovered from the next

season.

https://www.thefullbellyproject.org/uns-1/

11 | Page

Innovation

The projects have access to Innovation Fund to catalyze market development. Some recommendations

for use of the innovation fund, arranged by crops are:

• Wheat – Investments in irrigation

• Groundnut – Investments in labor saving technologies for shelling and paste making. Investments

in production and marketing of groundnut products (peanut butter, kolo, roasted groundnuts

etc.).

• Onion – Investments in irrigation, cold storage as well as processing (drying onions)

• Cabbage – Investments in irrigation and cold storage

• Red Chili Pepper – Investments in irrigation, cold storage as well as local processing into spice

mixes.

• Potato – Investments in cold storage, seed storage and potato products such as flour and chips

• Sweet Potato – Investments in vine multiplication and sweet potato products such as flour

12 | Page

FINDINGS FROM WHEAT

Wheat Value Chain Map

Source: Research team

Overview

Wheat is one of Ethiopia’s most important cereal crops by production. About 4.8 million farmers produce

close to 4.04 million tons of wheat across 1.7 million hectares of land with average productivity of 2.1 t/ha

(CSA, 2013). Nationally, wheat contributes an estimated 12% to the daily per capita calorie intake, making

it the third most important contributor to national calorie intake, after maize and sorghum (Guush, et al.,

2011). Both Bread and durum wheat are widely grown in the country constituting 60% and 40% of the

total wheat production respectively (CIMMYT: Wheat Atlas).

Annual Agricultural Sample Surveys published by CSA (2008-12) confirm that compared to other cereals,

farmers sell higher proportions of wheat—an estimated 20%—which is second only to Teff at around

13 | Page

25%, making it an important cash generation crop for farmers. While this figure shows the relative

significance of the contribution of wheat in domestic cereal marketing, in absolute terms it shows the

limited commercialization of wheat production in the country.

Oromia is the biggest wheat producing state in the region, and project woredas in the Rift Valley have a

competitive advantage in wheat. The average production in East Shoa, Arsi and West Arsi is 31 qt/ha,

which is higher than the national average of 25 qt/ha. Farmers in East Show and Arsi report yields of

between 25-45 quintals. The dominant wheat type cultivated is for bread (soft wheat) and major varieties

are Digelu and Kubsa. Wheat in these woredas is highly market-oriented and mainly produced for retail,

the market surplus being about 60% as wheat is also consumed by every household. East Hararghe has

low wheat productivity and it is not a major crop in that region.

No value addition is done on wheat except cleaning, winnowing and sorting at the farmer level. Currently,

there is an increasing role of primary coops and unions in wheat marketing and value addition, focusing

on flour mills which also guarantee the supply of aggregated wheat to the mills in case of market failure.

Hitosa Union (Arsi, Eteya) and Lume Adama Coop Union (Modjo) are engaged in wheat value addition.

There are also a number of private flour mills and food complexes, gradually expanding, engaged in the

production of flour, bakery products and pasta, that can serve as a sustainable market for the wheat

produced in these woredas

The team has also observed that there is huge potential to produce wheat under irrigation in Ziway Dugda

– the topography is suitable, and it has the Ketar river crossing the woreda as well as Dodota where the

topography is suitable and Awash river can be used as a water source. However, there are no wheat-

appropriate production technologies for irrigation, such as varieties that fit the lowland agro-ecologies.

Study Findings

Input supply

The Ethiopia Seed Enterprise and the Oromia Seed Enterprise sell wheat seeds to the farmers through its

regular channel of unions, multi-purpose cooperatives and Direct Input Marketers. Across the agricultural

sector, the delivery of seeds at the woreda and kebele level is not timely. However, usage of fertilizers in

wheat is higher compared to other crops.

Farmers do not have enough training in the proper usage of inputs. Moreover, recommendations from

Research Centers, such as Kulumsa Wheat Research Center, are not always fully followed by the

government extension system. Farmers have a skill gap to apply recommendations and there is poor follow

up by Development Agents (Government Extension Officers).

Business development services

Kulumsa Wheat Research Center of Excellence offers a huge opportunity to support the wheat

production and productivity and is located close to the wheat woredas. The focus is on releasing suitable

varieties for the semi-arid agro-ecological zone particularly for the Rift Valley areas, such as Adami Tulu,

Dera and Arsi Negelle. The center releases about two new wheat varieties every year.

The Kulumsa Wheat Research Center works in coordination with international research centers, such as

CYMMIT and ICARDA, from where germ plasm is brought for testing under local condition.

In East Hararghe, Haramaya University is working to multiply Hidase variety in Jarso and Meta woredas.

These are packed and sold with Haramaya University logo. The University also worked with Farm Training

14 | Page

Centers to increase adoption of varieties. Another variety called King Bird is multiplied by Fadis

Agricultural Research Center in Babile through cooperatives and model farmers.

Production

The production of wheat is mainly done by smallholder farmers as well as a few commercial farmers.

Timely availability of improved seeds will help farmers to greatly increase their yields. Irrigation is very

uncommon in wheat. Fertilizer and pesticide usage is high compared to other crops.

The study team, met with Hitosa Farmer’s Cooperative Union that trades wheat, among other

commodities. The Cooperative reports unpredictable price fluctuation as a major marketing issue. The

Union has a future plan to establish a food complex, to use the wheat aggregated from members as the

raw material to avoid the current market challenge.

Storage

Wheat needs to be appropriately dry (13% moisture content) so that is can be stored appropriately.

Farmers need training on moisture content of wheat, which can be excessive due to early harvesting. The

training can be conducted by government agricultural extension staff, if they have the capacity or the

project.

Farmers store the wheat at home (that is left after early sales) for both later consumption as well as later

sale in the market at higher prices. Studies show that traders and wholesalers don’t store wheat as they

are scared of being called ‘hoarders’ by the government and have their stock confiscated (Minot, Warner,

Kasa, & Abate, 2015).

Given that the average price of wheat increases sharply between January and August each year, a robust

postharvest storage system will have a huge impact on farmer incomes while potentially increasing wheat

supplies and thereby reducing prices during the lean season. However, the project will need to allay fears

around hoarding and also work with farmers on appropriate home storage – this includes capacity building

as well as access to materials.

An inventory credit system is a possible solution; however, such systems are currently not accessible for

PSNP farmers. ECX provides inventory credit for traders who store greater than 50 quintals in its storage.

If PSNP farmers are organized to bulk produce, this can be an option.

Processing

There is a high demand for wheat from processors mainly flour mills, food complexes and biscuit, bread

and pasta makers. Bakeries often get their flour directly from mills.

The study team met with the Addis Dallas Food Complex, which was established in 2013 and is engaged

in the production of flour and biscuits. The company has shown interest in sourcing directly from farmers

and would like to break away from procuring from traders and brokers. With traders, one of the main

quality issues is that traders mix different grades. The company has prior experience in contractual

arrangements with unions, which were unfortunately broken. The factory is currently operating below

capacity. Hence, the company is looking forward to forming sustainable market linkages with unions to

ensure supply of quality wheat. In the future, the company plans to diversify into animal feed and baby

food.

The study team also met with Vera Pasta Factory in Dire Dawa, which imports a fraction of their wheat

from Australia for its needs. The company said that they are open to buying from smallholder farmers

who meet their quality and volume requirements (at least one Isuzu truck load) per transaction.

15 | Page

Marketing

The marketing of wheat starts from the farmgate where assembly is done by farm gate aggregators and

collectors. Wholesalers are big traders that supply wheat to millers. Thereafter, small traders act as

retailers and directly sell to final customers.

The wheat marketing is dominated by brokers who add no or limited value but have the upper hand in

determining the daily market prices.

The Ethiopian Trading Business Corporation (ETBC) is active in trading wheat for the domestic market

and for market stabilization. In 2017, it traded 200,000 quintal of wheat. The ETBC reports that wheat

purchased meets the quality requirements and there is an increasing understanding of the importance of

quality among farmers. The enterprise is also making quality-based payments. However, there are some

instances of wheat flour being adulterated with maize flour by traders.

Linking farmers to millers and ETBC for sustainable supply based on contracts could be profitable for

farmers.

Market channels and channel recommendations

In Project Woredas in the Rift Valley, farmers sell their wheat to local traders and sometimes to primary

cooperatives that in turn sell it to unions. The unions supply the aggregated wheat to their own mills, to

wholesalers, donors and NGOs that buy food aids. Other flour mills also purchase wheat for processing.

Retailers who collect the wheat from wholesalers finally deliver it to final consumers. Access to markets,

especially for dispersed and remote rural communities is often limited by poorly developed transport

infrastructures, but there is also the experience that traders travel to the villages to aggregate the produce

especially during harvest time

• Channel 1: Farmers → Aggregator → Wholesalers → Retailers → Consumers

• Channel 2: Farmers → Primary Coops → Unions → Wholesaler → Processor → Retailer →

Consumer

The current long market channel can be reduced by some degree to make the system more effective and

efficient.

Image: Display of pasta at the Vera Pasta Factory in the

Dire Dawa Food Complex Image: Truck of Dire Dawa Food Complex

16 | Page

Channel 1 is shorter and has a potential to give farmers a better chance of increased margins. However,

Channel 2 is also recommendable as it involves value addition, has a wider implication for increasing

production and productivity and on farm investment in the area.

The margin for aggregators, wholesalers and retailers is typically ETB 30-50 per quintal as reported in

interviews.

Market segments and quality requirements

The current wheat market in the area is not quality based and traders pay similar prices for different

qualities. Moreover, traders mix different grades and varieties, which is a major issue raised by millers.

Wheat quality requirements include:

• Moisture content of 13% or less

• Free from live insects

• Free from foreign matter etc.

Local market demand and price variations and seasonality

Despite rising production, there has been continuous government importation of wheat accounting for an

average of 23% of the domestic wheat supply in the past decade. Wheat imports represent 2-4% of all

imports and significantly offset foreign exchange generated by agricultural exports. Imported wheat is

more expensive than local wheat costing additional $40/MT however, due to subsidy structure sells at

$160/MT lower than the local market price making the local wheat uncompetitive. In general, ending

Ethiopia’s imports of wheat will reduce foreign currency pressure and generate ~5-7billion ETB additional

income for local farmers. (ATA 2015)

Figure 1: Wheat Price

According to survey results the price of wheat is the lowest at harvest (November-December) and highest

at lean season (August-September).

Gender analysis

Broadly, men are typically responsible for the heavier manual tasks, such as land preparation and tillage

with oxen. Men play a dominant role in seed selection, reflecting their better access to information. They

also perform the skilled jobs of broadcasting seed and fertilizer. However, once a household adopts row

17 | Page

planting, any family member can plant. Men are usually responsible for threshing and winnowing cereal

crops. Women have limited role in wheat value chain. Their roles mainly focus on small volume wheat

sales for family expenditures.

Financial analysis for smallholder farmers: Wheat

We present below the financial summary for a wheat smallholder for 1 hectare of land. Using average

yields and prices and given the cost of production, the net income for a wheat farmer is ETB 13,599 with

a 56% profit margin. Wheat farmers who can intensify their production to improve yields and have a

second crop in the year, can become food secure households. Access to irrigation and seeds are the main

levers for increasing yields and incomes.

WHEAT SMALLHOLDER ENTERPRISE FINANCIAL SUMMARY FOR 1 HECTARE

REVENUE - Per Hectare in Ethiopian Birr

Average yield Unit # Unit Price Total Revenue in ETB Total Revenue in USD

Wheat Qt 28.2 850 23,970.00 $887.78

EXPENSES - Cost/Hectare in Ethiopian Birr

TOTAL COSTS 10,370.50 $384.09

NET INCOME 13,599.50 $503.69

Profit Margin 56.74%

A complete business plan for wheat farmers is presented in Annex 4.

Conclusion and Recommendations

Constraints and opportunities

Value chain

stage Constraints Opportunities

Input Low supply of improved seed limiting

yields

Research centers efforts to increase the

supply

Production Use of traditional practices with some

technology usage (mostly fertilizer and

pesticides)

Improved extension packages and good

agricultural practices

Increase use of mechanization and

irrigation

Post-harvest Storage facilities Availability of improved storage materials

such as PICS bags and other air-tight

storage.

Post-harvest losses in wheat is not high

and farmers have the ability to store at

home and sell when the price is right.

Processing Wheat quality is inconsistent and

constrains supply to big agro-processors

Awareness creation by the extension

system

Local

Markets

No market information system Use of mobile phones so that farmers

have market information

18 | Page

Direct linkage of farmers to buyers like

wholesalers and millers

Export

Markets

Ethiopia imports wheat from other

countries and supplies to millers at a

reduced price, creating some market

distortions.

Opportunity to produce wheat for

import substitution.

Recommendations:

• Promote irrigation and intensification. Production intensification especially with irrigation

will increase yields and make PSNP farmers more competitive.

• Promote storage capacity and solutions: In order to take advantage of the price hike in the

lean season and to smoothen supply, the project should provide postharvest management training

to farmers besides promoting technologies like PICS bags.

• Create market linkages. PSNP farmers in the Project Woredas in the Rift Valley are specialized

in growing wheat. This provides an opportunity to create market linkage through direct sales to

millers and agro-processors of pasta, breads etc. and reduce imports of wheat. The project should

explore contractual agreements with processors with the aim to generate contracts that can lead

to financing (either from the buyer or from a formal financial institution).

• Strengthen cooperatives and unions. Farmers who are organized and collectively aggregate,

market and process the grain will have a strong profit advantage.

19 | Page

FINDINGS FROM GROUNDNUTS

Groundnut Value Chain Map

Source: Research team and adaptation of ‘The Groundnut Value Chain in Babile District, Eastern Ethiopia,’ An

AgriDiet Research Brief

Overview

Groundnuts are a traditional crop in East Hararghe, whose production is dominated by smallholder and

PSNP farmers. Groundnuts are a profitable crop for smallholders and the varieties grown in the focus

region are used for eating rather than for oil extraction. The varieties used for eating have a higher market

value of ETB 2500 per quintal. Groundnuts are drought resistant and women are active in groundnut

production and post-harvest management, as well as value addition and sales. This provides an opportunity

to improve women's livelihoods.

Nutritionally, groundnuts are high in vitamins, proteins and fats and diversify diets and contribute to

reducing rural poverty. However, groundnuts are marked by high aflatoxin levels, which has negative

impacts on human health. The high levels of aflatoxin have also brought groundnut exports in Ethiopia to

a grinding halt in the recent years.

20 | Page

There is a strong domestic market demand for groundnuts as it is a key ingredient in the traditional snack,

Kolo. However, farmers are currently selling the groundnuts without any value addition and there is a

huge potential for value addition in groundnuts. Consumption of products, such as peanut butter, is limited

in the country and only popular among the middle and upper income class in Addis Ababa.

Study Findings

Groundnut is mostly cultivated in Babile, followed by Melka Balo and Midega Tola. Dire Dawa and Deder

have very small amounts of land that is currently under groundnut production. The groundnuts are well

adapted to the area and suitable for its agro-ecological conditions.

Groundnuts are grown mostly for the local market and the market demand and price are appealing.

Input supply

Farmers grow groundnuts using traditional

practices and have access to inputs. There is an

opportunity to work with the Afran Kelo

Farmer’s Cooperative Union and the Haramaya

Farm Service Center that they operate to

increase supply of inputs as well as extension to

farmers.

Business development services and

financial services and products

In East Hararghe, Haramaya University worked

on several varieties - Baha Jidu, Baha Guda, Babile

1,2 and 3. The Baha Jidu and Baha Guda varieties

are difficult to thresh. Babile 1,2 and 3 are easier

for threshing. It is reported that the varieties have

similar productivity level. Baha Guda, has a high

oil content and Babile 1 is resistant to aflatoxin.

Fadis Agricultural Research Center is working on groundnut screening. The Roba variety has been

distributed to seed producing cooperatives. The variety is fast growing and drought resistant. The Center

is also conducting research on aflatoxin as well as weeds and root diseases.

Production

Ethiopia produced 1,039,395 quintals of groundnuts in 2015/2016, of which close to 20% was grown in

the East Hararghe region.

There are two types of groundnuts in the market - those that are used for eating and those that are used

for oil extraction. Typically, groundnuts that are used for oil extraction need to have more than 30% oil

extractability. The groundnuts produced in the project areas have lower oil extraction and hence are used

for eating. The price of eating groundnuts is higher than the price of oil groundnuts, so farmers in East

Hararghe and Dire Dawa are at an advantage.

Farmers typically produce mostly for the market and keep only small amounts for household consumption.

The production of groundnuts, does not require high investment as farmers typically don’t need to use

fertilizers as there is no significant yield difference.

Image: Front entrance of Haramaya Farm Service Center

21 | Page

Storage and processing

Value addition largely consists of drying the nuts. Groundnut shelling is a labor-intensive process and is

primarily carried out by women. Traditional shelling methods, which involve soaking the shells for easy

shelling, are associated with higher incidence of aflatoxin.

Outside the city of Harar, the study team met with the Hamaresa Edible Oil Company. The company

extracts oil from groundnut seeds among others. However, the company sources groundnuts from

Western Ethiopia that have higher oil extraction rates.

No other large agro-processor is present in the region. The main modes of consuming groundnuts is in

the popular snack, Kolo for which the groundnut is roasted. Farmers sell their produce shelled as well as

unshelled to wholesalers. If the groundnuts are unshelled, the wholesalers or retailers will typically shell

the groundnuts before bringing them to the market. The groundnuts then move to urban centers where

they are roasted and sold by small processor cum retailers.

In Addis Ababa a few local companies, like Moon Packed Foods, are processing peanut butter and selling

in supermarkets. Ethiopia also has Hilina Enriched Foods, which is a manufacturer of Ready-to-Use

Therapeutic Foods based on the Plumpy range of products developed by Nutriset for the treatment of

acute malnutrition. The company has a factory in Legetafo in the outskirts of Addis Ababa. As the food is

used of therapeutic grade, however, the factory requires a very high quality and safety standard for the

groundnut it sources. According to a recent press release, the company is unable to operate at full capacity

because of the shortage in supply of high quality groundnuts.2

Marketing

In the harvest season, Harar is the main market for groundnuts. From there, the product moves to other

urban centers and the Merkato in Addis Ababa. Large traders and wholesalers in the Harar market are

speculators who own their own warehouse. They buy and store the groundnuts and sell when the price

is higher later in the year.

Some cooperatives are also involved in output marketing of the product, however this is in small quantities

because of their capacity limitations, both financial and technical.


• Channel 1: Farmers → Wholesalers → Retailers → Consumers

• Channel 2: Farmers → Primary Coops → Unions → Retailers → Consumers

• Channel 3: Farmers → Village collectors → Consumers

• Channel 4: Farmers → Wholesalers → Processors → Retailers → Consumers

• Channel 5: Farmers → Local traders → Wholesalers → Processors → Retailers → Consumers

The farmers in East Hararghe typically get ETB 12 per kg. By the time, the product reaches Addis, the

price is ETB 80 per kg. Hence most of the value in the chain is captured by traders and retailers (those

who roast and sell the peanuts). It is recommended to the project that market linkage work be done with

cooperatives as well as directly with processors and other large buyers.

Field team was unable to collect monthly price data for the woredas.

2 http://www.hilinafoodseth.com/index.php/news-updates/18-french-embassy.html

http://www.hilinafoodseth.com/index.php/news-updates/18-french-embassy.html

22 | Page

Groundnut export performance of Ethiopia

The export of groundnuts from Ethiopia has all but stopped in the recent years because of high incidence

of aflatoxin, as can be seen in the data below. Ethiopian Pulse, Oil and Spice Processor Exporter

Association (EPOSPEA) is one of the official groundnut exporter. Previously, The association exported

both shelled and unshelled groundnuts. Exports were mainly to Djibouti, Yemen, Sudan and some gulf

countries.

Year Volume/metric ton Fob Value in millions/USD

2011/12 144,24 18,199

2012/13 12,609 14,335

2013/14 592 581

2014/15 124 124

2015/16 79 81

Source: Harvest Insight, official publication of the 6th international conference on pulses, oil seeds and spices

November, 2016.

Gender and Youth Analysis

Women are highly involved in value addition including shelling and roasting and petty trading in urban

areas. Women can be formed into groups and encouraged to do small-scale processing of groundnuts –

roasting and packing as well as making peanut butter which is a nutritious food for children especially.

Youth can also be involved in processing of peanuts. In Addis Ababa, youth are usually the ones who are

roasting and selling groundnuts on the streets.

Summary of financial analysis of Groundnut Smallholder farmers

Groundnut farmers who invest in seeds and proper weeding and harvesting practices including postharvest

handling, stand a very good chance to make high returns. The profit margin for groundnut is highest of all

the crops and the net income is ETB 23,025 from one hectare. Investment costs are low as farmers don’t

need to use fertilizers, which is an advantage for women smallholders. East Hararghe and Babile specially

are very well suited for groundnut production and have a strong reputation for high quality nuts in Ethiopia.

GROUNDNUT SMALLHOLDER ENTERPRISE FINANCIAL SUMMARY FOR 1 HECTARE



Groundnuts Qt 25 1200 30,000.00 $1,111.11


TOTAL COSTS 6,975.00 $258.33

NET INCOME 23,025.00 $852.78


A complete business plan for groundnut farmers is presented in Annex 4.

23 | Page


Constraints and Opportunities

Value

chain

stage

Constraints Opportunities

Input ● Limited access for

improved seed, chemicals

and fertilizers

● Support from research centers,

Universities (for variety development and

dissemination)

● Presence of farmers’ cooperative unions

can be used to disseminate information. In

particular the Farm Service Center in

Haramaya should be used for increasing

access to inputs for groundnuts.

Production ● Limited adoption of

recommended agronomic

practices

● Drought and erratic rain

● Presence of experienced farmers

● Suitable agro ecology

● Potential to increase production and

productivity

● Links with Haramaya University and Fadis

Agricultural Research Center

Postharvest ● Lack of postharvest

handling and storage

knowledge in farmers

leading to high incidence

of aflatoxin

● Opportunity to train farmers, especially

women, on the ill-effects of aflatoxin and

how to reduce it.

● Train farmers in harvesting and post-

harvest handling

Processing ● Limited value addition

activity

● Opportunities for value addition including

shelling by machine, roasting and packaging

at cooperative/farmer group level, as well

as small-scale manufacture of peanut butter

Local

Markets

● Poor market linkage

● Weak capacity of coops

● Infrastructure related

constraints

● Growing demand both locally and for

regional exports

Export

Markets

● Drastically reduced

exports because of

aflatoxin concerns

● Opportunity to restart Ethiopian export

of groundnuts.

Recommendations:

● Create strategic plan to reduce Aflatoxin levels – Given the high rates of aflatoxin, a

detailed strategic plan should be created before undertaking work in groundnuts. We recommend

that the project work with a research institution such as Haramaya University to design a plan to

reduce aflatoxin levels. This strategy should integrate adoption of seed technology, production

practices, postharvest practices, value chain interventions and linkages with private sector.

24 | Page

● Promote intensification of production - Farmers need training on using improved seed

varieties and better farming practices that can encourage yields. In the region, farmers have the

potential to produce up to 50 quintals per hectare.

● Promote alternative shelling options - The project should work to organize farmers and

work with already organized groups to add value to the product and reduce women's labor in

groundnut shelling. Simple groundnut shelling machines such as the ones promoted by The Full

Belly Project, can drastically increase the shelling capacity, provide jobs and free up women's time.

Afrankalo Cooperative Union has conducted some activities with groundnut producers and these

can be expanded.

● Start a public campaign to reduce aflatoxin - On time harvesting, careful drying, proper

sorting and good storage can drastically reduce the occurrence of aflatoxin. There is an urgent

need to do large scale awareness raising of aflatoxin and how to reduce it. This will be a major

lever to kick start groundnut export again. The project can consider making farmer-to-farmer

video such as this that has been

made by the USAID Feed the

Future Peanut & Mycotoxin

Innovation Lab in Northern

Ghana.

● Promote small-scale value

addition that is closer to

farmers - Small-scale value

addition including shelling,

roasting and packaging, and even

making peanut butter

(contingent on further market

study) should be promoted

closer to the farmer level. These

can be done by farmer groups

and cooperatives. The project

can also help promote female

entrepreneurs who are involved

in or interested in pursuing

small-scale processing.

● Branding East Hararghe Groundnuts - Groundnuts from East Hararghe, especially Babile are

famous all over Ethiopia. Creating a brand recognition through marketing activities and including

brand name and packaging (for roasted and salted groundnuts, as well as branded kolo) has the

potential to provide premium pricing to farmers in the region.

● Promote relationships between farmers and established processors - The project

should also work on increasing market linkages between farmers and established processors like

Hilina, who are looking to source high quality groundnuts.

Figure 2: Universal Nut Sheller

Photo from the Fully Belly Project website

https://youtu.be/cQ5j46ahOTI



https://www.youtube.com/watch?v=81xpZbpvIfY

https://www.youtube.com/watch?v=81xpZbpvIfY

25 | Page

FINDINGS FROM ONIONS

Value Chain Map of Onions


26 | Page

Overview

Onions are one of the most important vegetables produced in Ethiopia and used in almost all traditional

dishes. The area under onion cultivation is increasing due to its high profitability, ease of production and

increased use of small scale irrigation systems. The crop can be produced both during the rain-fed “Meher”

season and under irrigation in the off-season “Belg.” In many areas of the country, the off-season crop

which is under irrigation, constitutes much of the area under onion production.

In many parts of Ethiopia, onions are grown by small farmers, private growers and some large state

enterprises. Areas with good soil and favorable weather conditions for the cultivation of onions are the

Awash valley, Lake region and areas close to the Sudan border (Desalenge and Aklilu, 2003). Onion is

considered one of the most important vegetable crops produced on large scale in Ethiopia. The area under

onion production is increasing over time mainly due to its high profitability per unit area and ease of

production, and the increased availability of small scale irrigation.

Despite the increase in cultivated areas, the productivity of onion is much lower than other African

countries and the world average. The private farmers’ holdings in ‘meher’ season 2015/2016, the total

area coverage by onion crop in the country by 790,807 holdings were 29,517.01 hectare, with total

production of 264,849.35 tons with average productivity of 8.9 tons per hectare. This is very low yield

compared to the world average of 19.7 tons per hectare. In Oromia region, in the same cropping season

the total area coverage by onion crop in the country by 334,130 holdings were 12, 424.46 hectare, with

total production of 83,900.27 tons with average productivity of 6.7 tons per hectare. This is low yield

compared to the national average of 8.9 tons per hectare.

In HCS, onion is grown in small quantities with rain-fed and irrigation in the selected woredas of DFSA

Project area Dire Dawa Administrative (Dire Dawa woreda) and East Harerghe Zone (Deder, Midega

Tola and Melka Belo woredas) by smallholder farmers. The crop has a high market demand in the local

market as well as export (Djibouti and Somali). PSNP Farmers in these woredas are highly interested to

invest in onion production due to its highest profit potential. Onions are also drought tolerant and grow

in a short rainfall period (within three months). Currently, women in the study area are engaged in petty

trade of onions.

Fedis research center has undertaken an adaptation trial on Bombay red and Nasik Onion varieties at FTC

demonstration site field in the area, and these varieties are highly accepted by farmers for their high yield

and drought resistance characteristics. Afran Kelo and Melka Belo Cooperative Unions have supplies of

an imported improved onion seeds for farmers in the study area.

In addition to its domestic market, a large volume of onion is exported to Djibouti and Somalia by many

exporters by truck and Ethio-Djibouti railway. According to Ethiopia Custom and Revenue Authority 2017

export data, 14,612.9 tons of onion were exported to Djibouti and Somali markets and earned $ 2.4

million, of which 90.2% of onion exported was to Djibouti market.

Study Findings

Input supply

The varieties of onion that are most popular with farmers are Bombay red, Red Creole, Nasik and Adama

red. There are local private suppliers and some point farmers that produce their own seed. For the supply

of seeds, the informal sector plays a significant role in reaching large number of farmers. Most of the

demand for seed is met by local suppliers in an unorganized market system and imported seeds from

informal sources.

27 | Page

For onion seed supply, farmers mention that there is a lack of improved seed variety and low germination

rate on their own seed bed. There is also a shortage of seed supply and the price is inflated.

The limited supply of agrochemicals is also a problem. Low quality chemicals and fertilizers and even fake

inputs are available in the market which limit or even have a negative impact on the yield. There is a lack

of traceability and few trusted sources that can supply in a timely manner. Chemicals and inputs are not

packed to trace their source and often don’t have expiry dates written on the package.

Duro Langano Cooperative in Arsi Negelle Woreda is involved in onions and provides inputs from private

importers and the government to the farmers. Private Input suppliers, such as Watka Input Supplier,

typically add a 20 birr margin on to the price at which they buy.

In East Hararghe, Afren Quelo Cooperative Union is one of the major onion seed suppliers. Fadis

Agricultural Research Center works on adaptation of onions. The Integrated Seed Sector Development

project has also provided financial support for seed release, adaptation, multiplication and storage.

Table 2: Released onion varieties - Ethiopian Institute of Agricultural Research

Variety Year of

Release

Maturity

(days

Yield

(t/ha)

Bombay red 1984 110-120 30

Adama red 1980 110-130 35

Melkam 1997 110-130 40

Nasik red 2004 90-100 30

Nafis 2010 90-100 40

Chemicals and fertilizers

Supply of other agricultural chemicals to control disease and pests on farm are supplied through private

traders found in Meki and Ziway towns. In some cases, Meki-Batu Union supplies a certain amount, but it

is not consistent. The problem with the agro-chemical supply is that there are few suppliers who dominate

the market and set their own price. Other problems are also observed on the quality of chemicals available

in the market. Some of the chemicals are outdated, stored in poor condition, and price is set by the

traders and often expensive.

The farming activities include land preparation, planting, fertilizing, controlling pest and disease, watering

and weed control, harvesting, and post-harvest processing require a substantial amount of labor cost.

Almost all farmers used inorganic fertilizers, such as DAP and Urea. A few farmers applied organic fertilizer

in relatively small doses.

Vegetable farmers in the study area are highly dependent on pesticide applications. Usually, farmers

sprayed their crops once every two days. During the rainy season, the frequency of spraying was increased.

In pesticide applications, sometimes farmers mixed two or more kinds of pesticides so that they can attain

more protection of the crop from disease and pest. The chemical and fertilizer application is intensive in

the study area. Farmers report that the chemicals are not very effective, so farmers are obliged to use

more and mix pesticides, such as selecron, karate, match, Lannet, Detametrin, Ridomil gold, Mancozeb,

Revus, Strobin, Chlorotahlonil, etc. by their own intuition, based on past experience and peer to peer

advice among the farmers. Purple blotch, downy mildew, damping off and iris yellow spot virus were the

most important diseases of onion. Insects, such as thrips, cut worm and caterpillar were the major pests.

28 | Page

At the same time farmers are not knowledgeable about the negative side of intensive chemical application,

like the effects on soil fertility, environment, water, as well as the long-term negative impacts on

environment and soil fertility degradation.

Business development services and financial services and products

The Awash Melkasa Agricultural Research Center has been working on onions since the 1950s and has

released many varieties. Bombay red is the most in-demand variety as it is suitable for drought-prone

areas with irrigation and is an early maturing variety. Nasik red and Nafis varieties are also in demand in

the local markets. The center holds demonstrations and field days to get feedback from farmers and the

seed is supplied with a full technology package.

The Government’s extension system does not have crop development agents that specialize in

horticulture. Farmers thus have to rely on their own experience and peer to peer learning.

Farmers face shortages of capital for financing vegetable production. Farmers are often in a tight spot to

buy improved inputs, labor and required chemicals for better production. Microfinance institutions don’t

have a financial product that fits the vegetable producers’ cash flow. Farmers need products that

adequately cover the input costs for a season (which can be 4-6 months) as well as a grace period after

harvest, so they are not forced to sell right away and have some more time to repay. Another factor is

that farming costs are spread out throughout the season, however disbursement is done in one lump sum.

A big disbursement is a security risk and can promote misspending. Farmers also need to be able to quickly

access finance in the event of shocks, such as disease and pests which require a quick solution. Hence,

loan products for farmers need to be tailored to their needs using human centered design principles.

Farmers are forced to approach alternative informal sources of finance from local traders (referred to as

“commissions” or “profit sharing”). However, this is expensive and a last resort for most farmers.

Production

The farmers who are engaged in onion production are able to produce more than the national average.

In Meki and Ziway areas, the maximum production of Onion per Hectare is about 500 Quintal and the

minimum is about 132 Quintal. And on average, the production of onion per hectare is about 480 Quintal.

The income generated from all the selected vegetables varies significantly due to high price fluctuations.

Per quintal price of onion varies at different times for different reasons, the maximum reported as 1,200

Birr and the minimum as 300 Birr per Quintal.

Price of onions fluctuates unpredictably and is set by wholesalers in Piazza in Addis Ababa. The price

fluctuation is mainly because of variable productivity affected by climatic conditions that affects the supply.

Poor market linkages also leave producers dependent on brokers and vegetable traders who decide the

price at the Kebele and Woreda level. Vegetables are usually sold on the local market and brokers are

the main actors linking farmers to the traders and get substantial gain at the expense of the farmers.

Farmers suffer from climate change in the Rift Valley where there is a shortage of rainfall during the critical

times of production. Inadequate or erratic rainfall with a lack of irrigation results in moisture stress, leading

to lower yields.

Farmers also report that they want to cultivate more land for vegetable production, but land availability is

limited. Water from lakes and groundwater has also reduced because of over-usage and salinity problems.

Storage

29 | Page

During the peak vegetable production season, farmers are forced to sell their onions at extremely low

prices because of lack of appropriate storage conditions to avoid sprouting. Farmers do not have any

means to store onions at home or on the farm.

Additionally, onions in Ethiopia (because of harvest, postharvest practices and seeds) are prone to

postharvest losses. Losses increase along the value chain, closer to the customer and can reach 50%. This

is mostly because rotten onions are not separated from good onions. Training on postharvest handling

and storage, can reduce these losses, and increase value for every actor along the chain.

Processing

No processing of onions is done locally. Dehydrated onions can be used in spice mixes as well as

commercial production of soups, sauces and other such products. Market opportunities for processed

onions will greatly alleviate farmers reliance on spot markets.

Marketing

Producers and local traders lack reliable market information and brokers and wholesalers in the terminal

market determine prices. During the supply glut, wholesalers may even refuse to buy harvested produce.

Due to the perishable nature of the produce, farmers are price takers.

Duro Langano Cooperative is involved in buying onions from farmers and selling to wholesalers, retailers

and even supermarkets. The cooperative has branches and warehouses in 14 kebeles. The cooperative

usually sells the produce for 70 birr more per quintal than the price it pays to the farmers.

Cooperatives, such as Duro Langano, often have working capital problems and are unable to supply inputs

as well as buy from farmers in the volumes they would like.

In East Hararghe, wholesalers source onions from Assela, Adama, Meli (near Arba Minch) and Bale in

Oromia and Gojjam in Amhara region. In addition to its domestic market, a large volume of onion is also

exported to Djibouti and Somali markets by many exporters who are located at Dire Dawa, every day by

truck and via Ethio-Djibouti railway.

Market channels

• Channel 1: Farmers → Consumers

• Channel 2: Farmers → Local Collectors→ Consumers

• Channel 3: Farmers → Local collectors → Retailers → Consumers

• Channel 4: Farmers → Wholesalers → Retailers →Consumers

• Channel 5: Farmers → Local Collectors → Wholesalers → Retailers → Consumers

• Channel 6: Farmers → Local Collectors → Exporters

Farmers typically make 5 to 7 ETB per kg and the retail is between 10-12 ETB per kg. Local collectors,

wholesalers and retailers typically make 0.5 to 1 ETB per kg.

30 | Page

Figure 3: Onion Prices

Gender analysis

Women farmers are involved in the onion value chain but are marginalized because of the gender power

imbalance. This is because onion is a high investment, high profit crop and men make the major decisions.

Women are involved in production and harvest as well as local marketing. The bigger sales are managed

by men.

Summary of financial analysis for onion smallholder farmers

The research team looked at the costs for an onion farmer to produce onions on one hectare of land.

The crop is immensely profitable, and farmers can make a good income even on a quarter hectare of land.

It is important for farmers to invest in irrigation though, as well as inputs, so that the farmer does

everything within his or her control to ensure a good yield. We also looked at the net income possible

from a quarter hectare of land, as farmers are more likely to keep only a part of their land for onion

farming, especially in the beginning. Even in that scenario, the farmer will be profitable. The upfront

investment for onion farming is high however, and farmers will need financing on favorable terms.

ONION SMALLHOLDER ENTERPRISE FINANCIAL SUMMARY FOR 1 HECTARE


Average yield Unit #

Unit

Price

Total Revenue in

ETB

Total Revenue in

USD

Total Revenue in USD for

0.25 HA

Onions Qt 225 750 168,750.00 $6,250.00 $1,562.50


TOTAL

COSTS 77,316.00 $2,863.56 $715.89

31 | Page

NET INCOME 91434.00 $3,386.44 $846.61


A complete business plan for onion farmers is presented in Annex 4.



Value

chain

stage


Input ● Low availability of improved

seed varieties

● Low quality of agrochemicals

● Fake inputs in the market

● Connect farmers to suppliers of high

quality inputs

● Support development of network of

Direct Input Marketers

● Support farmers in accessing finance

for the inputs

● Train farmers on correct usage and

storage of inputs

Production ● Lack of irrigation

● Usage of pesticide and

fertilizers vary

● Inadequate land preparation

and management

● Increase access to finance for farmers

and provide financial literacy and

training on farm management so that

they can responsibly take on higher

levels of finance. Farmers need access

to finance to smooth their income

flows and not be indebted to traders

which reduces their bargaining power.

● Train farmers on climate- smart

agriculture and adoption of water-

smart methods and irrigation

● Stimulate private sector for providing

irrigation solutions

● Train farmers on using pesticides and

fertilizers to intensify production.

Postharvest ● Low storage options for onions ● Explore coolbots (low cost cooling

technology – see Annex 9) and other

low cost cooling technology which can

be operated by farmer groups. Under

cold storage conditions, onions can be

kept for over 8 months depending on

the variety.

Processing ● No processing is done locally ● Explore option for dehydrating onions

and supplying to agro-processors

32 | Page

Local

Markets ● Highly fragmented market

dominated by

wholesalers/brokers

● Growing and steady demand for

household consumption

Export

Markets ● Limited acceptance of the

produce in middle to high end

market segments in export

market destinations due to

poor quality of the vegetables

● Reliable and growing market in the

Middle Eastt and other African

countries.

Recommendations:

● Link to financial institutions – Horticulture farmers need access to finance because of the high

cost of inputs as well as irrigation. For farmers to successfully transition to producing horticulture,

it is important that they have access to loans on the right terms to make profitable investments

in their farm.

● Work to strengthen farmer groups and cooperatives – Onion farmers when organized in

groups and cooperatives will have more bargaining power and will be able to sell directly to

wholesalers and other big buyers such as Et Fruit, Fresh Corner and other supermarkets, without

the involvement of brokers. This is a key lever for farmer’s increased profitability and market.

● Training in harvest and postharvest handling – Develop curriculum on harvest and

postharvest handling for onions and train farmers. Resources are available from UC Davis3 and

Feed the Future Horticultural Innovation Lab.

● On-farm or at home storage – Farmers do not have a space to store their onions under

optimum conditions (dry with good air circulation). Farmers should be trained in building simple

and safe storage structures, so they do not have to sell immediately at harvest.

● Catalyze cold storage - The

project can work to promote

Coolbots (or other low cost cold

storage solutions) for long-term

storage by engaging youth

entrepreneurs who can collectively

start and rent out their cold storage

space to farmers. Farmer groups can

also invest in coolbots.

● Engagement of Youth - Youth

should be engaged in technological

aspects of farming that are appealing

to them. Since onion farming is

driven by irrigation, youth can be

supported to provide mobile motor

pump repair and provide

maintenance services. Youth can

also be trained to specialize in

spraying services with full safety

equipment.

● Seedling production - The project can work with women’s groups and engage them in seedling

production. 4

3 http://postharvest.ucdavis.edu/files/259452.pdf

4 http://ucanr.edu/?blogtag=postharvest&blogasset=96361

Photo credit University of California, Division of Agriculture and

Natural Resources4

Figure 4: Photo of Vegetables Stored in a

Coolbot

http://horticulture.ucdavis.edu/

http://postharvest.ucdavis.edu/files/259452.pdf

http://ucanr.edu/?blogtag=postharvest&blogasset=96361

33 | Page

FINDINGS FROM CABBAGE

Value Chain Map of Cabbage


Overview

Cabbage is one of the most important vegetables produced in Ethiopia. The area under cabbage cultivation

is increasing due to its high profitability, ease of production and the increase in small scale irrigation

systems. The crop can be produced both during the rain-fed “Meher” season and under irrigation in the

off-season “Belg.”

34 | Page

The national average yield for Ethiopian Cabbage in 2015/2016 was 97.14 qt/ha on a production area of

33,942 hectares and it is one of the most popular vegetables for domestic consumption. In Oromia, the

productivity of Ethiopian cabbage is 101 qt/ha and in the focus zone of West Arsi even higher at 112 qt/ha.

Study Findings

Input supply

For cabbage, the most mentioned seed varieties are Rotonda, Thomas, Durum Head, Copenhagen market

and Holland. Cabbage seeds are being offered by Bejo Seed/Crop Grow PLC, Hazera Genetics and Carl

Scholten, among others. Improved seeds can offer a yield advantage and extend shelf life. Farmers just

have one or two varieties to choose from, showing the gap in distribution network and lack of new

varieties.

Production of cabbage seedlings can be a good income generating activity for women's groups.

The research centers for cabbage are Holetta Agricultural Research Center (HARC) and Kolumsa

Agricultural Research Center (KARC).

Duro Langano Cooperative in Arsi Negelle Woreda is involved in cabbage and provides inputs from

private importers and the government to the farmers. Primary cooperatives are the main suppliers of

fertilizers.

Production

Cabbage production is done by smallholder farmers, primarily women and is done as rain-fed as well as

irrigated production. The price of cabbage often goes up during the long fasting season before Easter as

well as Christmas. Farmers who can time their harvest to these seasons or store to sell in these seasons

can increase their returns.

Storage and processing

There are no storage and processing options for cabbage. There is potential for developing cold storage

for cabbage as cabbage can be stored for 3-6 weeks.

Marketing

Duro Langano Cooperative is involved in buying cabbage from farmers and selling to wholesalers, retailers



Cooperatives, such as Duro Langano, often have working capital problems and are unable to supply inputs

as well as buy from farmers in the volumes they would like to.

Market channels:

• Channel 1: Producers → Consumers

• Channel 2: Producers → Retailers → Consumers

• Channel 3: Producers → Wholesalers → Retailers → Consumers

• Channel 4: Producers → Collectors → Wholesalers → Retailers → Consumers

• Channel 5: Producers → Unions → Wholesalers → Retailers → Consumers

If unions, are present, depending on the union’s performance, farmers may prefer to sell through the

unions. Otherwise, PSNP farmers have to rely on the channels through which a majority of the cabbage

passes, which is Channel 4.

35 | Page


Gender analysis

In cabbage farming women have a primary role as they are the ones who grow cabbage at the homestead

level (among PSNP farmers). The project should focus on working with women farmers and encouraging

them to incrementally increase the land on which they produce cabbage, for the market. Increasing

women’s access to seeds and other inputs will be crucial for their success in cabbage farming.

Financial summary for small-scale cabbage producers

Cabbage is an excellent investment for smallholder farmers as it has steady market demand and good

prices in the market. Farmers will need access to finance for investing in cabbage production as well as

training on good agricultural practices and irrigation to be successful. The project should focus its cabbage

interventions in the project woredas in the Rift Valley where irrigation is already available or easily available

to PSNP farmers.

CABBAGE SMALLHOLDER ENTERPRISE FINANCIAL SUMMARY FOR 1 HECTARE



Cabbage Qt 102 550 56,100.00 $2,077.78


TOTAL COSTS 23,667.00 $876.56

NET INCOME 32433.00 $1,201.22


A complete business plan for cabbage producers is presented in Annex 4.



Value

chain

stage


Input ● Absence of vegetable seed

multiplying and distributing

companies resulting in low

availability of improved seed

varieties

● Low availability and quality of

agrochemicals

● High input prices

● There is a big opportunity to increase

yields by connecting farmers to

suppliers of high quality inputs,

supporting development of network of

Direct Input Marketers, supporting

farmers in accessing finance for the

inputs and training farmers on correct

usage and storage of inputs.

36 | Page

Production ● Lack of irrigation

● Climate change

● Incidence of diseases and

insects, such as cabbage

aphids, cabbage butterfly, etc.

● Increase access to finance for farmers

and provide financial literacy and

training on farm management so that

they can responsibly take on higher

levels of finance. Farmers need access

to finance to smooth their income flows

and not be indebted to traders which

reduces their bargaining power.

● Train farmers on climate-smart

agriculture and adoption of water-

smart methods and irrigation

● Stimulate private sector to provide

irrigation solutions

● Train farmers on using pesticides and

fertilizers to intensify production.

Postharvest ● Lack of storage facilities ● Train farmers on proper harvesting

practices and postharvest handling, to

reduce damage and moisture loss.

● Between harvest and sale farmers can

keep their produce in Zero Energy

Cool Chambers that reduce

temperature by 5-10 C, thereby

increasing shelf-life and reducing weight

loss.

● Explore coolbots and other low-cost

cooling technology that can be

operated by farmer groups. With cold

storage, cabbage can be kept up to 6

weeks.

Processing ● No processing options ● None

Local

Markets

● Highly fragmented market

dominated by

wholesalers/brokers

● Supply shortages

● Low product quality

● Growing and steady demand for

household consumption

Export

Markets

● Illegal export to Somalia ● Reliable and growing market in the

Middle Eastt and other African

countries.

Recommendations:

● Increase farmer knowledge to invest in cabbage production – Farmers need awareness

generation and capacity building to invest in cabbage production. Many PSNP farmers in the focus

woredas are not presently farming cabbage for the market. Women are mostly practicing cabbage

production for home consumption. Through capacity building, women farmers will have an edge

in expanding their cabbage production from homestead to the market. The project can consider

37 | Page

various options to increase farmer knowledge including specialized training of development agents

in cabbage production and facilitating learning through model farmers.

● Increase farmer access to quality inputs – For horticulture, the access to quality inputs,

especially seeds is an important lever for successful start to the production. The project should

explore innovative ways to work with seed producers, Farm Service Centers, the extension

system and Direct Input Marketers to fill the gaps, so that farmers have ready access to input

technology.

● Build capacity of Duro Langano cooperative – Improve the capacity of Duro Langano

cooperative to supply improved cabbage seeds. Also work with management to increase their

capacity to buy cabbage from farmers and sell to big buyers. The project can encourage the

cooperative to especially support women farmers.

● Establish relationship with research centers – The project should establish a relationship

with Holetta Agricultural Research Center (HARC) and Kolumsa Agricultural Research Center

(KARC), and connect extension and producers to the knowledge being generated from these

centers.

● Access to finance – Cabbage is a high investment crop which needs irrigation and hence without

access to finance, PSNP farmers cannot invest in its production. The recommended starting plot

size for diversification into cabbage is 1/4 hectare.

● Focus on Postharvest - Postharvest losses in cabbage are high along the chain, thereby reducing

weight due to moisture loss and increasing price for end-consumers. Postharvest storage will even

out the supply of cabbage and contribute to stabilizing prices. The project should work to catalyze

entrepreneurship among youth or farmer groups to build zero energy cool chambers and coolbots

can go a long way in reducing losses.5

● Engagement of Youth – The project can engage youth in irrigation (installation, service, repair

and maintenance) as well as postharvest storage of cabbage.

● Engagement of Women - The project can work with women's groups on seedling production,

as well as expanding current production beyond just household consumption. While women often

sell the produce for their immediate cash needs, involving them in cooperatives has the potential

to increase and stabilize their incomes.

5 Cabbage – Recommendations for Maintaining Postharvest Quality


38 | Page

FINDINGS FROM RED CHILI PEPPERS

Value Chain Map – Red Chili Peppers


Overview

Ethiopia is one of the world’s largest producers of peppers. The red chili peppers are dried, powdered

and go into the two most popular spice mixes of berbere and mitmita. The green peppers are used fresh

in cooking.

39 | Page

In 2015/2016 Meher season, in Oromia, farmers had a productivity of 19 quintal per hectare compared to

the national average of 18.4 quintal per hectare

In some selected HCS value chain analysis study woredas, such as Dire Dawa, Deder and Midega Tola,

Melka Belo, small quantities of pepper are currently grown by smallholder farmers by rainfed and irrigation.

Pepper are also highly demanded in the market and PSNP farmers in these woredas are interested to

engage in pepper production. The main reason for farmers choosing pepper production was for its high

income/profit potential.

Fadis Agricultural Research Center has undertaken an adaptation trial on MarekoFana and Pepper

(MiTimita Amharic name) varieties at FTC demonstration site. Currently, the varieties have not been

released.

On field visits, interviewed traders have shared that red chili pepper grown in Jarso woreda in East

Hararghe Zone was highly demanded by consumers and its current market price is 60-65 Birr/kg as

compared to red chili pepper from Addis Ababa at 40-45 Birr/kg.

Figure 5: Major Types of Peppers Grown in Ethiopia

Study Findings

Input supply

Duro Langano Cooperative in Arsi Negelle Woreda is involved in peppers and provides inputs from

private importers and the government to the farmers.

Model farmers often work in seed multiplication. Multi-purpose cooperatives also do seed multiplication

and supply farmers. Afren Qelo Cooperative Union, which is also a Farm Service Center, supplies seeds

for peppers. The Ethiopia Seed Enterprise is also involved in peppers.

Pepper seedling is a good business opportunity for farmer groups and cooperatives.

Research on peppers is done at the Melkassa Agricultural Research Center. In East Hararghe, the Fadis

Agricultural Research Center is working on peppers.

40 | Page

Production

The production is quite seasonal with the harvest in the months of November through January. Farmers

need training in when to pick peppers to have peppers of uniform quality and also sorting, so that peppers

of low and bad quality are not mixed with high quality peppers. The red peppers should be harvested

when they have turned red and are starting to dry.

Farmers depending on distance to the nearest markets, may transport peppers to the markets themselves.

Village collectors or brokers also assemble peppers from farmers and sell directly to wholesalers. The

local collectors are usually farmers or part-time traders who use their financial resources and local

knowledge to source peppers. The wholesalers are the major actors in the marketing channel.

Storage

Fresh green peppers have a low shelf life and are usually sold to traders right after harvest. Farmers and

traders sometimes add water to the peppers to increase the weight.

Red peppers are picked when they are mature and are dried at home by farmers. Peppers should be

preferably dried to 11-13% moisture content and in the shade. However, the farmers do not have good

bags to store the dried peppers.

Processing

Processing is done by ‘Baltina’ Processors. These are small

women-led businesses that specialize in making spice mixes

and packaging for retail sale. Many households also prefer to

dry the peppers themselves and take them to a miller to be

ground. Such households, will usually process the pepper

powder in large amounts, which will last them a whole year.

Marketing

Pepper is sold by farmers to traders and brokers who then sell to wholesalers. Wholesalers for peppers

typically sell to big buyers in Adama, Hawassa and Addis Ababa.

Duro Langano Cooperative is involved in buying peppers from farmers and selling to wholesalers, retailers



Cooperatives, such as Duro Langano, often have working capital limitations and are unable to supply inputs

as well as buy from farmers in the volumes they would like to.

In East Hararghe, wholesalers source peppers from Babile mostly.

Market channels

• Channel 1: Farmers → Collectors → Wholesalers → Processors → Consumers

• Channel 2: Farmers → Wholesalers → Retailer → Consumers

• Channel 3: Farmers → Wholesalers → Processors → Consumers

• Channel 4: Farmers → Processors → Consumers

Given that farmers can have a larger fraction of the total value, development of pepper producer groups

and associations with direct linkages to processors or even cottage-level production of berbere and

mitmita powders should be explored.

Barrier analysis

The project should research any

barriers to entry for women’s groups

to become Baltina processors.

41 | Page



Pepper is grown under rainfed conditions and hence supply fluctuates. The season of low supply is between

June and mid-September. Farmers typically sell their red pepper at harvest between October and February.

Gender analysis

Women are involved in all stages of pepper farming, especially postharvest handling and processing. Men,

however, have control of sales. Women also own Baltina processing shops where the peppers are dried

and processed into spice mixes (berbere).

Financial summary for smallholder pepper producers

The production of red pepper is a profitable enterprise for smallholder farmers. Farmers will need to take

care to invest in inputs as well as manual labor for land preparation, weeding, harvesting as well as

irrigation.

RED CHILI PEPPER SMALLHOLDER ENTERPRISE FINANCIAL SUMMARY FOR 1

HECTARE



Pepper Qt 19 3850 73,150.00 $2,709.26


TOTAL COSTS 38,634.00 $1,430.89

NET INCOME 34516.00 $1,278.37


See the full business plan for red chili pepper producers in Annex 4.



Value

chain stage Constraints Opportunities

Input ● Lack of access to quality

inputs

● Increasing price of inputs

● Limited research and

development on peppers

● Limited access to finance

for inputs

● Opportunity to increase production and

strengthen the inputs value chain by

encouraging private agro-dealers to supply

inputs for pepper production

42 | Page

Production ● Erratic rainfall and

shortage of water

● Climate change

● Prevalence of fungal

disease

● Low knowledge of good

agricultural practices

● Low productivity

● Low recognition of the

project areas as quality

producers of pepper

● Opportunity to increase production by

intensifying production through training on

agricultural practices and facilitating finance

for purchasing inputs as well as storing

dried red pepper for later sale.

Postharvest ● Poor postharvest handling

and storage that leads to

losses along the chain

● Opportunities to increase value through

drying (solar drying) and proper storage,

including cold storage for green peppers.

Processing ● Lack of awareness and

low capacity of farmers to

engage in processing and

packing

● Lack of major

agroprocessors

● Processing can be done close to farmer

level through farmer groups and

associations.

● Additional product development can be

explored for making chili oils, chili paste,

dried powders and sauces.

Local

Markets

● Fluctuating supply

● Long chain

● Lack of organized market

information services

● Peppers are a mainstay of Ethiopian cuisine

and will always be in demand

● Some marketing and advertising activities

can be undertaken to highlight the quality

of peppers from project area to stimulate

demand.

Export

Markets

● Export markets exist, but

farmers have a hard time

meeting quality

requirement

● In the future, under contract farming,

access to export markets may be possible

for project farmers.

Recommendations:

● Strengthen Farmer Groups and Cooperatives - The development of red pepper producers’

bargaining power through cooperatives will increase their share of total market value. Build the

capacity of Duro Langano Cooperative working on seed marketing and its capital limitations for

off-taking.

● Promote local processing and packaging - With increased urbanization, people prefer

buying the berbere and mitmita mix. Encouraging small-scale processing and packaging at the

village level is not only a postharvest measure, but also good for marketing and gaining a larger

share of value. It will also increase women’s incomes. Facilitate financing for local processing and

packaging.

● Access to Finance - Peppers can have a high level of profitability, but farmers need to invest in

production, as well as drying and storage to come out as winners. Good financial products that

understand farmer’s cashflow needs including long grace periods, will be crucial for farmer success.

43 | Page

● Training on better production - Chili peppers are susceptible to rot and mold. Farmers need

training on how to reduce physiological and pathological disorders. They also need training on

reducing postharvest losses.6

6 Chili peppers – recommendations for maintaining postharvest quality -



44 | Page

FINDINGS FROM POTATOES AND SWEET

POTATOES

Value Chain Map for Potatoes


45 | Page

Overview of Potatoes

Potatoes are one of the most popular vegetables in Ethiopia and are eaten in traditional vegetarian dishes

as well as French fries and chips. The average yield of potato in Oromia is 119 qt/ha, which is lower than

the national average of 134 qt/ha. About 70% of the agricultural land in the county is situated at an altitude

range of 1800-2500 m above sea level with annual rainfall of 600 mm or more, which is conducive for high

quality ware (potatoes for human consumption) and seed potato production. The country has suitable

edaphic and climatic conditions for the production of high quality ware and seed potatoes.

Potato grows in Dire Dawa Administrative council (Dire Dawa woreda) and East Harergehe Zone (Deder,

Midega Tola and Melka Belo woredas) in small quantities by rainfed and irrigated production. The crop is

highly demanded by farmers and consumers in the study area. Currently, women in Dire Dawa towns are

engaged in petty trade of boiled potato at small shops and open areas on the streets. If PSNP farmers in

the study area were interested to invest and engage in production and trading activity of this crops, they

can improve their income and become self-sufficient in a short period of time.

Fadise Agricultural Research Center has undertaken an adaptation trial on Bere Buna and Gudene Potato

varieties at FTC demonstration site. These varieties are selected for their disease resistance

characteristics. Fedis Agricultural Research center is working in collaboration with Integrated Seed Sector

Development (ISSD) of Haramaya University. The role of the research center is facilitation of the

adaptation and seed multiplication activity, providing training to DAs, follow-up activities and providing

necessary equipment, such as farm equipment, pump, furniture etc. Cooperatives are doing the seed

multiplication activity. Fadis Agricultural Research Center has brought these varieties from other areas

outside the zone, the varieties were released by Oromia Agricultural Research Center. These potato

varieties are highly accepted by famers by their high yield and disease resistance characteristics. The

following five varieties of potato - Chiro, Zemen, Bedassa, Gabissa and Harchassa - have been developed

by Potato Improvement Program of Haramaya University and recommended for mid highland and high-

altitude areas of Eastern and Western Hararghe.

The crop matures within 4 months’ time (June/July to October). The major challenges that the farmers

are facing are pests, such as wag (Amharic name), and leaf rust. Farmers also report the unavailability of

the seed and the difficulty in transferring the planting material to the next cropping season. The available

opportunity to scale up the crop is via market linkages, availability of adaptation in the area, list of released

varieties with their characteristics, and closeness to export markets (Djibouti, Somalia and the Middle

Eastt).

Potato was supplied to the local markets and exported to Djibouti and Somalia and even to USA and

Europe in preserved forms. According to Ethiopia Custom and Revenue Authority 2017 export data,

14,613 tons of potato was exported to Djibouti and Somali markets and earned $ 2.6 million(90.2 % of

potato exported to Djibouti market).

46 | Page

Value Chain Map for Sweet Potatoes


Overview of Sweet Potatoes

Sweet potatoes are among the list of major food crops that are consumed across the country and are a

high-potential food security crop because of its ability to provide a high yield of high-quality product per

input unit with a shorter crop cycle (mostly less than 120 days) than major cereal crops. In Ethiopia, Sweet

Potato is the second most important root crop after enset (Ensete ventricosum).

According to CSA 2015/16 cropping season, the estimated area covered under Sweet Potato by private

farmers’ holdings and large scale farmers was estimated to be 41,039 hectares with an average yield of

334 quintals per hectare and estimated total production of greater than 13 million quintals at the national

level. The productivity in Oromia is significantly higher at 494 quintal/hectare.

47 | Page

Sweet Potato grows in Dire Dawa Administrative council (Dire Dawa woreda) and East Hararghe Zone

(Deder and Melka Belo woredas) in small quantities by rain fed and irrigation.

Fedis Agricultural Research Center has undertaken an adaptation trial on Ado and Berkume Sweet Potato

(Orange flesh) varieties at FTC demonstration site at Babile Woreda, the research center has brought

these varieties from other area outside the zone, the varieties were released by Oromia Agricultural

Research Center. These sweet potato varieties are highly accepted by famers by their high yield, test, huge

biomass (feed to animal) and morphological characteristics. The crop is matured within 4 months’ time

(June/July to October), the major challenges that farmers face in the production of the crop was it being

damaged or eaten by pigs and kerkero - Amharic name for Wild Boar; and also the availability of the seed

or it is difficult to transfer the seed (cuttings) for other cropping season. The available opportunity to scale

up the crop is ease of market linkages, availability of adaptation in the area and a list of released varieties

with their good characteristics.

Study Findings for Both Potatoes and Sweet Potatoes

Input supply

Potato seeds are supplied by cooperatives and private traders. Traditionally farmers grow potatoes using

small potatoes from the previous season, which results in a very low yield.

The following five varieties have been developed by Potato Improvement Program of Haramaya University

and are recommended for mid and high-altitude area of Eastern and western Hararghe with an altitude

between 1700 and 2400 m.a.s.l.

Table 3: Yield Potential and Other Characteristics of Improved Potato Varieties

Variety Days to

Maturity

Late blight

tolerance

Yielding

Potential

ton/ha)

Chiro 85-105 Low 28-35

Zemen 85-110 Medium 30-35

Bedesssa 95-114 Medium 29-35

Gabissa 85-110 Medium 31-40

Harchassa 85-110 Medium 35-42

Sources: Haramaya University, Root crops improvement program, research and extension team


The International Potato Center (CIP) is active in promoting orange fleshed sweet potato in Ethiopia.

Their focus is on increasing the production of pre-basic disease-free planting material and rapid

multiplication as well as improvement of market linkages and promotion of nutrition education and

production through homestead gardens.

Haramaya University has:

● 9 varieties of potatoes have been released. Bubu variety is high yielding and late blight tolerant.

Bubu is a medium maturing and high yielding sweet potato variety with a size and shape that is

preferred by farmers and consumers. The taste of the cooked Buba potato is categorized as very

good and is an accepted variety by farmers. Bubu variety was released by Haramaya University

and multiplied at Jarso woreda by cooperatives.

● Bubu variety is used for many value addition activities like injera, qita (local bread), Genfo, chips,

Sambusa and Flour.

48 | Page

● Gudene variety has high yields.

● The extension and outreach section of the University has undertaken a demonstration trial on

farmers day, and also provided training to 20 women on the value addition process, with focus on

how to retain good color.

Fadise Agricultural Research Center has:

● Undertaken an adaptation trial of Ado and Berkume varieties of Orange fleshed sweet potatoes

at the FTC demonstration site in Babile. These varieties have been brought from other areas and

have been released by the Oromia Agricultural Research Center. Their unique characteristics are

its good taste, morphological size, high amount of biomass, high productivity. In addition, they

offer a good source of Vitamin A.

● Challenges: destroyed/eaten by pigs and Kerkero Amharic name (Boar), insufficient access to

improved seed (difficult to transfer seed for next crop season)

● Mandate of the research center on Potato is providing training, follow up of multiplication activity

and providing necessary farming tools (equipment, pump and furniture). The research center has

received fund from ISSD (Integrated Seed Sector Development) project from Haramaya

University.

● Opportunity: availability of water for irrigation in some low land Erer woreda, water harvest

potential in Midega Tola woreda (ground water is hard), accessible and nearest export market

Djibouti, Somalia and the Middle Eastt, highest local consumption demand (middle income group

is increasing in the country)

Production

Sweet potatoes are grown by smallholders throughout the year. Farmers with access to irrigation, prefer

to grow sweet potatoes in the off-season so that they are better able to control watering and reduce the

disease burden. The main production constraints are related to poor quality seed and low access of

farmers to quality seed. In addition, farmers have low capacity to manage diseases.

Postharvest storage

Farmers need training on postharvest handling of potatoes and efficient storage to reduce losses. The

potatoes are damaged at all stages of the value chain from harvesting to transportation.

Cooling and pack houses are set up in Meki and Ziway towns for potatoes. Meki Batu Fruits and Vegetables

Growers Farmer Union also has refrigerated trucks.

For potatoes, the produce is often affected by rot and late blight. For sweet potatoes, it was observed

that curing was not sufficiently done and the skin was prone to damage. The periderm of the sweet potato

is easily damaged during harvest and handling and this leads to high rates of water loss and increased

susceptibility to decay. Roots should be cured for better storage.

Processing

Small-scale processing of potatoes into chips and other food items can help towards decreasing

postharvest losses, increasing demand by consumers and providing an attractive market to potato farmers.

For sweet potato, the flour can be used to replace wheat to a certain extent in baked items, thereby

increasing the nutritional content.

Marketing

In East Hararghe, Wholesalers source potatoes and sweet potatoes from Adama, Meki and Sahasemene

in Oromia, Arbaminichi and Wolayita (SNNPRS region), and Jarso and Komobolicha (East Harerghe zone,

49 | Page

Oromia Region). Shashamane is strategically located between Addis and Hawaasa and thus serves as one

of the biggest potato markets.



• Channel 2: Farmers → Local Collectors → Consumers

• Channel 3: Farmers → Local collectors → Retailers → Consumers

• Channel 4: Farmers → Wholesalers → Retailers → Consumers

• Channel 5: Farmers → local Collectors → wholesalers → Retailers → Consumers

• Channel 6: Farmers → local collectors → Exporters


Gender and youth analysis

In East Hararghe, in most of the town, even in rural area at time of drought, women are engaging in

wholesale, retailing and petty trade activities in potatoes. Potatoes are also part of snack food that is sold

on the road side by women.

Financial summary for potato smallholder producers

Potato farming can be a profitable business for PSNP farmers. While the upfront investment is high, even

planting on a quarter hectare will yield good increase in household income. The main costs for potato

farmers are seeds, farm labor and transportation.

POTATO SMALLHOLDER ENTERPRISE FINANCIAL SUMMARY FOR 1 HECTARE



Potato Qt 150 733 109,950.00 $4,072.22


TOTAL COSTS 63,006.00 $2,333.56

NET INCOME 46,944.00 $1,738.67


The complete business plan for potato farmers is presented in Annex 4.

Financial summary for sweet potato smallholder producers

Sweet potato farming is a very profitable business for smallholder farmers and will also increase the

nutrition of the farming household as well as consumers. The main costs are vine cuttings, labor for

planting, weeding, harvesting etc. as well as transportation.

SWEET POTATO SMALLHOLDER ENTERPRISE FINANCIAL SUMMARY FOR 1

HECTARE

50 | Page



Sweet Potato Qt 275 537.5 147,812.50 $5,474.54


TOTAL COSTS 86,478.98 $3,202.93

NET INCOME 61333.52 $2,271.61


The complete business plan for sweet potato farmers is presented in Annex 4.



Value

chain stage Constraints Opportunities

Input ● Inadequate supply of improved seed,

and also difficulties in transferring the

available improved seed to the next

cropping season

● Existence of University who

focused on research and

extension

● Existence of Agricultural

Research Center in the area

Production ● Occurrence of short rain fall, erratic

rainfall, drought

● Inadequacy of irrigation services

● Unavailability of water harvesting

practices for farming

● Frequent incidence of pest and disease.

Late blight and bacteria wilt for

potatoes. Sweet potato feathery mottle

virus (SPFMV) and Sweet potato

chlorotic fleck virus (SPCFV) for sweet

potatoes.

● lack of improved seed and fertilizer

● Farmers knowledge gap on farming

practices

● Lack of farmers organization or groups

engaged in output marketing

● Availability of supporting

institutions in the area

(government and non-

government)

● Unfulfilled high demand of

agricultural products

● Increased income level of the

people

● Availability of high water run-

off in the area and high

demand for irrigation

services

Postharvest ● Lack of modern storage infrastructure

and services

● Potatoes and sweet potatoes are not

sufficiently

● Opportunities to keep

potatoes for a long period of

time through curing and

proper postharvest storage

and handling.

51 | Page

Processing ● Insufficient agro processing services in

the area

● inadequacy of finance

● Opportunities to process

potatoes into chips, flour and

other processed foods

especially by women and

youth groups

Local

Markets

● Involvement of brokers and

unorganized markets

● High demand of consumers

for vegetable commodities

● High demand from farmers

side to have cooperative

involved in output marketing

Export

Markets

● Low income level of importing

countries (Djibouti and Somali)

● Nearest export market

(Djibouti, Somalia and Middle

Eastt countries)

Recommendations:

● Support storage infrastructure - Required support like construction of storage facility and

access to credit should be given to PSNP farmers, women’s and youth groups in order to engage

them in potato seed supply business activity

● Support seed efforts – Engage women in potato seed supply business. Build on the success of

GRAD project with the diffused light storage of potato seeds.

● Water harvesting – Provide support for developing water harvesting technology like

construction of water catchment in areas where high water runoff existed like Dire Dawa, Melka

Belo and Deder woredas

● Strengthen farmer groups – Organize and strengthen farmers groups or cooperatives who

are involved in input and output marketing in the study area

● Explore product development – Product development such as dried potato flour and potato

chips can be done on a small-scale basis by women’s groups as an income generating activity.

● Reduce postharvest losses – Postharvest losses including losses from pathological disorders

are high in potato and sweet potato. The project should train farmers on production, harvest and

postharvest measures to reduce these losses and produce higher quality potatoes.7

7 Sweet Potato – Recommendations for Maintaining Postharvest Quality -

http://postharvest.ucdavis.edu/Commodity_Resources/Fact_Sheets/Datastores/Vegetables_English/?uid=34&ds=799

Potato – Recommendations for Maintaining Postharvest Quality - http://postharvest.ucdavis.edu/files/259453.pdf

http://postharvest.ucdavis.edu/Commodity_Resources/Fact_Sheets/Datastores/Vegetables_English/?uid=34&ds=799


52 | Page

REFERENCES

Abate, G., Kasa, L., Minot, N., Rashid, S., Lemma, S., & Warner, J. (2015). Maize Value Chain in Ethiopia:

Structure, Conduct and Performance. IFPRI.

Abate, T., Shiferaw, B., Menkir, A., Wegary, D., Kebede, Y., Tesfaye, K., . . . Keno, T. (2015). Factors that

transformed maize productivity in Ethiopia. Food Security, 7(5), 965-981. Retrieved 12 11, 2017, from

https://link.springer.com/article/10.1007/s12571-015-0488-z

Afro Universal Consult & General Trading P.L.C. (2017). Value Chain Study on Wheat Industry in Ethiopia.

Addis Ababa Chamber of Commerce & Sectoral Associations.

Benfica, R., & Thurlow, J. (2017). Identifying priority value-chains in Ethiopia. IFPRI.

Central Statistical Agency. (2016). Agricultural Sample Survey 2015/2016 - Report on Area and Production

of Major Crops. The Federal Democratic Republic of Ethiopia.

Chisholm, N. (2015). The Groundnut Calue Chain in Babile District in Eastern Ethiopia. AgriDiet.

Daniels, H., & Fors, S. (2015). Supply & Value Chain Analysis of Onions in Ethiopia. Swedish University of

Agricultural Sciences.

Ferris, S., & Kaganzi, E. (2008). Evaluating marketing opportunities for haricot beans in Ethiopia. Nairobi: IPMS

(Improving Productivity and Market Success) of Ethiopian Farmers Project Working Paper. ILRI

(International Livestock Research Institute).

Getahun, A., & Tefera, E. (2017). Value Chain Assessment Study of Groundnut in Northwestern Ethiopia.

British Journal of Economics, Management & Trade.

Guchi, E., Ayalew, A., Dejene, M., Ketema, M., Asalf, B., & Fininsa, C. (2014). Occurrence of Aspergillus

Species in Groundnut ( Arachis hypogaea L.) along the Value Chain in Different Agro-Ecological Zones

of Eastern Ethiopia. Retrieved 12 10, 2017, from http://pubs.sciepub.com/jaem/2/6/7

Kitinoja, L. (2013). Innovative Small-scale Postharvest Technologies for reducing losses in Horticultural

Crops. Ethiop .J. Appl. Sci. Technol.

Lemu, E. T. (2016). Review of Haricot bean Value Chain in Ethiopia. Retrieved 12 11, 2017, from

http://iiste.org/journals/index.php/jaas/article/view/32492

Minot, N. W., Warner, J., Kasa, L., & Abate, G. (2015). The Wheat Supply Chain in Ethiopia: Patterns,

Trends, and Policy Options. IFPRI.

Optimal Solutions Group. (2013). COST-BENEFIT ANALYSIS OF THE POTATOES, ONIONS, AND

TOMATOES VALUE CHAINS IN ETHIOPIA. USAID.

Optimal Solutions Group, LLC and Cambridge Resources International. (2012). Cost -Benefit Analysis of the

GRAD Red Haricot Beans Value Chain.

Social Impact, I. (2017). Final Performance Evaluation: Graduation with resilience to achieve sustainable

development (GRAD) activity.

USAID. (2010). An Atlas of Ethiopian Livelihoods. USAID.

53 | Page

ANNEXES

Annex 1: Toolkit

Prioritization Matrix

Impact criteria

1. Nutrition: Does the crop contribute to improved family/community nutrition levels?

2. Income: What is the income potential of the crop? Will the crop substantially improve income

levels and represent a viable pathway to achieve prosperity?

3. Climate smart/Resilience: What are the agricultural input levels required for the crop? Is the

crop shade tolerant—can it be grown as part of an agroforestry and/or intercropped system?

Are cover crops/green manures/trees used in the system? Are eco-markets being sought for this

product? Is the crop drought tolerant? Are green third-party certifications possible? Is carbon

sequestration possible with this product? Does the crop contribute to greater resilience to

shocks in the landscape?

4. Youth friendly: Are there particular opportunities in the value chain that would be attractive for

youth?

5. Gender friendly: Are there particular opportunities in the value chain that empower women?

6. Employment: Is the crop/value chain a generator of local employment at the farm/community

level?

7. Influence: Does participation in the value chain represent an opportunity to influence the

industry and/or influence policy/practice in the private and/or public sector?

8. Food security: Does the crop contribute to the food security of a family or community?

9. Scalability: Is the crop produced by a large number of farmers in the country to achieve broad

impact?

54 | Page

Feasibility criteria

1. CRS presence in target territory: What level or history of presence does CRS or its local

partners have in the target territory?

2. Value chain services in territory: Are there input service dealers, cash or in-kind financial

services/processers in the territory or nearby?

3. Market demand: Is there established market demand for the product at the local, national,

regional, and/or international markets? Are prices and volumes attractive to farmers?

4. Smallholder friendly: Is the crop produced by large numbers of small farmers with low barriers

to entry? When is first return on investment? Is it a short-cycle crop that will ensure that

farmers earn income over the short term?

5. Upgrading potential: Can the farmer conduct primary post-harvest processing on the farm to

add value to the product? Can secondary processing be conducted by farmer organizations? Is

vertical integration possible with the crop by the farmer or farmer organization? Can a farmer

business achieve greater production volume, processing capacity, and sales to grow the business

to a new level?

6. CRS staff knowledge of crop: Does the CRS Country Program or regional office have previous

experience working with this crop or chain, or would the project be starting from scratch?

7. Strong implementing partner: Can CRS contract a strong local implementing partner? Is one

available with skills in agro-enterprise/value chains, or would CRS need to train the partner in

value chain basics for proper execution?

8. Existing organized farmer groups: Are there existing small-farmer groups organized around the

particular crop or value chain, or would the project need to organize them from the beginning?

9. Enabling environment: How is the government addressing this crop? Are infrastructure (roads,

water, electricity, markets) and private sector practices (active engagement in the agriculture

sector) in place for a value chain to potentially function or be improved?

10. Donor interest: Has the donor issued a Request for Applications or mentioned in country-based

meetings an interest in the particular crop or chain?

55 | Page

Annex 2: Study Methodology

The study was undertaken using the CRS Value Chain toolkit, that is explained in the figure below.

Figure 6: Value Chain Tool Kit Road Map - Key Milestones

In particular, the consultants focused on the first 2 phases - Defining the Scope and Building a Strategy.

The tools used are - Territorial analysis, value chain prioritization filter, market opportunity identification,

rapid market appraisal, value chain mapping and value chain strategy development.

Methods of primary and secondary data collection

The study was conducted in a participatory manner involving all partners and stakeholders at all levels and

using participatory research methods. The following are the key participatory research methods used in

the study:

● Focus Group Discussions (FGDs) were held with primary target livelihood groups (PSNP

households) of both men and women, young and old, literate and illiterate, skilled and unskilled in

the selected target woredas. Fourteen focus group discussions were held - one in each Woreda.

The group also conducted two ‘practice’ focus group discussions in Dera in Dodota Woreda, to

refine the focus group questionnaire.

● Woreda level focus group discussions – These focus group discussions were held with

Woreda officials from Bureau of Agriculture and Natural Resource, Bureau of Trade and Market

Development, Cooperative promotion Agency, Bureau of Women and children, Bureau of Youth

and Sport Affairs, Job creation and Micro and Small enterprises, and Irrigation Development

Authority.

● Zone level meetings – Zone level meetings were held in Arsi Asela (with Deputy Head, Bureau

of Agriculture, PSNP Livelihood Coordinator, Zone Food Security Coordinator), West Arsi Zone

(with Crop Protection Process Head) and East Hararghe (Representative of Bureau of Agriculture

Head).

● Key Informant Interviews (KIIs) with selected key informants including the CRS staff, Meke

Catholic Secretariat (MCS) and Hararghe Catholic Secretariat (HCS) staff, research centers,

56 | Page

National government offices, cooperatives/unions, SMEs, MFIs, processors, exporters, etc. (See

Annex 3 for list of key informants interviewed)

● Internal Workshop to prioritize crops was held with staff from MCS, HCS, CRS

headquarters and selected partner development organizations including SNV. This workshop used

the prioritization matrix tool and helped select the value chains for the study.

● Participatory Market Place Observations of sampled market places at woreda level offered

insights into current levels of supply and anticipated market demand

● Review of Secondary Data: Secondary qualitative and quantitative data at National, Zonal and

Woreda levels was identified and reviewed by the consultant. Reports included review of GRAD

project, previous value chain reports conducted on selected crops, Agricultural Growth Project

II Baseline Survey Report, Agricultural Sample Survey from the Central Statistical Agency of

Ethiopia and others.

Rationale for Deviation for household survey

Initially, the study had planned to conduct a household survey to listen to PSNP households and ground

the value chain analysis in their realities. However, it was decided internally, that farmer focus groups was

a better way to learn more about PSNP households, their farming practices and livelihoods and their

aspirations. Focus group discussions also allowed the research team to better understand the farmers

relationship with other value chain actors, how they can take better advantage of value chain opportunities

and the power dynamics, which would not be possible through a quantitative household survey. With this

view, the team conducted farmer focus groups in each woreda.

57 | Page

Annex 3: Study Woredas

Focus woredas for Feed the Future Ethiopia Livelihoods for Resilience - Oromia

Focus woredas for USAID's Office of Food for Peace-funded Development Food Security Activity

58 | Page

Annex 4: Business Plan Models:

The following business plans aim to provide a simple analysis to producers to present them with a clear

picture of what it entails to invest in a new crop. The SWOT analysis condenses the main findings from

the value chain analysis that are pertinent to farmers and will inform their opinion of the crop. The financial

numbers are based on farmer’s current practices, information collected from agrodealers and extension

agents as well as subject matter specialists from Woreda irrigation office.

Wheat Model Business Plan for Households

Overview: Wheat is one of the most important crops in Ethiopia for consumption at home and for sale

in market. Wheat guarantees farmers a level of food security through production, and surplus can be

marketed for income generation. The Rift Valley zones are high producers of wheat.

Potential customers: The main customers for wheat for PSNP farmers are brokers and local traders.

If the PSNP farmers are able to aggregate their produce, they can supply to millers and agro-processors.

Business SWOT Analysis

Strengths Weaknesses

● Wheat has steady market demand and

Ethiopia is a net importer of wheat.

● Low yields especially because of poor seed

quality

● Farmers need increased access to finance

for buying inputs

● Market challenges including import

subsidies

Opportunities Threats

● Increased yield through using improved

seeds and fertilizers

● Strong prices compared to other staple

crops

● Farmers in Rift Valley are poised to take

advantage of interventions that can help

them substantially increase yield and link

them to buyers.

● Climate change - in drought years, wheat

yields are very low

● Pests like Fall Armyworm

● Market imperfections - an increase in

production without reduction of import

subsidies can lead to prices plunging for

domestic producers

59 | Page

Model Financial Plan for Wheat Farming

Zone: Arsi Zone; Woreda/Kebele: Dodota and Sire


Average yield Unit # Unit Price Total Revenue

Wheat Qt 28.2 850 23,970.00


Input Cost Units # Unit Cost Total Cost

SEEDS

Seeds - Faven 76 KG 15 150.00 2,250.00

FERTILIZER

DAP Qt 1 1,100.00 1,100.00

Urea Qt 1 1,000.00 1,000.00

PESTICIDES

Insecticide Liter 1.5 360.00 540.00

Fungicide Liter 1 510.00 510.00

Herbicide Liter 1 480.00 480.00

LABOR

Labor # of people 25 100.00 2,500.00

OTHER COSTS

Transportation of inputs KG 3.5 15.00 52.50

Transportation from field # of people 12 100.00 1,200.00

Bagging and storage # 18 41.00 738.00

TOTAL COSTS 10,370.50

NET INCOME 13,599.50


60 | Page

Groundnuts Model Business Plan for Households

Overview: Groundnuts is one of the most important crops in East Hararghe. It is a good source of

income, increases dietary diversity and a gender friendly crop. East Hararghe has a competitive advantage

in growing groundnuts. Farmers that focus on intensifying production, proper harvesting and

postharvesting and those that participate in value addition, have the opportunity to make outsized gains

from the crop.

Potential customers: Groundnuts can be sold to village collectors as well as wholesalers. Farmers

should work in an organized way to access buyers who can provide a fairer price and surpass brokers.

Farmers can also aggregate and sell through cooperatives and unions. Farmers with more advanced

capabilities and higher quality production can be linked to large processors such as Hilina.



● East Hararghe has a competitive advantage

in growing groundnuts and the produce is

recognized throughout Ethiopia as of good

quality

● The crop is adapted to the agro-ecology of

the region, and there are universities and

research centers which are working on

the crop


quality and poor farmer practices

● High presence of aflatoxin because of poor

harvest and postharvest practices


● Increase yield through promotion of

intensification

● Increased quality and price through proper

harvesting and post-harvesting handling

and storage practices

● Value addition including shelling, roasting

and packaging and even peanut butter

● Linkages with agro-processors

● Opportunity to encourage women’s

entrepreneurship

● Climate change

● Pests and insects

61 | Page

Model Financial Plan for Groundnut Farming

Zone: East Hararghe Zone

Commodity: Groundnut



Groundnut Qt 25 1200 30,000.00



SEEDS

Seeds KG 100 26.00 2,600.00

LABOR

# of people 40 100.00 4,000.00

OTHER COSTS

Transportation of inputs KG 25 15.00 375.00




Assumptions:

Labor cost for weeding (30-35 days after planting) and (earthupping 50-60 days after planting)

Chemicals are not traditionally used for groundnuts in Ethiopia, so we were unable to estimate the costs.

However, Groundnuts requires adequate levels of phosphorus, potassium, magnesium and particularly

calcium for high yields. The project can work with agronomists in the region to provide recommendations

to farmers.

62 | Page

Onion Model Business Plan for Households

Overview: Onion is one of the most highly consumed and demanded crops in Ethiopia and can be a very

profitable enterprise for PSNP farmers.

Potential customers: The main customers for onions for PSNP farmers are brokers and local traders.

The market is dominated by the brokers and the wholesalers in Piazza in Addis, who to a large extent set

the price. It is possible however for farmers to aggregate and sell to big buyers like ET fruits, universities

etc. through unions.



● Onion has no seasonality in its demand and

Ethiopians consume onions on a daily basis

● Onion can be stored for many months

under the right conditions


quality


for buying inputs and irrigation

● Farmers need training in horticulture –

especially production, pest management

and postharvest.



seeds and fertilizers and irrigated farming

● Opportunity to store onions in cool

storage, so that farmers can benefit from

good prices.

● Onion farmers to be linked to unions

● Climate change - in drought years, yields

are very low

● Pest burden

63 | Page

Model Financial Plan for Onion Farming

Woreda Dodota

Crop Onion



Unit

Price

Total

Revenue

Onions Qt 225 750 168,750.00


Input Cost Units #

Unit

Cost Total Cost

SEEDS

Seeds - bombay red KG 12 500.00 6,000.00

Seed bed preparation bed 12 100.00 1,200.00

FERTILIZER

DAP kg 600 14.50 8,700.00

Urea kg 400 11.00 4,400.00

PESTICIDES

1. Insecticide

Selecron Lit 6 1,600.00 9,600.00

karate Lit 2 350.00 700.00

Match Lit 0.7 500.00 350.00

Lannet Kg 2 1,750.00 3,500.00

Detametrin Lit 0.5 400.00 200.00

2. Fungicide

Ridomil gold Kg 4 233.00 932.00

Mancozeb Kg 8 80.00 640.00

Revus Lit 0.5 900.00 450.00

Strobin Lit 0.5 3,800.00 1,900.00

Chlorotahlonil Lit 3 150.00 450.00

LABOR

Preparation (Ploughing, Harrowing,

Leveling, Ridging & Clearing) Labour 128 70.00 8,960.00

Planting Seedlings (Transplanting) Labour (Female) 80 60.00 4,800.00

64 | Page

Weeding

(9 – Labour in 4 – Rounds) Labour 144 70.00 10,080.00

Harvesting Box 412 15.00 6,180.00

OTHER

COSTS

Motor Pump

(Used for 3 – Years & Salvage Value

2,000) Robin (3 – Inch 2,334.00

Water Development

(Used for 5 – Years)

Hand Dug Well (One

time installation) 600.00

Fuel Lit 200 18.00 3,600.00

Repair & Maintenance Sum 10 150.00 1,500.00

OTHER

COSTS 0.00

Transportation of inputs KG 6 40.00 240.00

TOTAL

COSTS 77,316.00

NET

INCOME 91,434.00


65 | Page

Cabbage Model Business Plans for Households

Overview: Cabbage or Tikil Gomen as it is called locally in Ethiopia is one of the most popular vegetables.

Ethiopia has 60% Orthodox Christians who are vegan on more than half the year.

Potential customers: The main customers for cabbage for PSNP farmers are brokers and local traders.

The market is dominated by the brokers and the wholesalers. It is possible however for farmers to

aggregate and sell to big buyers like ET fruits, universities etc. through unions.



● Cabbage has steady year-round demand

● There is local knowledge available in

cabbage production especially commercial

farms like Genesis.

● Low yields especially because of low

availability of improved seeds

● Low availability of agrochemicals





and postharvest.

● No storage or processing options




● Farmers to be linked to unions

● Low cost on-farm or near-farm cold

storage can extend the shelf life and

reduce weight loss.


are very low

● Pest burden

Model Financial Plan for Cabbage Farmers

Zone West Arsi

Woreda

Adami Tulu

J/K

Woreda

Crop Cabbage



Cabbage - Average in

Oromia Qt 102 550 56,100.00


66 | Page


SEEDS

Seeds - Rotonda or Thomas

or Durum Head KG 5 160.00 800.00

Seed bed preparation bed 4 80.00 320.00

FERTILIZER

DAP Qt 1 1,100.00 1,100.00

Urea Qt 1 1,000.00 1,000.00

PESTICIDES

Insecticide

Selecron Liter 1 1,600.00 1,600.00

karate Liter 1 350.00 350.00

Abamectin Liter 0.5 3,000.00 1,500.00

Actara kg 0.4 3,250.00 1,300.00

Confider Liter 0.1 7,500.00 750.00

Fungicide

Ridomil gold kg 1 233.00 233.00

Mancozeb kg 1 80.00 80.00

Revus 250 SC lit 0.1 3,700.00 370.00

Cruzate R WP kg 1 230.00 230.00

LABOR 0.00

Labor cost (land preparation,

planting, managing,

harvesting, and transporting)

– 60 days @ 100 birr per day days 60 100.00 6,000.00

OTHER COSTS

Motor Pump

(Used for 3 – Years & Salvage

Value 2,000)

Robin (3 –

Inch 2,334.00

67 | Page

Water Development


Hand Dug

Well (One

time

installation) 600.00

Fuel Lit 200 18.00 3,600.00





68 | Page

Red Chili Pepper Model Business Plans for Households

Overview: Red peppers that are used in Berbere spice mix is one of the most important spices in Ethiopia

and Ethiopia is also one of the largest pepper producers.

Potential customers: The main customers for PSNP farmers producing red peppers are brokers and

local traders. It is possible however for farmers to aggregate and sell to big buyers like ET fruits,

universities etc. through unions. It is also possible for smallholders to come together and start small-scale

processing ‘Baltinas’ – where they dry and ground the pepper into spice mixes. Farmer groups will need

marketing and finance support for small-scale processing initiatives.



● Strong market demand and good prices








and postharvest.






● Farmers can be trained in how to reduce

postharvest losses

● Farmers can be trained in low cost on-

farm or near-farm cold storage can extend

the shelf life and reduce weight loss.

● Women groups can engage in small-scale

processing


are very low

● Pest burden

69 | Page

Model Financial Plan for Red Pepper Farmers



Unit

Price

Total

Revenue

Red Pepper Qt 19 3850 73,150.00


Input Cost Units #

Unit

Cost Total Cost

SEEDS

Seeds KG 40 400.00 16,000.00

FERTILIZER

Fertilizer Kg 300 16.00 4,800.00

PESTICIDES

Pest Management 1 800.00 800.00

LABOR

Labor cost (land preparation, planting,

managing, harvesting, and transporting) –

60 days @ 100 birr per day days 90 100.00 9,000.00

OTHER

COSTS

Motor Pump

(Used for 3 – Years & Salvage Value 2,000) Robin (3 – Inch) 2,334.00

Water Development


Hand Dug Well

(One time

installation) 600.00

Fuel Lit 200 18.00 3,600.00


TOTAL

COSTS 38,634.00

NET

INCOME 34,516.00


70 | Page

Potato Model Business Plans for Households

Overview: Potatoes are one of the most popular vegetables in Ethiopia and are eaten in traditional

vegetarian dishes. There is a lot of scope for processing of potatoes as well.




processing to make chips etc. Farmer groups will need marketing and finance support for small-scale

processing initiatives.



● Strong market demand

● Good prices

● Regional exports








and postharvest.






● Farmers can be trained in how to reduce

postharvest losses

● Farmers can be trained in low cost on-

farm or near-farm cold storage that can

extend the shelf life and reduce weight

loss.


processing of chips, flour etc.


are very low

● Pest burden

71 | Page

Model Financial Plan for Potato Farmers

Zone: East Hararghe

Commodity: Potato



Potato Qt 150 733 109,950.00



SEEDS

Seeds - Gudena and

Jalene QT 20 750.00 15,000.00

FERTILIZER

NPS Qt 2 1,278.00 2,556.00

Urea Qt 1.5 1,000.00 1,500.00

PESTICIDES

LABOR

Sowing # of people 35 100.00 3,500.00

Weeding and

cultivation # of people 30 100.00 3,000.00

Fertilizer application

and chemical spreading # of people 30 100.00 3,000.00

Harvestin # of people 40 100.00 4,000.00

OTHER COSTS

Transport QT 200 150.00 30,000.00

Land preparation

# of

plowing 3 150.00 450.00




72 | Page

Sweet Potato Model Business Plan for Households

Overview: Sweet Potatoes are one of the most popular vegetables in Ethiopia and are eaten in traditional

vegetarian dishes. Sweet potatoes and especially the orange fleshed varieties are known to be very

nutritious especially for children. Project woredas, especially those in East Hararghe have a strong culture

of growing sweet potatoes and have better yields than other parts of Ethiopia. There are a lot of

opportunities in sweet potato, including in vine multiplication, and processing.




processing to make chips, sweet potato flour (can be used in baking) etc. Farmer groups will need

marketing and finance support for small-scale processing initiatives.



● Strong market demand

● Good prices


availability of planting material. It is hard to

store from one season to another






and postharvest.







processing of chips, flour etc.


are very low

● Pest burden

73 | Page

Model Financial Plan for Sweet Potato Farmers

Crop

Sweet

Potato



Sweet Potato Qt 275 537.5 147,812.50



SEEDS

Seeds - Variety 1 berkume cuttings 55,556 0.40 22,222.40

FERTILIZER

NPS Qt 2 1,278.29 2,556.58

Urea Qt 1 1,000.00 1,000.00

PESTICIDES 0.00

Insecticide kg 2 450.00 900.00

LABOR

Seed Transport # of people 20 100.00 2,000.00

Planting # of people 20 100.00 2,000.00

Weeding and cultivation # of people 30 100.00 3,000.00

Earthing up # of people 30 100.00 3,000.00

Harvesting # of people 20 100.00 2,000.00

Loading and unloading # of people 10 100.00 1,000.00

OTHER COSTS

Transportation of inputs QT 300 150.00 45,000.00

Land preparation

# of

ploughing 3 600.00 1,800.00




74 | Page

Maize Model Business Plan for Households

Overview: Maize is one of the most important crops in Ethiopia for consumption at home and for sale

in markets for processing and animal feed as well. Maize guarantees farmers a level of food security through

production, and surplus can be marketed for income generation. Focusing on maize for income generating

opportunities can bring farmers some returns especially if farmers invest in storage and sell their produce

after the prices have stabilized after harvest.

Potential customers: Maize can be sold to traders and brokers who come to farmgate, but for better

prices, it is best to aggregate and sell to cooperatives and unions. If farmer groups can organize themselves

to aggregate at least 1 Isuzu volume of maize, then they can sell directly to millers and other agro-

processors.



● Farmers already grow maize, hence are

familiar with the crop

● In some parts - especially in East Hararghe,

Maize is inter-cropped with pulses

● Maize always has a market demand


quality


for buying inputs

● Low profitability

● Prone to postharvest losses



seeds and fertilizers

● Increased food security as well as

marketable surplus (at a higher price)

possible through using improved storage

such as PICS bags

● Increased nutritional outcomes possible by

cultivating Quality Protein Maize

● Export opportunities exist in the future,

after the Ethiopian Government relaxes

the maize ban

● Climate change - in drought years, maize

yields are very low

● Pests like Fall Armyworm

75 | Page

Model Financial Plan for Maize Farming

Data based on Dodota, Boset and Sire District

Crop Maize



Maize Qt 35.12 350 12,292.00



SEEDS

BH543 or Melkasa2 Quintal 0.25 2,248.00 562.00

FERTILIZER

DAP Quintal 1 1,100.00 1,100.00

Urea KG 0.5 1,000.00 500.00

PESTICIDES

Insecticide Liter 1 800.00 800.00

LABOR

Ploughing # of people 12 100.00 1,200.00

Weeding # of people 30 80.00 2,400.00

Harvesting # of people 16 70.00 1,120.00

Winnowing # of people 13 60.00 780.00

OTHER COSTS

Transport from field person 10 100.00 1,000.00

Bagging/ storage number 10 41.00 410.00


NET INCOME 2,420.00


76 | Page

Haricot Beans Model Business Plan for Households

Overview: Haricot beans is produced in the Rift Valley as well as in East Hararghe in smaller quantities.

There is a high demand for haricot beans from large processors, however productivity is low and prices

are not very appealing.

Farmers should invest in haricot beans for income earning only if they make significant investments to get

outsized yields. The farming of haricot beans has other benefits including soil health, diversification and

household nutritional benefits.

Potential Customers: The main buyers that farmers have access to are traders and brokers who come

to their farm gate. There is potential for growing higher quality haricot beans and linking with Exporters

such as ACOS.

SWOT Analysis


● Previous GRAD project has worked on

haricot beans, so farmers have experience

● Low yield

● Low availability of improved seeds and

problems with quality of improved seeds

● Limited access to pesticides

● Low access to finance

● Lack of market information


● Farmers need training on good agricultural

practices for Haricot Beans that can

improve yields and quality

● Since the crop is grown for the export

market it is subject to global price

fluctuations

Model Business Plan for Haricot Beans



Haricot bean Qt 16 700 11,200.00



Land/Rent

SEEDS

Seeds - awash1 QT 1 1,100.00 1,100.00

FERTILIZER

DAP KG 100 15.50 1,550.00

PESTICIDES

77 | Page

Insecticide Liter 0.5 850.00 425.00

Fungicide Liter 0.5 750.00 375.00

LABOR

Ploughing # of people 6 80.00 480.00

Weeding # of people 8 80.00 640.00

Harvesting # of people 8 80.00 640.00

Winnowing # of people 6 100.00 600.00

OTHER COSTS

Bagging/ Storage number 25 9.00 225.00


NET INCOME 5,165.00


78 | Page

Annex 5: Financial Analysis Graphs

Table 4: Profit Margin and Net Income

Profit Margin Net Income (ETB) Net Income (USD)

Groundnut 76.75% 23,025 $850

Wheat 56.74% 13,600 $502

Cabbage 57.81% 32,433 $1,197

Onion 54.18% 91,434 $3,374

Pepper 47.19% 34,516 $1,274

Haricot beans 46.12% 5,165 $191

Potato 42.70% 46,944 $1,732

Sweet potato 41.49% 61,334 $2,263

Maize 19.69% 2,420 $89

Figure 7: Profit Margin for All Crops

79 | Page

Figure 8: Net Income (ETB) for All Crops (1 HA)

Figure 9: Costs and Net Income for the Top 5 Investment Crops on 1/4 HA

80 | Page

Annex 6: List of People Interviewed

Name Position Organization Crop Woreda/Zone

Ababa Malako Market Research

and Promotion

Vera Pasta Wheat Dire Dawa

Abduljebar

Jemal

Branch Auditor SACCO All Sire

Abduselam

Jemal

- Haremaya

Farmers’

cooperative union

All Babile

Abebe Agonafir Village Collector - Grains Sire

Abera Deputy Head Bureau of

Agriculture

All Arsi Asela

Agrodealer - - All Boset

Ahmed Bulli Loan Officer OCSSCO,

Dodota

All Dodota

Alemgena Commercial

Manager

Hamaressa Edible

Oil Factory

Groundnut Haramaya

Aman Danbura - MFI Oromia

Credit and saving

share company

Babile branch

All Babile

Babulo Tone Retailer - onions Onions West Arsi Zone,

Adami Tulu J/K

Woreda

Bedhaso Anota Branch Manager OCSSCO All West Arsi Zone,

Siraro Woreda

Beriso Roba Customer Service

Officer

OCSSCO All West Arsi Zone,

Heben Arsi

Woreda

Beshir Fruit and

Vegetable

Exporter

Potato, Onion,

Tomato

Dire Dawa

Beyene Diriba - Trade Office Onion, Pepper,

Cabbage and

Haricot beans

West Arsi Zone,

Adami Tulu J/K

Woreda

Bezu Managing

Director

Gondie Import

and Export

Haricot Beans Adama

Birtukan Haramaya

University

Extension and

Outreach

Coordination

Office

Haramaya

University

All Haramaya

Dagmawit

Stegaye

low land pulses

researcher

Awash Melkasa

Agricultural

Research Center

Haricot Beans Dodota, Boset

and Adami Tulu.

81 | Page


Debebe Abebe Zone Food

Security

Coordinator

Bureau of

Agriculture

All Arsi Asela

Denur

Mohammed

Agrodealer - Vegetables and

Fruits

Dodota

Dr. Yitbarek Inputs Agriculture

Transformation

Agency

All Addis Ababa

Dursitu Jemal Village Collector Pepper Midega Tola

Edaho Koresso Crop Protection

Process Head

Bureau of

Agriculture

All West Arsi Zone

Fayassa

Gutema

Manager Afren Kello

Farmers

Cooperative

Union

All Haramaya

Fetachew W/

Mariam

Village Collector - Grains Dodota

Fisehaye

G/Meskel

Adama Branch

Manager

Ethiopian Trading

business

Corporation,

Grain and Coffee

Trade Unit

Wheat and

Haricot Beans

Adama

Gadesie Seime Branch Manager Metemamen MFI All West Arsi Zone,

Arsi Negele

Getahun Alemu Village Collector Wheat and Maize West Arsi Zone,

Heben Arsi

Woreda

Getahun Nigatu Soil Fertility

senior Expert,

Representative of

Bureau Head

Bureau of

Agriculture

All East Hararghe

Getenet

Mogase

Crop Trader - Grains and beans Dire Dawa

Girma Ayena Maki Batu

Multipurpose

Union

Beans East Shewa Zone,

Bora

Habtamu

Diriba

Integrated Seed

Sector

Development

Project

Haramaya

University

Grains Haramaya

Habtemariam

Zegeye

National Wheat

Research

Coordinator

Kulumsa wheat

Research Center

of excellence

Wheat Adami Tulu, Dera

and Arsi negelle.

Jafar Mumu Researcher Fadis Agricultural

Research Cener

All Harar

John Meyer COP CARE All Addis Ababa

Kader Marketing

Manager

Et Fruit All hort Addis Ababa

82 | Page


Lealem Tilahun Maize Research

project for

Drought and Heat

prone Areas

Coordinator

Awash Melkasa

Agricultural

Research Center

Maize Rift Valley

woredas

Lidet Tilaye Loan Officer Metemamen MFI All Ziway Dugda

Melaku Head of Student

Dean

Dire Dawa Potato, Tomato,

Pepper, carrot,

Garlic and Onion

Dire Dawa

Melikamu Wholesaler - Potato, Onion,

Sweet Potato,

Peppers,

Tomatoes

Harar

Merga Gadissa Acting Branch

Manager

Bussa Gonofa MFI All West Arsi Zone,

Adami Tulu J/K

Woreda, Ziway

Merko Shibru Manager Merko and

Mekdes

Partnership

All - Inputs West Arsi Zone,

Shala

Mohammed

Dobie

Branch Manager Metemamen MFI All West Arsi Zone,

Adami Tulu J/K

Woreda, Ziway

Mulugeta

Mohammed

Ministry of Trade

- Fruit and

Vegetable

Marketing

Directorate

All Addis Ababa

Nasir Siraji Researcher Fadis Agricultural

Research Cener

All Harar

Nega

Mekonnen

Value Chain

Market Specialist

SNV All Addis Ababa

Retailer -

Vegetables and

Fruit

- - Vegetables and

Fruits

Boset

Shimelis

Workneh

ACOS Ethiopia Haricot Beans Adama

Tadesse

G/Michael

PSNP Livelihood

Coordinator

Bureau of

Agriculture

All Arsi Asela

Tadesse Sewnet Production and

Technical

Manager

Addis Dallas Food

Complex

Wheat Adama

Tahir Hussein Wholesaler - Grains Ziway Dugda

Taye Wake Buyer Agroprocessor -

Wheat Flour

Wheat Dodota

Tedlech Bedada Head of Irrigation

Office

Irrigation Office All West Arsi Zone,

Adami Tulu J/K

Woreda

83 | Page


Teha Reuf Melka Belo

Farmers’

cooperative union

Cereals Melka Belo

Tolesa H/

Mariyam

Chair Person Ashale & Wayo

Cooperative

All West Arsi Zone,

Arsi Negele

Tolosa

Gemechu

- Multi-purpose

Cooperative

All Ogolcho Kebele,

Ziway Dugda

Trader Grains Dodota

Usman Abdella Branch Manager OCSSCO All West Arsi Zone,

Shala Woreda

Watka Input

Supplier

- - Onion, tomato,

cabbage

West Arsi Zone,

Adami Tulu

Woreda

Woineshet

Endeshaw

Ministry of Trade

- Fruit and

Vegetable

Marketing

Directorate

All Addis Ababa

Yimisirach

Belachew

Yimisirach

Agrodealer

- All - focus on

hort.

Ziway Dugda

Yoseph Alemu Horticulture

Researcher

Awash Melkasa

Agricultural

Research Center

Onions Rift Valley

woredas

Zelalem Jirata Regoinal Branch

Manager

Ethiopian

Commodity

Exchange

Haricot Beans Adama

- Branch Manager OCSSCO, Boset All Boset

- Hitosa Farmers

Cooperative

Union

Grains and beans Adama

- Ethiopian Seed

Enterprise

All Addis Ababa

84 | Page

Annex 7: Findings from Maize

Based on the analysis done for the maize business plan, the research team found that maize has very low

profitability. Since the primary goal of the two projects are to graduate households out of the safety net

program, we recommend that interventions in maize are not prioritized.

Maize Value Chain Map

Source: Created by research team

Overview

Overview of Maize sub-sector dynamics

Maize is Ethiopia’s most important cereal in terms of production, with 71 million quintals produced in

2015/2016 Meher Season by 9.5 million farmers across 2 million hectares of land in the 2015/2016 Meher

Season (Central Statistical Agency, 2016). Over half of all Ethiopian farmers grow maize, primarily for

subsistence. Maize is thus an important crop for overall food security and economic stability in the country.

While significant gains have been made in maize production over the past decade, there remains large

potential to increase productivity. Between 2001 and 2011, maize production increased by 50%, due to

increases in both per hectare yields and area under cultivation (Agriculture Transformation Agency, 2015).

However, estimates indicate that the current maize yield could be doubled if farmers adopt higher quality

85 | Page

inputs and proven agronomy best practices.8 At present, approximately only 30% of the land cultivated

for maize makes use of improved varieties of seed, and only 30% of farmers use the recommended rates

for fertilizer application. (Agriculture Transformation Agency, 2015.)

In 2015/2016, Ethiopia produced over 71 million tons of maize and it is the most grown cereal in Ethiopia.

Maize is eaten in the form of injera (Ethiopian flat bread), porridge, fresh - on the cob as well as popcorn

and corn flakes. Maize is also used as animal feed and can be used in many processed foods, such as

supplementary foods for infants, corn syrup and corn starch.

The profit potential for maize is very low and some studies show that it can even be negative (Abate, et

al., 2015). It is recommended that PSNP households grow maize only for home consumption and diversify

to other crops to increase their income.

Maize in project woredas

Maize is grown in almost all of the project woredas. It is a major crop in Boset, Sire, Dodota and Ziway

Dugda woredas. In East Hararghe, maize is produced by a majority of the smallholder farmers as a staple

crop often in rotation with sorghum.

It has varieties suitable for the lowland agroecology and is suitable for the Project Woredas in the Rift

Valley with average productivity of 25-32 quintals per ha, close to the national average which is 33 quintals

per ha. It is mainly produced for home consumption and is said to be preferred as food security commodity

than for the market.

Among PSNP households, maize is one of the most economical sources of calories. It is cultivated using

few modern inputs and farmers are limited to subsistence farming. In East Hararghe, it has specially been

noticed that farmers have little to no marketable surplus.

According to the respondents in the farmer focus group discussions, smallholders in the Project Woredas

in the Rift Valley, normally sell most of their produce as green maize particularly by women for minor

household expenses and immediately after harvest for fear of storage loss, and also to meet various cash

needs including repayment of loans, payment of taxes and to cover miscellaneous expenses.

Study Findings

Input Supply

To get the maximum yield, the maize crop requires seed, fertilizers and agrochemicals. The required inputs

are provided by Ethiopian Seed Enterprise, Oromia Seed Enterprise and Direct Input Marketers who are

small-scale agro-dealers. The Ethiopian Seed Enterprise and Oromia Seed Enterprise provides the inputs

to unions, multi-purpose cooperatives and farmer associations from whom the inputs flow to the farmers.

There are also private input suppliers like Pioneer present in Ethiopia.

Across the board, farmers report that fertilizers are readily available, however seeds are not available in

a timely manner.

There is also a general lack of technical knowledge and extension (both presence and quality), which

contributes to low productivity among the PSNP farmers.

8 http://ethioagp.org/maize-2/

86 | Page

Fall Armyworm has emerged as a major pest in maize in 2017. According to the FAO, the Fall Armyworm

is a migratory insect pest known to cause massive destruction of maize crops under warm and humid

conditions in the Americas. In Ethiopia, maize fields planted in belg and meher seasons in the prevailing

warm and moist weather conditions provide favorable environment for the insect to multiply massively

and spread to more areas. “The weather conditions from March to September in maize growing areas

provide fertile ground for the insect to mass multiply and spread easily,” said Zebdewos Salato, Director

of the Plant Protection Directorate at the Ethiopian Ministry of Agriculture and Natural Resources. Aided

by wind front, the fall armyworm of a single generation can spread quickly as far as 500 km away from its

point of emergence.

“The insect is establishing itself and is expected to remain an economic pest for very long time to come

hence we need to put in place a short and long-term fall armyworm management and control plan,” said

Bayeh Mulatu, National Integrated Pest Management Expert at FAO Ethiopia.

For the current season, pesticides have been recommended, as the infestation is massive. Farmers are

being advised to handpick the insect when the infestations are very low or apply contact and systemic

pesticides using knapsack sprayers when the infestation is significant to cause economic damage, he said.

Farmers are informed to undertake routine monitoring of their farms and exercise handpicking of larvae,

which escape the pesticide.9

Business development services

Research centers are working on Quality Protein Maize (QPM) varieties have already been officially

released by Ambo, Bako and Melkassa Agricultural Research Centers. Basic and adaptive research activities

are being conducted concurrently by different centers of the Ethiopian Institute of Agricultural Research

(EIAR) in collaboration with CIMMYT.

The Awash Melkasa Agricultural Research Center is working on drought-resistant maize varieties. Apart

from QPM, it is also working on extra early maturing seeds that mature in 90 days. These are Melkasa1

and Melkasa1Q (the Quality Protein Maize [QPM] version of Melkasa1). The center is unable to conduct

field demonstrations due to resource limitations. The center also requires assistance in increasing adoption

and popularizing the seeds that it releases.

In East Hararghe, Haramaya University is working on maize. They have worked to multiply the Melkasa 2

variety in Babile and also done demonstrations at Bate and Afran Kalo Farm Service Center’s

demonstration site. Close to Harar, the Fadise Agricultural Research Center has varieties that are early

maturing and drought resistant. Melkasa 1-7 have high nutrient content and are multi-purposes whereas

Melkasa 3, 4 and 7 are high yield.

Production

Productivity is below potential because of low input usage as well as limited crop rotation. Farmers are

aware of the importance of improved seeds and have a high demand for them. Inputs are primarily supplied

by Unions and Cooperatives including Hitosa union, Maki Batu Multipurpose Union, Ashale & Wayo

Cooperative, and Afran Kello Farmer’s Cooperative Union in Haramaya. However, seeds are not made

available at the Kebele or Woreda level in a timely manner. Fertilizers are available in a timely manner,

and farmers use them.

Through focus groups, the study team learned that Farmers have been provided training on improved

farming practices such as planting in rows, but these practices have not always been adopted.

9 http://www.fao.org/emergencies/fao-in-action/stories/stories-detail/en/c/889848/

http://www.fao.org/emergencies/fao-in-action/stories/stories-detail/en/c/889848/

87 | Page

On-farm losses are incurred because of poor seed quality, lack of proper fertilization and irrigation, lack

of knowledge of maturity indices for maize as well as poor planning at planting with harvesting dates.

Farmers also have a lack of market information, suffer from pests such as Army Worm, have poor field

sanitation (weedy plots), poor plant density, lack of adequate knowledge of fertilizer, herbicide and

insecticide application.

Storage

Farmers report high post-harvest losses of 20-30% including on-

farm losses. This is mainly because maize is stored in traditional

structures called Gotera, and gets easily infested. Farmers also

have a lack of knowledge of proper handling of maize and poor

temperature and humidity management during drying. Farmers

find themselves selling the marketable surplus during the supply

glut (January), when the price is the lowest. However, farmers

are forced to sell because of their immediate cash needs as well

as the risk of losses.

It was noted that PICS bags are available for sale in some

markets, particularly by Direct Input Marketers; however,

uptake among PSNP households is low.

Processing

Farmers usually sell green maize because of immediate cash needs as well as the inability to safely store

maize for long periods of time. Women farmers typically do minor cleaning and sorting before sales.

Traders may also do minor cleaning and sorting.

There are no maize processing facilities in the project woredas, however, though they are limited in

number, there are maize processing plants around Addis Ababa and Debre Zeit engaged in producing food

products such as corn flakes, biscuits, baby food, as well as animal feed and maize flour. Some millers also

do maize fortification, another form of value addition.

Marketing

The market is dominated by brokers who have kebele level information on farmers and the quality and

quantity of maize they have for sale. The brokers act as gatekeepers between farmers and traders and

often control the price. The farmers may have visibility on market prices at the Adama terminal through

cell phones, but are likely to go with the broker’s word on the price. Additionally, farmers don’t have

means for transport to take their produce to the market, hence they are reliant on brokers and traders

who come to the farmgate.

Traders come to the farmgate to aggregate the produce and transport it to markets. Traders incur

transportation costs and pay commission to brokers.

Traders typically sell maize to wholesalers who are big traders that supply maize to millers (milling,

however, is not very common in Ethiopia – and mostly is for animal feed processors), World Food

Programme and processors, such as Oromia Federation Maize Processing Plant and Faffa Food Share

Company, as well as retailers.

The Ethiopian Trading Business Corporation (ETBC) deals in maize and traded 300,000 quintals in 2017.

Barrier analysis:

The research team found that even

when farmers have received training

on a particular farming practice such as

planting in rows, the practice is not

always adopted. Additional research

needs to be done to assess why

farmers are not adopting improved

practices and how to effect behavior

change.

88 | Page

Market channels and channel recommendation

Farmers primarily sell their maize to local traders and the remaining to cooperatives and unions. Coops

and unions sell to wholesalers, donors such as WFP and other NGOs. The few maize processing plants

also purchase maize for processing. Retailers collect maize from wholesalers and deliver it to final

consumers. Access to markets is a problem for smallholder producers due to distance from market and

power dominance of traders.

• Channel 1: Farmers → Aggregator → Wholesalers → Retailers → Consumers

• Channel 2: Farmers → Primary Coops → Unions → WFP → Consumers

• Channel 3: Farmers → Primary Coops → Unions → Wholesaler → Processor → Retailer →

Consumer

The WFP Purchase for Progress (P4P) was an efficient marketing system for maize farmers especially

during bumper harvest by creating market-guaranteed opportunities. Uta Wayo Cooperative Union near

Shashamane was supplying maize to WFP. WFP has cancelled its contract with 34 coops in 2017.

Currently the export of maize is banned to ensure that local food supply is not affected. In the next few

years, however, the ban may be lifted if there is surplus production. This could raise prices as demand

from Eastern and Southern African countries for maize is high.

In East Hararghe, the channels are very short as most of the maize is consumed at home. Small quantities

are sold to village traders and consumers often directly, by women for their immediate cash needs.


As is the case for other agricultural commodities, the current maize market in the Project Woredas in

the Rift Valley is not quality based and traders pay similar prices for different maize qualities, which is a

disincentive for farmers to pay attention to quality.

Maize quality requirements include

· Moisture content of 13%

· Pure varieties without mixing different colors (white and yellow)

The ECX also provides grading parameters on its website and in its contracts as follows for white maize

and yellow maize:

Source: ECX website

89 | Page


According to survey results the price of maize in Project Woredas in the Rift Valley is the lowest at

harvest (November-December) and highest during the lean season between May to August. The study

was able to collect price data for Boset, Sire and Dodota. The data shows that farmers who commit to

early sales are unable to take advantage of the spike in prices during the summer months, when the price

close to doubles.

Gender and youth analysis

Women are involved in maize production and do a majority of the maize handling including shelling. Also,

since maize is primarily grown for home consumption, the surplus that is sold in the local markets is often

done by women in the form of petty trade.

Many young people are landless and those who own have about a quarter of a hectare. It is noted that the

youth participate in production activities to support their parents. It has been also explained that maize is

not particularly youth friendly as it is not mechanized.

Financial analysis for smallholder farmers – Maize

We present below the financial summary for a maize smallholder for 1 hectare of land. Using average

yields and prices and given the cost of production, the net income for a maize farmer is quite low at ETB

2,420 which is less than a 20% profit margin. PSNP Farmers in project woredas, who are primarily maize

farmers are trapped in a vicious cycle of poverty, as the investment is high compared to the returns from

maize. Farmers do have a familiarity with maize however, as it is their staple grain. Also, farmers can store

maize for some amount of time and consider it as a “safe” produce, as even if market prices drop, the

household will have food stocks to eat. Maize farmers will be largely unable to lift themselves out of

poverty without huge gains in yield, which may be very hard to achieve. The recommended strategy for

these farmers then, is to slowly diversify away from maize to other higher value crops, and grow only

enough maize for the family’s needs.

90 | Page

MAIZE SMALLHOLDER ENTERPRISE FINANCIAL SUMMARY FOR 1 HECTARE



Qt 35.12 350 12,292.00 $455.26


TOTAL COSTS 9,872.00 365.63

NET INCOME 2420.00 89.63


A complete business plan for maize farmers is presented in the annex.



Value chain

stage Constraints Opportunities

Input ● Need improved seed supply in a timely

manner

● Farmers need access to finance for

inputs

● Research centers efforts to

increase the supply of seeds

● And private seed suppliers

such as Pioneer

Production ● Farmers use traditional practices

● Damage because of pests such as stalk

borer and Fall Army Worm

● Drought and erratic rain

● Improved extension packages

are needed by farmers

● Suitable agro-ecology with

potential to increase

productivity

Post-

harvest

● Farmers use traditional storage

facilities that are prone to insect

damage and shorter storage life

● Availability of improved

storage materials

● Training to farmers on drying

maize and storing in PICS

bags

● Fumigation services are an

opportunity especially for

youth

Processing ● Processing at the Woreda level is

limited in number and are not

accessible for farmers

● Awareness creation by the

extension system

Local Markets ● Farmers have limited market

information systems

● Limited numbers of large end buyers

● Growing demand for

consumption as well as animal

feed

● Employment opportunity for

women and youth to sell

green maize

Export

Markets

● Currently, the government of Ethiopia

has banned the export of maize

● Growing regional demand

91 | Page

Recommendations:

● Intensify production and diversify away from Maize. The project should work to increase

productivity through improved seed usage by creating push and pull effects. Farmers need to

receive regular exposure to improved technology packages (seed, inputs, Good Agricultural

Practices) to create a demand pull. On the push side, the project can work to improve sustainable

access to inputs through linkages to Direct Input Markets (small-scale private agro-dealers). This

intensification of production is needed to increase food security for PSNP households, which are

reliant on maize as it is one of the cheapest sources of calories. Increasing yields is especially

important for these households, as they are not able to produce maize at a scale where it can be

profitable. If farmers are able to double their yields from an average of 35 quintals per hectare to

70 quintals per hectare, then the crop will be profitable and pull them out of poverty. But this

level of productivity gains is very hard to achieve. Hence, it is recommended that maize be grown

only for home consumption on a smaller piece of land and the rest of the household land be used

to diversify toward more profitable crops.

● Promote drought-resistant and early-maturing varieties. Wherever possible, the project

should promote drought-resistant and early-maturing varieties. This gives more space for rotating

the crop with a vegetable, which increases income, dietary diversity as well as has productivity

benefits.

● Savings Groups. Strengthen savings and internal lending community groups, savings and credit

cooperatives to bring sustainable production finance to smallholders, particularly for seeds.

● Promote usage of postharvest technologies. It is very unfortunate, that farmers work so

hard to see 20-30% of the crop being consumed by pests. Training on post-harvest handling and

storage is crucial for increasing amounts available for household consumption as well as

marketable surplus. Proper storage can also help farmers stagger their sales in the market and at

least receive higher prices for a portion of their produce. Also, strong postharvest practices

reduce the prevalence of aflatoxin in maize. Labor saving devices, such as small-scale threshers,

can significantly reduce post-harvest losses, as well as free up women’s time. Women’s

empowerment is a key ingredient for increasing nutritional outcomes for households.

92 | Page

Annex 8: Findings from Haricot Beans

Based on the analysis done for the haricot bean business plan, the research team found that the crop has

very low profitability. Since the primary goal of the two projects are to graduate households out of the

safety net program, we recommend that interventions in maize are not prioritized.

Haricot Bean Value Chain Map


Overview

There are three main haricot bean types grown in Ethiopia, based on color: red, speckled and white beans

and within each color type, beans are further sub- classified according to size; for example, red beans are

93 | Page

subdivided into small red, medium red and large red types. The red bean types are typically grown for

food security by the poorer farmers in the southern Rift Valley.

To support both the domestic and export markets, the Ethiopian Institute of Agricultural Research (EIAR)

has developed a range of high yielding, multi-disease resistant bean varieties. Within the red bean types

the most favored include Red Melka, a mottled medium sized red, Red Wolaita, a medium sized pure light

red, and Naser, a small pure dark red variety that are also predominantly cultivated in Project Woredas

in the Rift Valley.

Within the white types, there are a number of commercially accepted varieties, such as Awash 1, Awash

Melka and Mexican 142. There is a shortage of haricot beans seeds because of the poor inputs value chain

in Ethiopia. The shortage is compounded by the increasing demand from export markets especially for

new white bean varieties. However, due to the decline in international demand for white pea beans and

the stringent ECX quality parameters, volume delivered to ECX has also declined significantly (from

387,000 quintals in 2004 to only 56,000 quintals in 2016).

In the Project Woredas in the Rift Valley all haricot beans are produced almost exclusively for the export

market as in other areas of central eastern Rift Valley. At present, virtually all bean production is by

smallholder farmers with minimal to zero inputs on plot sizes of up to 1.5 ha. Haricot beans is a second

major crop in Sire and Boset woredas and a third major crop in Dodota woredas. Haricot beans

production is highly supported by the Melkasa Agri Research center that supplies farmers with improved

varieties adapted to the dry agro ecological zone. Most farmers inter-crop haricot bean with maize. The

Haricot beans are also inter-cropped with maize and sorghum as well as other pulses in East Hararghe.

The demand for Ethiopian haricot beans is increasing over time and to use this opportunity, two marketing

and processing companies have been trying to enter the bean markets, Poortman and ACOS (Agricultural

Commodities Supply). Poortman is an international London based trading house that has been trying to

work with haricot beans in Ethiopia since 2005. ACOS located in Adama is a growing industrial processor.

The company already has significant investments in Argentina, China and through new leadership is now

seeking to diversify into new global locations, such as Ethiopia. Given the company’s long experiences in

working with cooperatives and farmers and its huge processing and export capacities, ACOS continues

to be one of the most dependable demand sink for the haricot beans production of small holder farmers

in the area.

The white haricot bean was introducing at the ECX in October 2010. Red kidney beans are also traded

through the ECX. Through the ECX system, traders buy and aggregate the beans and deliver them to the

ECX warehouses at Dessie, Addis Ababa or Adama, depending on proximity. After the beans have been

included in the ECX, the sector has changed. Under the ECX system, exporters must pick products by

quality and grade in the warehouse and the name of the supplier is kept anonymous. This has limited the

grading, as previously exporters had more room to inspect the product before delivery.

The previous GRAD project has experience working with haricot beans, that the current projects can

build on. Overall, the profit potential for haricot beans is not very high. Farmers may choose to inter-crop

with maize, which yield soil benefits, nutrition gains for households as well as diversification but lower

incomes. Even with a mono-cropping system, the income opportunity is low. The GRAD project

conducted a Cost-Benefit Analysis of the Red Haricot Beans Value Chain in 2012. The study showed that

while monocropping of haricot beans is more profitable than intercropping with maize, even

monocropping is not sufficient to generate enough cash income for the smallholders to graduate out of

the PSNP program. The study recommended that interventions in red haricot beans should be packaged

together with interventions in other commodity value chains

94 | Page

Study Findings

Input Supply

Inputs for haricot beans are supplied to farmers through unions and multi-purpose cooperatives. The

inputs are sourced from Ethiopia Seed Enterprise, Oromia Seed Enterprise and Melkassa Seed Enterprise.

Maki Batu Multipurpose Union is one of the bigger players in the Rift Valley for haricot beans. One of the

main problems with haricot bean production is that the price of the seeds fluctuates.

Like other inputs, there is also shortage of seeds during high demand periods.

In East Hararghe, varieties that are preferred by farmers are - Dusti (red), Tiniqe (red) and Awash1

(While). In Babile, Awash 1 seed multiplication is done.

Table 5: Seed varieties for Haricot Bean

Variety name Seeding rate –

kg/ha

Growth

duration – days

Major use Color

Nasir 90-100 Domestic

consumption

Dark

red

Red Wolayita (not an

improved variety)

90-100 90-110 Domestic

consumption

Dark

red

Awash – 1 90-100 85-100 Export White

Awash-Melka 90-100 85-100 Export White

Source: Haricot Bean Production Guide, Walelign Worku, 2015

Figure 10: Haricot Beans Seed Display at Ethiopian Seed Enterprise

95 | Page

Haricot bean farmers also have to fight various pests and diseases like – cut worm, bean stem maggot,

bollworm, aphids, bean weevil, haricot bean rust, anthracnose and bacterial blight. Use of Disease resistant

varieties and proper planting and pest control practices can help farmers control on-field losses.


The Awash Melkasa Agricultural Research Center focuses on three varieties of speckled beans, namely

dark speckled, light speckled and red speckled bean varieties for Rift Valley areas of Dodota, Boset and

Adami Tulu. The center also supplies Awash1, Awash2, Nasir, Ser119, round and flat WPB, red kidney

beans etc. The center provides pre-basic seed to seed enterprises for multiplication and distribution

through farmers’ coops. The recommended system for effective seed distribution is multiplication of pre-

basic seed by coops and distributing it to farmers. The main challenge for research centers in terms of

farmer adoption is poor coordination between the center and extension.

Production

Production of haricot beans are done mostly by smallholder farmers and traditionally a high percentage

has been exported. The major production challenge of haricot bean farmers has been the limited

availability of quality seeds. Farmers face many challenges and lack of knowledge that limit their production.

Farmers don’t have information on when to sow, how to prepare the land and the correct planting density.

They also require training on weed control and disease and insect protection measures.

The market is dominated by brokers, who limit linkages between farmers and processors and also limit

the fraction of the value that is paid to the farmers.

The production of white haricot beans has gone down, but the red beans is going up, as per the Central

Statistical Agency data for the last 3 years.

Figure 11: Production in Quintals of White Haricot Beans

Source: Compiled from Central Statistical Agency data

0.00

500,000.00

1,000,000.00

1,500,000.00

2,000,000.00

2,500,000.00

2014 2015 2016

Haricot Beans - White (Production in Quintals)

Ethiopia Oromia

96 | Page

Figure 12: Production in Quintals of Red Haricot Beans

Source: Compiled from Central Statistical Agency data

Storage

Farmers report approximately 10 percent of postharvest losses are seen in haricot beans, implying a need

for better storage. Losses up the chain are higher as the diseased or blemished beans are removed to

meet buyer requirements.

Processing

The primary processing needs for haricot beans is cleaning and sorting with the main issue being sorting

out foreign matter.

The main quality issues are the mixing of different varieties and high moisture content due to early

harvesting.

Marketing

Haricot beans is mostly grown as an export commodity and farmers sell to Ethiopia Trading Business

Corporation, Unions and private exporters such as ACOS Ethiopia.

The Ethiopian Commodity Exchange takes white pea beans of both round and flat variety. However, the

volume of the crop going to the exchange market has been going down. In 2016, only 56,000 quintals

were sold to the Ethiopian Commodity Exchange. The main reasons for the decline is illegal trade and

drought. Currently, other varieties of haricot beans are not traded at the exchange, however the ECX

supports the inclusion of other varieties provided that it fulfils volume and other parameters.

The Ethiopian Trading Business Corporation (ETBC) exports haricot beans - red kidney beans and white

pea beans. The ETBC does cleaning, sorting (including hand picking) and packaging based on buyer

demands. The transaction volume for haricot beans for the ETBC in 2017 was 16,000 quintals.

Maki Batu Union also buys haricot beans from farmers and sells it to Oromia Farmers Productive

Organization. This organization adds value to the beans through cleaning and sorting and exports overseas.

0.00

500,000.00

1,000,000.00

1,500,000.00

2,000,000.00

2,500,000.00

3,000,000.00

3,500,000.00

4,000,000.00

2014 2015 2016

Haricot Beans - Red (Production in Quintals)

Ethiopia Oromia

97 | Page

ACOS Ethiopia is a private company with a plant located in Nazareth, which specializes in the processing,

cleaning and exporting of dry pulses and oil crops. ACOS is engaged in exporting a number of haricot

beans such as pinto beans, speckled beans (Red, dark and white) and dark kidney beans. The company is

working with various research institutes as well as cooperatives and farmers. ACOS has experience in

distributing certified seeds to farmers who after harvest repay the seed amount and sell the harvest to

ACOS. It also works to train farmers on seed production. ACOS is exporting to Europe, United Kingdom,

Asia, America and Africa.

The study team met with Gondi Import and Export that trades red kidney beans, white pea beans, pinto

beans and speckled beans (red and light color). The company in the past had linkages with Maki Batu

Union, but decided to stop working with them because of slow decision making. Another problem with

haricot beans is that sometimes local prices are higher than domestic prices. This is mainly because of

brokers who play a key role in determining price and restrict the direct connection between buyers and

farmers. Some of the destinations are Russia, Europe, Pakistan and Turkey.

Image: Women sorting haricot beans at the ACOS Factory


Farmers sell their haricot beans mainly to aggregators and wholesalers who create bulk and supply it to

either exporters or processors who also export after some value addition. Few retailers who collect small

amounts of haricot beans from wholesalers finally deliver it to wholesalers. In Project Woredas in the Rift

98 | Page

Valley, similar to other commodities, farmers don’t have steady access to markets. The markets are

affected by the fragmented nature of the production system, and the quality and yield fluctuation.

White pea beans and red kidney beans are sold through the ECX. ECX is the sole player that bridges local

suppliers with exporters. It grades the beans and facilitates the transaction. The ECX warehouse locations

are Addis Ababa, Adama and Shashemene for white pea bean and Addis Ababa, Nazareth, Shashemene

for Red Kidney Beans.

The main haricot beans market channel include the following:

• Channel 1: Farmer → Primary Coops → Unions → Wholesaler → ECX → Exporter

• Channel 2: Farmer → Aggregators → Exporter

• Channel 2 is the shortest and most effective specifically for the export markets with possibility of

increased margins going to the farmers.

In East Hararghe:

• Channel 1: Farmers → Local Collectors → Consumers


Currently in project woredas in East Hararghe and Dire Dawa area there are no marketable surpluses, as

PSNP farmers use most of their produce for household consumption. This is because farmers have smaller

plots of land (as compared to farmers in the project woredas in the Rift Valley), and low productivity

(inter-cropped with maize or sorghum). However, small quantities of produce are traded locally by

farmers who deliver to local small collectors or directly sell to consumers in their locality.


Quality is a key requirement in the international market and exporters are struggling to fulfil this

requirement. The current haricot beans marketed in the Project Woredas in the Rift Valley is not quality

based as such traders pay similar prices for different qualities.

Basic haricot beans quality requirements include:

• Moisture content of about 15% or less

• Free from shriveled and immature seeds

• Pure varieties without mixing different colors (white and yellow)

• The three similar varieties (light, dark and red speckled haricot beans) should be independently

brought to the market


According to survey results, the price of haricot beans is the highest in the months of May to September

and the lowest in October, when harvest starts.

99 | Page

Gender analysis

Haricot beans are women friendly as it can be grown in gardens with limited technologies. Men and women

are equally involved in land preparation, planting, weeding and harvesting. Women are also involved in

postharvest cleaning, processing and packing at the farm level. Men however have the decision-making

power on inputs, sales and management of cash.

During the visit to ACOS, the team observed that most of the cleaning and packing staff was women,

hence haricot beans is a source of jobs for women at the large-scale processor level (See photo above).

Summary of financial analysis for haricot bean farmers

Farmers who monocrop haricot beans can only earn an approximate revenue of ETB 5165 from 1 hectare,

hence making haricot bean not a very profitable crop. The profit margin is strong at 46.12%, but because

of low market prices, the commodity does not yield a strong revenue for the producers. As shown in the

GRAD cost-benefit analysis and in this study, haricot beans are not a recommended crop for pulling PSNP

households out of poverty. However, the commodity can be grown in small quantities for household

consumption, fulfilling nutritional needs and increasing soil fertility.

HARICOT BEANS SMALLHOLDER ENTERPRISE FINANCIAL SUMMARY FOR 1

HECTARE



Haricot beans Qt 16 700 11,200.00 $414.81


TOTAL COSTS 6,035.00 $223.52

100 | Page

NET INCOME 5,165.00 $191.30


The complete business plan for haricot beans is given in the annex.



Value

chain

stage


Input ● Inadequate access to improved seed supply

● Limited research and development in improved

haricot bean seeds and technologies

● Research centers

efforts to increase

the supply

● And private seed

suppliers such as

Pioneer

Production ● Traditional practices – farmers don’t sow at the

proper time, inadequate land preparation, not

using the correct planting density, inadequate

weed control, poor disease and insect protection

measures, low usage of improved seeds and

inadequate usage of fertilizers

● Poor yield resulting from type of seed and poor

agronomy practices

● Disease prevalence

● Drought

● Limited extension support

● Low production and productivity

● Improved

extension

packages

Post-

harvest

● Storage facilities/prone to insect damage and short

storage life

● Availability of

improved storage

materials

● Fumigation

services

Processing ● Lack of value addition at farmer level ● Awareness

creation by the

extension system

Local

Markets

● No market information system

● High fragmentation

● Mobile phones can

help democratize

market

information

● Growing demand

for household

consumption

Export

Markets

● Stringent quality requirements by the international

market

● Low competitiveness, lower profit for farmers and

farmers shift to other commodities

● Increasing trend in Illegal trade

● Increase

awareness of

farmers on haricot

bean quality

101 | Page

● Proximity to

Addis-Djibouti

railway network

for Oromia

Recommendations:

• Watch market prices. Low productivity combined with low market prices, make haricot beans

not a very good investment for farmers. Mono-cropping of haricot beans will not help to graduate

PSNP farmers. It is recommended that the project watch haricot bean market prices before

investing in it. It is noted that haricot beans are easy to grow and can help fulfill nutritional needs

of household members, so growing it for household consumption is recommended. However, it

is doubtful that farmers will be able to take advantage of value chain opportunities in haricot beans

without market increases in productivity.

• Intensify production. Working with input suppliers to increase improved seeds for farmers will

greatly improve yield and may make haricot bean farming more appealing to farmers. Without

marked increase in productivity, mono-cropping of haricot beans is not a recommended

investment for PSNP farmers because of low profits.

• Aggregation of produce. Farmers grow small quantities of haricot beans as they are inter-

cropped with maize. Aggregation of produce at the Kebele level will increase farmer’s ability to

bargain and sell directly to big buyers, by-passing traders. When farmers grow haricot beans for

the market, they also need to be able to sell when the price is high in the months of May through

September, so proper storage methods is required.

• Direct linkages with buyers. A contract with ACOS or other big exporters will be crucial to

the development of the haricot bean farmers, so that they can have a higher fraction of the total

value. Relationship with buyers will also make it easier for producers to meet quality requirements.

The project should explore partnership opportunities with ACOS, where the farmers can find a

ready buyer for their haricot bean produce.

102 | Page

Annex 9: Coolbot

ASSESSMENT OF CROP VALUE CHAINS/MARKET ... - USAID

Documents

Transcript of ASSESSMENT OF CROP VALUE CHAINS/MARKET ... - USAID