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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
Conclusion and Recommendations .............................................................................................................. 23
6. Findings from Onions .......................................................................................................... 25
Value Chain Map of Onions ........................................................................................................................... 25
Overview ............................................................................................................................................................ 26
Study Findings .................................................................................................................................................... 26
Conclusion and Recommendations .............................................................................................................. 31
7. Findings from Cabbage ........................................................................................................ 33
Value Chain Map of Cabbage ......................................................................................................................... 33
Overview ............................................................................................................................................................ 33
Study Findings .................................................................................................................................................... 34
Conclusion and Recommendations .............................................................................................................. 35
8. Findings from Red Chili Peppers ........................................................................................ 38
Value Chain Map – Red Chili Peppers ......................................................................................................... 38
Overview ............................................................................................................................................................ 38
Study Findings .................................................................................................................................................... 39
Conclusion and Recommendations .............................................................................................................. 41
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
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Overview of Sweet Potatoes ......................................................................................................................... 46
Study Findings for Both Potatoes and Sweet Potatoes............................................................................ 47
Conclusion and Recommendations .............................................................................................................. 50
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
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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
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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.
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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
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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.
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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,
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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
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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.
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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.
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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.
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• 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).
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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.
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• 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.
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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
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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.
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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
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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
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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
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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.
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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.
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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
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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.
Market channels and channel recommendations
• 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
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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
REVENUE - Per Hectare in Ethiopian Birr
Average yield Unit # Unit Price Total Revenue in ETB Total Revenue in USD
Groundnuts Qt 25 1200 30,000.00 $1,111.11
EXPENSES - Cost/Hectare in Ethiopian Birr
TOTAL COSTS 6,975.00 $258.33
NET INCOME 23,025.00 $852.78
Profit Margin 76.75%
A complete business plan for groundnut farmers is presented in Annex 4.
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Conclusion and Recommendations
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.
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● 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
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
REVENUE - Per Hectare in Ethiopian Birr
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
EXPENSES - Cost/Hectare in Ethiopian Birr
TOTAL
COSTS 77,316.00 $2,863.56 $715.89
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NET INCOME 91434.00 $3,386.44 $846.61
Profit Margin 54.18%
A complete business plan for onion farmers is presented in Annex 4.
Conclusion and Recommendations
Constraints and Opportunities
Value
chain
stage
Constraints Opportunities
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
33 | Page
FINDINGS FROM CABBAGE
Value Chain Map of Cabbage
Source: Research team
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
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 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
Field team was unable to collect monthly price data for the woredas.
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
REVENUE - Per Hectare in Ethiopian Birr
Average yield Unit # Unit Price Total Revenue in ETB Total Revenue in USD
Cabbage Qt 102 550 56,100.00 $2,077.78
EXPENSES - Cost/Hectare in Ethiopian Birr
TOTAL COSTS 23,667.00 $876.56
NET INCOME 32433.00 $1,201.22
Profit Margin 57.81%
A complete business plan for cabbage producers is presented in Annex 4.
Conclusion and Recommendations
Constraints and Opportunities
Value
chain
stage
Constraints Opportunities
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
Source: Research team
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
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 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
Field team was unable to collect monthly price data for the woredas.
Local market demand and price variations and seasonality
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
REVENUE - Per Hectare in Ethiopian Birr
Average yield Unit # Unit Price Total Revenue in ETB Total Revenue in USD
Pepper Qt 19 3850 73,150.00 $2,709.26
EXPENSES - Cost/Hectare in Ethiopian Birr
TOTAL COSTS 38,634.00 $1,430.89
NET INCOME 34516.00 $1,278.37
Profit Margin 47.19%
See the full business plan for red chili pepper producers in Annex 4.
Conclusion and Recommendations
Constraints and Opportunities
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.
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● 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 -
http://postharvest.ucdavis.edu/files/259447.pdf
44 | Page
FINDINGS FROM POTATOES AND SWEET
POTATOES
Value Chain Map for Potatoes
Source: Research team
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).
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Value Chain Map for Sweet Potatoes
Source: Research team
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.
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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
Business development services and financial services and products
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.
Market channels and channel recommendations
• 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
Field team was unable to collect monthly price data for the woredas.
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
REVENUE - Per Hectare in Ethiopian Birr
Average yield Unit # Unit Price Total Revenue in ETB Total Revenue in USD
Potato Qt 150 733 109,950.00 $4,072.22
EXPENSES - Cost/Hectare in Ethiopian Birr
TOTAL COSTS 63,006.00 $2,333.56
NET INCOME 46,944.00 $1,738.67
Profit Margin 42.70%
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
REVENUE - Per Hectare in Ethiopian Birr
Average yield Unit # Unit Price Total Revenue in ETB Total Revenue in USD
Sweet Potato Qt 275 537.5 147,812.50 $5,474.54
EXPENSES - Cost/Hectare in Ethiopian Birr
TOTAL COSTS 86,478.98 $3,202.93
NET INCOME 61333.52 $2,271.61
Profit Margin 41.49%
The complete business plan for sweet potato farmers is presented in Annex 4.
Conclusion and Recommendations
Constraints and opportunities
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
52 | Page
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Structure, Conduct and Performance. IFPRI.
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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.
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of Major Crops. The Federal Democratic Republic of Ethiopia.
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(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.
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Kitinoja, L. (2013). Innovative Small-scale Postharvest Technologies for reducing losses in Horticultural
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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
REVENUE - Per Hectare in Ethiopian Birr
Average yield Unit # Unit Price Total Revenue
Wheat Qt 28.2 850 23,970.00
EXPENSES - Cost/Hectare in Ethiopian Birr
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
Profit Margin 56.74%
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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.
Business SWOT Analysis
Strengths Weaknesses
● 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
● Low yields especially because of poor seed
quality and poor farmer practices
● High presence of aflatoxin because of poor
harvest and postharvest practices
Opportunities Threats
● 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
REVENUE - Per Hectare in Ethiopian Birr
Average yield Unit # Unit Price Total Revenue
Groundnut Qt 25 1200 30,000.00
EXPENSES - Cost/Hectare in Ethiopian Birr
Input Cost Units # Unit Cost Total Cost
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
TOTAL COSTS 6,975.00
NET INCOME 23,025.00
Profit Margin 76.75%
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.
Business SWOT Analysis
Strengths Weaknesses
● 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
● Low yields especially because of poor seed
quality
● Farmers need increased access to finance
for buying inputs and irrigation
● Farmers need training in horticulture –
especially production, pest management
and postharvest.
Opportunities Threats
● Increased yield through using improved
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
REVENUE - Per Hectare in Ethiopian Birr
Average yield Unit #
Unit
Price
Total
Revenue
Onions Qt 225 750 168,750.00
EXPENSES - Cost/Hectare in Ethiopian Birr
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
Profit Margin 54.18%
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.
Business SWOT Analysis
Strengths Weaknesses
● 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
● Farmers need increased access to finance
for buying inputs and irrigation
● Farmers need training in horticulture –
especially production, pest management
and postharvest.
● No storage or processing options
Opportunities Threats
● Increased yield through using improved
seeds and fertilizers and irrigated farming
● Farmers to be linked to unions
● Low cost on-farm or near-farm cold
storage can extend the shelf life and
reduce weight loss.
● Climate change - in drought years, yields
are very low
● Pest burden
Model Financial Plan for Cabbage Farmers
Zone West Arsi
Woreda
Adami Tulu
J/K
Woreda
Crop Cabbage
REVENUE - Per Hectare in Ethiopian Birr
Average yield Unit # Unit Price Total Revenue
Cabbage - Average in
Oromia Qt 102 550 56,100.00
EXPENSES - Cost/Hectare in Ethiopian Birr
66 | Page
Input Cost Units # Unit Cost Total Cost
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
(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
TOTAL COSTS 23,667.00
NET INCOME 32,433.00
Profit Margin 57.81%
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.
Business SWOT Analysis
Strengths Weaknesses
● Strong market demand and good prices
● Low yields especially because of low
availability of improved seeds
● Low availability of agrochemicals
● Farmers need increased access to finance
for buying inputs and irrigation
● Farmers need training in horticulture –
especially production, pest management
and postharvest.
● No storage or processing options
Opportunities Threats
● Increased yield through using improved
seeds and fertilizers and irrigated farming
● Farmers to be linked to unions
● 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
● Climate change - in drought years, yields
are very low
● Pest burden
69 | Page
Model Financial Plan for Red Pepper Farmers
REVENUE - Per Hectare in Ethiopian Birr
Average yield Unit #
Unit
Price
Total
Revenue
Red Pepper Qt 19 3850 73,150.00
EXPENSES - Cost/Hectare in Ethiopian Birr
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
(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
TOTAL
COSTS 38,634.00
NET
INCOME 34,516.00
Profit Margin 47.19%
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.
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 to make chips etc. Farmer groups will need marketing and finance support for small-scale
processing initiatives.
Business SWOT Analysis
Strengths Weaknesses
● Strong market demand
● Good prices
● Regional exports
● Low yields especially because of low
availability of improved seeds
● Low availability of agrochemicals
● Farmers need increased access to finance
for buying inputs and irrigation
● Farmers need training in horticulture –
especially production, pest management
and postharvest.
● No storage or processing options
Opportunities Threats
● Increased yield through using improved
seeds and fertilizers and irrigated farming
● Farmers to be linked to unions
● 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.
● Women groups can engage in small-scale
processing of chips, flour etc.
● Climate change - in drought years, yields
are very low
● Pest burden
71 | Page
Model Financial Plan for Potato Farmers
Zone: East Hararghe
Commodity: Potato
REVENUE - Per Hectare in Ethiopian Birr
Average yield Unit # Unit Price Total Revenue
Potato Qt 150 733 109,950.00
EXPENSES - Cost/Hectare in Ethiopian Birr
Input Cost Units # Unit Cost Total Cost
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
TOTAL COSTS 63,006.00
NET INCOME 46,944.00
Profit Margin 42.70%
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.
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 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.
Business SWOT Analysis
Strengths Weaknesses
● Strong market demand
● Good prices
● Low yields especially because of low
availability of planting material. It is hard to
store from one season to another
● Low availability of agrochemicals
● Farmers need increased access to finance
for buying inputs and irrigation
● Farmers need training in horticulture –
especially production, pest management
and postharvest.
● No storage or processing options
Opportunities Threats
● Increased yield through using improved
seeds and fertilizers and irrigated farming
● Farmers to be linked to unions
● Women groups can engage in small-scale
processing of chips, flour etc.
● Climate change - in drought years, yields
are very low
● Pest burden
73 | Page
Model Financial Plan for Sweet Potato Farmers
Crop
Sweet
Potato
REVENUE - Per Hectare in Ethiopian Birr
Average yield Unit # Unit Price Total Revenue
Sweet Potato Qt 275 537.5 147,812.50
EXPENSES - Cost/Hectare in Ethiopian Birr
Input Cost Units # Unit Cost Total Cost
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
TOTAL COSTS 86,478.98
NET INCOME 61,333.52
Profit Margin 41.49%
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.
Business SWOT Analysis
Strengths Weaknesses
● 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
● Low yields especially because of poor seed
quality
● Farmers need increased access to finance
for buying inputs
● Low profitability
● Prone to postharvest losses
Opportunities Threats
● Increased yield through using improved
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
REVENUE - Per Hectare in Ethiopian Birr
Average yield Unit # Unit Price Total Revenue
Maize Qt 35.12 350 12,292.00
EXPENSES - Cost/Hectare in Ethiopian Birr
Input Cost Units # Unit Cost Total Cost
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
TOTAL COSTS 9,872.00
NET INCOME 2,420.00
Profit Margin 19.69%
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
Strengths Weaknesses
● 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
Opportunities Threats
● 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
REVENUE - Per Hectare in Ethiopian Birr
Average yield Unit # Unit Price Total Revenue
Haricot bean Qt 16 700 11,200.00
EXPENSES - Cost/Hectare in Ethiopian Birr
Input Cost Units # Unit Cost Total Cost
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
TOTAL COSTS 6,035.00
NET INCOME 5,165.00
Profit Margin 46.12%
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
Name Position Organization Crop Woreda/Zone
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
Name Position Organization Crop Woreda/Zone
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
Name Position Organization Crop Woreda/Zone
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
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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/
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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/
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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.
Market segments and quality requirements
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
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Local market demand and price variations and seasonality
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.
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MAIZE 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
Qt 35.12 350 12,292.00 $455.26
EXPENSES - Cost/Hectare in Ethiopian Birr
TOTAL COSTS 9,872.00 365.63
NET INCOME 2420.00 89.63
Profit Margin 19.69%
A complete business plan for maize farmers is presented in the annex.
Conclusion and Recommendations
Constraints and opportunities
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
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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
Source: Research team
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.
Business development services and financial services and products
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
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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
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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
Market channels and channel recommendations
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
• Channel 2: Farmers → 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.
Market segments and quality requirements
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
Local market demand and price variations and seasonality
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.
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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
REVENUE - Per Hectare in Ethiopian Birr
Average yield Unit # Unit Price Total Revenue in ETB Total Revenue in USD
Haricot beans Qt 16 700 11,200.00 $414.81
EXPENSES - Cost/Hectare in Ethiopian Birr
TOTAL COSTS 6,035.00 $223.52
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NET INCOME 5,165.00 $191.30
Profit Margin 46.12%
The complete business plan for haricot beans is given in the annex.
Conclusion and Recommendations
Constraints and opportunities
Value
chain
stage
Constraints Opportunities
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
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● 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.