USAID Agribusiness Market Development in Ethiopia Magazine

The official magazine of the USAID Agribusiness Market Development Program: A Feed the Future Project Implemented in Ethiopia 2011 - 2016

A G R I N N O V AT I O N

Coffee is King

quality and traceability in a vibrant sector, pg.21

USAID + Dupont Pioneer maize attracts private sector investment, pg. 42

The Sweetest Thing

Parodi Apicultura and USAID partner with beekeepers for better processing and export, pg. 30

Pulses of the year

Investment and innovation take Ethiopian chickpea and sesame to next leveI, pg. 74

Welcome to Agrinnovations!

This magazine is about the amazing teamwork, innovation, passion, dedication and commitment of our staff and hundreds of Agribusiness and Market Development partners who have worked together over the past four and half years towards the common goal of increasing farmer incomes and reducing poverty.

In my journeys around Ethiopia, from Humera to Yirgacheffe, from Nekemte to Bahir Dar, I have seen farmers and their families work hard to adapt new technologies, learn to better utilize their resources and find new markets and customers for their products.

As a project, we watched our partners grow. Over 50 farmer cooperative unions acquired new tools and demonstrated their skills to expand their reach to over 1.5 million smallholder farmer households, learn and absorb intensive technical assistance and training, and embrace over 78,000 women to become new members for the first time.

Large agribusiness partners also flourished under the AMDe partnership. They discovered new markets and introduced new technologies that increase efficiency and product quality. Our international marketing strategy took over 100 producers, processors, farmers unions and Ethiopian partners to international trade shows to meet buyers on four continents. Dozens of business to business meetings are now bearing fruit.

The Women’s Agribusiness Leadership Network demonstrated the ability of women entrepreneurs to develop business plans, confidently approach and access financial services and new markets. Through increased leadership capacity, these women are also changing their communities.

In the domestic markets, the maize yields have doubled thanks to improved seed and fertilizer. The post-harvest team rolled out smallholder farmer training for the past three seasons with impressive results—reduction by half in the post-harvest losses according to over 2200 farmers surveyed in 2015!

Vanessa Adams Best,

Vanessa Adams Chief of Party USAID Agribusiness Market Development Program

Dear Ethiopian AGP Partners, Feed the Future is the U.S. Government’s bid to solve global hunger, and our USAID Agribusiness Market Development is the flagship program in Ethiopia. Since 2011, the AMDe program has invested over $50 million in six strategic agriculture sectors: maize, coffee, honey, sesame, chickpea and wheat. One part of this investment was used to cost-share the establishment of warehouses, industrial processing machinery and new technologies for grading, quality control and post-harvest handling. Additionally, AMDe carried out a multi-year strategy to increase the financial management skills of farmer cooperatives enabling them to access business loans.

When President Obama visited Ethiopia in July of 2015, he brought with him a new model of development aid that leverages the private sector more than ever before.

Especially in agriculture, the partnership of input suppliers, seed companies, food processors and specialized traders can fill major gaps in crop value chains and open the way for farmers to access capital, new market channels and improved technologies. Most of all, these partnerships open the eyes of a struggling farmer class to the vast potential of Ethiopia’s agriculture sector.

Ethiopian farmers are sitting on some of East Africa’s most fertile land, and despite the dependence on rain-fed systems, they have demonstrated increasing productivity year after year. Climate change will most certainly cause challenges for these farmers in the future, and maximizing efficiency in every aspect of the business is critical to profitability.

USAID continues to bet on the ‘win-win’ partnerships that move these farmers closer to time-saving technologies.

The shift to mechanized farming, albeit slow, has already begun to improve Ethiopia’s produce and farmers’ pocketbooks. The U.S. Government will continue to support Ethiopia’s food production systems and invest in agricultural research and climate-smart strategies. Soon, the growth and resilience of Ethiopia’s people will stand out and take them beyond manual farming systems into the global food supply of the 21st Century.

Sincerely,

D.Weller Dennis Weller Mission Director USAID Ethiopia

USAID Agribusiness Market Development - AMDe

88,000 beneficiaries $60.7 million in farmgate sales Reduced post harvest losses from 10% to 5% 45 grants worth $3.3 million

46,500 beneficiaries Introduced 700+ modern beehives $3.5 million in farmgate sales 43 grants worth $900,000

47,500 beneficiaries 13,300 ha. under improved technology/management Reduced post harvest losses from 20% to 3% 36 grants worth $1.2 million

122,000 beneficiaries 10% Increase in yields to 100 kg/ha Reduced post harvest losses from 25% to 14% 50 grants worth $2.7 million

127,500 beneficiaries 20,800 ha under improved technology/management $29.2 million in farmgate sales 82 grants worth $1.3 million

202,000 beneficiaries Yield increase from 1.8 MT to 4.5 MT/ha Reduced post harvest losses from 23% to 6.5% 75 grants worth $2.3 million

ACCESS TO FINANCE

EXPORTS

FARMGATE SALES

$137 million in loans to rural farmers and cooperatives

$159 million in exports by program partners

$175 million in six value chains

GRANTS

GENDER EQUITY

345 grants worth $14 million 235+ member business network 78,000 new women coop 15 agro-processing facilities 13 large capacity warehouses members 16 grants for women-led businesses

The Agribusiness Market Development—AMDe—program is a USAID-funded, Feed the Future initiative that targets strategic value chains to strengthen Ethiopia’s agriculture sector, enhance access to finance and stimulate innovation and investments. AMDe falls under the Government of Ethiopia’s Agriculture Growth Program. This magazine presents the cumulative results of AMDe’s activities between October 2011 and September 2015.

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WALN - Women in Agribusnes Leadership Network

10 - Women in Agribusiness grow with Professional Network 14 -Using Conf dence to Increase Clientele 16 - All the Right Ingredients for Success

28 Honey

30 - Parodi Sticks a Hand into Ethiopia’s Honey Pot 35 - Q&A, Santiago Herrero, General Manager, Parodi Apicultura 36 - Modern Hives Give Women Farmers New Vocation 38 - Beeswax Bounces Back

48 Input Supply

50 - Blended Fertilizer ...at the soil’s request 52 -Seed Multiplication is worth the extra effort 54 - New Maize Seeds Produce Amazing Yields

64 Wheat

66 - Planting the Seeds of Self Reliance 70 - Wheat Threshers increase Eff ciency and Grain Quality 71 - Q&A, Gebregziabher Abay, Head Planner, EGTE

72 Chickpea

74 - Making Chickpea Synonymous with Ethiopia 78 -How to Promote Ethiopia’s Most Famous Dish 79 - Expert Notes, Fertice Miller

18 Coffee

20 - Higher Quality, Larger Quantity 24 -Tracing, the Future of Ethiopian Coffee 27 - Q&A, Ermias Eshetu

40 Maize

42 - DuPont Pioneer and USAID, Grains of Progress 47 - Modern Warehouse Enables Cooperative Union to Meet Delivery Deadlines

56 Sesame

58 - Fine Tunning the Art of Sesame 63 -Q&A, Gurinder Singh, Business Manager, Olam

82

Access to Finance

84 - Making Agriculture Bankable 86 - Q&A, Feyera Ejeta, VP Coop. Bank of Oromia 87 -Savings Coop Now Serves Entire Village 88 - Expert Notes, Matthew Davis

T he W omen

A gribusiness L eadership N etwork is the first of its kind in E thiopia . I n just two years , WALN ha s helped strengthen business skillsets of nearly 1000 E thiopian women leaders . E ver y member owns or is starting a business with ties to the agriculture sector , r anging from coffee growers to spice tr aders and from food processors to seed dealers . B y addressing gender differences in productivity , participation and leadership , the entire supply chain is improved . in

waln

Women in Agribusiness Leadership Network

Women in Agribusiness

10 grow with Professional Network

Using Conf dence to

14 Increase Clientele

All the Right Ingredients

16 for Success

Women in Agribusiness grow with

Professional Network

WALN - Women in Agribusiness Leadership Network

The Women in Agribusiness Leadership Network—WALN—highlights the importance of the role of women in agriculture in Ethiopia while giving space for members to innovate their business plans and markets

D

ehab Mesfin is the face and owner of Diamond Coffee Enterprise, a 200-hectare coffee plantation in Kaffa, southern Ethiopia. She markets forest green coffee as well as the coffee from neighboring out growers.

Last year she exported one container of specialty coffee to Germany and is looking to expand production by 50% in 2015.

Dehab Mesfin was the perfect candidate to join the inaugural edition of the Women in Agribusiness Leadership Network: strong leader, manager and owner of a successful business in coffee, a sub-sector of Ethiopia’s agriculture economy practically dominated by men. The concept of the business network, simply known as WALN, was created by the USAID-funded Agribusiness Market Development program in 2013 as an innovative way to promote gender parity in a sector where men usually make the decisions and women do everything else.

Although women in Ethiopia make up nearly half of the agriculture work force, they represent less than 15% of members of agricultural cooperatives. They have less access to resources, financial services and land than their male counterparts.

WALN provides members with the support and resources needed to better plan and manage their businesses as well as information on savings and loan services. Even a successful business woman like Dehab Mesfin used WALN to advance the progress of Diamond Coffee.

“When I joined WALN, I admit I already had a five year plan in my head, but it was just a bunch of ideas. The training allowed me to put the plan on paper and begin achieving my business goals,” she explains.

The inaugural group incorporated 110 women from around the country, from a variety of agribusinesses, from food processing and production to dried good shops and poultry. Over a period of six months, AMDe trainers and experts helped the entrepreneurs build skills in business planning, management, marketing, negotiation and communication.

WALN is more than just business skills. Ethiopian women are often quiet and have little to no experience in public speaking. Developing these types of skills greatly influences the women’s ability to gain new clients.

“WALN taught me to speak in front of people,” she explains in English. “I was shy and had a difficult time speaking to buyers. I am no longer worried about negotiating.”

WALN also gave her the opportunity to attend a specialty coffee trade show in Kenya and a women coffee vendor exhibition in Brazil. Currently, Dehab is preparing page

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WALN - Women in Agribusiness Leadership Network

her business to obtain organic coffee certification by designing and developing a coffee traceability model. Dehab is also a member of the new Ethiopian Women in Coffee organization, which was created by WALN members working in the coffee sector.

As part of the training, the members then choose budding women entrepreneurs from their communities to participate in WALN’s mentorship program, in which members share their experiences and skills about business management.

“A lot of women think there is a finite market out there, but Ethiopia and Africa are enormous. There is enough room for everybody to find their place. I always tell the women I mentor that anybody can copy your product but nobody can copy you,” she explained.

Mehbuba Seid, another woman coffee entrepreneur from Southern Ethiopia, was on the receiving end of WALN’s mentorship program. Her mentor, Zahara Ahemed, met with Mehbuba once a month to share ideas on how to better market her coffee and manage her books. Mehbuba oversees 80 permanent staff and 300 temporary workers. Her coffee farm, Fahem, produces over 170 MT of specialty coffee for export and aggregates another 3000 MT of coffee for the domestic market. Under her current plan, she hopes to increase her exports, but to do this, she needs to interact with international buyers, usually in English.

“My WALN mentor helped inspire me to become a better negotiator. WALN also gave me a group of people I could rely on for information and business contacts. Thanks to WALN was I able to send a sample of 2.5 kilograms of my specialty coffee to the Specialty Coffee Association of America annual conference,” explains Mehbuba.

In 2015, WALN more than doubled its numbers bringing another 130 high-potential women leaders and over 400 mentees from across the country to receive business leadership training and coaching. The future is bright for the network, since inception, 90% of the women successfully completed the program. The group is currently registering itself with the Ethiopian government and building a block of agribusiness leaders watching out for the interests of Ethiopian women, proving there is an urgent demand for women-specific business organizations and support.

“It is vital to see the continuation of WALN in order to link producers with traders, traders with exporters. There are members at every place in the supply chain,” says Hadia Mohammed, Chairwoman of the Ethiopian Womens’ Exporter Association.

Women in agribusiness Leadership Network WALN

USAID Agribusiness Market Development - AMDe

Women in Farmer Cooperatives WALN represents a small percentage of the women involved in agriculture and agribusiness in Ethiopia. In fact, there are millions more working in the fields, harvesting coffee cherries and processing grain by hand, every day.

The vast majority of these women have no representation or group to rely on for market channels and information and support.

In order to give more of these women access to inputs, markets and support, in 2014 AMDe collaborated with the Federal Cooperative Promotion Agency and regional governments to promote and facilitate the inclusion of more women into farmer cooperatives in Tigray, Amhara, Oromia and SNNPR. The campaign, which targeted 54 farmer unions and some 1.7 million smallholder farmers, aimed to increase women membership from 15% to 30%—the Ethiopian Government’s national target. AMDe collected and verified the names of 45,000 new women members registered in farmer cooperatives, and the federal cooperative agency reported a total of 78,000 new women members in over 1,600 cooperatives of some 50 unions in just nine months.

“As a result of this membership campaign, AMDe helped build our institutional capacity to achieve federal government targets, and we will use this campaign as a starting point to base future campaigns to mobilize women membership. In our strategy, cooperatives are a critical mechanism to ensure equitable participation and benefits for women in the agriculture sector. In Ethiopia there are over 60,000 cooperatives under 300 unions,” according to Usman Surur, the Director General of the Federal Cooperative Promotion Agency.

Over the course of four months, the program used printed materials in local languages as well as other incentives such as scarves and umbrellas to motivate cooperative members to recruit women farmers. In the region of Tigray—where the membership drive had the most success—more than 8,000 women farmers joined cooperatives as a result, and the one cooperative’s women membership went from 25 to 34%.

Wheat producing Bokra Union, located in Southern Tigray, increased the representation of women in its primary cooperatives from 40 to 52% of a total of 21,000 farmers. The membership drive helped add 4000 women farmers to the union’s cooperatives. In Amhara, participating unions reported adding a whopping 30,500 women members to its cooperatives, and the Yem Tebaber Union, located in SNNPR, registered 25% of the eligible women in its coverage area, increasing women’s representation by 85%.

“We knew we had to come up with an innovative approach to change the mindset of the male members. This approach involved incentives but also basic awareness on the benefits of more members, a more cohesive community and equal participation of women farmers,” notes Solomon Legesse, AMDe’s Farmer Cooperative expert.

As a result of the campaign, wheat farmer Silass Gidey joined the Bethlehem Primary Cooperative, under the Bokra Union. Throughout her life, she has never been directly invited to join a cooperative, but the obvious benefits were enough to convince her to join.

“I didn’t know anything about cooperatives or how they work. My neighbor told me the cooperative would help me get a better price for my crops and that I could buy sugar, oil and even a refrigerator and TV from the cooperative at lower prices than in the market,” she says.

The campaign made it clear to cooperative managers and board members that gaining new women members not only benefits the members but the cooperative as well, since new members expand capital, purchasing power and overall volume.

“By promoting and adding new women members, our union collected over $2,500 in capital to increase our union’s capacity to buy more. We will continue to mobilize more women members, because they are part of our communities and they strengthen our cooperatives,” according to Seboka Dinkena, manager of the Robi Berga Union in Oromia.

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WALN - Women in Agribusiness Leadership Network

Using Confidence to Increase Clientele Tsehay Fantu, 55, grew up on a sugar cane factory after her father—a trader and store owner in the eastern Ethiopian city Dire Dawa—went bankrupt and took a job processing sugar. On the plantation, Tsehay finished grade school, and her parents supported her to obtain a business management diploma. Her real passion is food, and it was her mother who taught her everything she knows about it.

After several jobs, in 2005 she and her husband moved to Adama, southeast of Addis Ababa, where he found a job in a warehouse.

She started her own business buying live chickens, then cleaning and processing them. “Cooking is my passion, when we were poor I knew we needed to start a business, so I focused on poultry and created Tsehay’s Prepared Chickens.”

Tsehay ran the business out of her home with her two sisters, providing her neighbors and local restaurants with ready-to-cook poultry. Despite being precise and as safe as possible, her business grew very slowly, plateauing at 100 chickens a month and an average monthly revenue of $300.

In 2014, she joined the Women in Agribusiness Leadership Network, a business network of over 120 Ethiopian women entrepreneurs created by the USAID AGP-Agribusiness Market Development program to give women leaders’ resources to plan, manage and grow their businesses.

Over a 10-month period, through a series of workshops, business training and by sharing work experiences, Tsehay learned ways to better manage her finances, to create a business plan and to find the confidence to address issues affecting her business.

“WALN taught me to separate my personal and household finances from my business finances. Before I just had all the money together and took what I needed,” she explains.

WALN workshops also engaged Tsehay in critical thinking exercises on ways to develop new business, increase promotion and expand operations. Instead of just processed poultry, she began adding value to her products selling prepared meals that she cooked with passion and joy. While each processed chicken is worth $6.50, a roasted chicken is valued at $20 and in a stew, it’s worth $25.

During the first year of WALN membership, Tsehay more than doubled her institutional clients, including half a dozen hotels in Adama. She did business with several supermarkets, but found their prices to be too low, and she made the business decision to quit supplying to them. The overall improved cash flow allowed the

business to acquire a new freezer and rent a small shop in downtown Adama. The cleaning and preparation still takes place in her kitchen, but now she has a distribution point to reach her growing portfolio of customers.

Every month she sells 900 chickens and over the past three months, revenues are more than $800 per month.

Using the business plan training, she and her sisters took a $900 loan from a local microfinance institution to launch a new business line of Ethiopian spices and dry goods, from beans to chickpea powder. They have already paid off half of the loan.

“WALN gave me the confidence to get a loan. Ethiopian women are usually too frightened to take loans from official sources, too afraid they won’t be able to pay it back,” she says.

As part of WALN’s mentorship program, Tsehay mentors three women from her community, church and business networks.

“I give them practical lessons about how to keep records. They lack advertising and promotion skills. The biggest advantage to being in WALN is the raised profile. Members gain the ability to reach more and more people.”

Tsehay and her sisters are now working hard to prepare their storefront, and she continues to win new hotel clients while grooming her teenage daughter and son to take over the business within a few years. Her husband still works in the same warehouse, earning half of what Tsehay makes.

“He’s supportive of our business, and smiles when I provide money for my children’s school fees and can buy them new clothing. My father’s business went bankrupt, I want to make sure that mine doesn’t.”

Tsehay Fantu

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All the Right Ingredients for Success

USAID Agribusiness Market Development - AMDe

Asmeret Mekonnen, 52, knows something about living under a low profile. Her Italian father passed away when she was two years old, and she spent the better part of her childhood ‘in hiding’, for her mother feared his family would come to Ethiopia and take Asmeret away. She was her mother’s only child.

As a child growing up in Gondar, in the north of Ethiopia, she managed to finish the 8th grade. She quickly married her husband, Gebre and they successfully raised seven children, which she says makes up for her growing up a single child.

Gebre retired in 2010 and they relied on their children until she opened up Asmeret Baltena, a small shop known for dried goods including spices, pulses and flour. She took a small loan from a local microfinance institution for $250 to stock the shelves.

After several months, she paid back the loan.

She put all her experience from raising her family into her products, especially her shiro, a popular Ethiopian chickpea powder dish blended with spices. After buying whole chickpeas, she does all the work from roasting the chickpeas to crushing the delicate mix of spices by hand and milling the chickpeas twice at a local mill and packaging. Her end product is a delight of hot pepper, ginger, garlic and secret spices, and has made her into a local shiro expert.

“It’s really all about the quality of the pepper that makes a shiro stand out, and good quality peppers are becoming more and more expensive,” she explains.

In 2014, her fame landed her in the Women’s Agriculture Leadership Network

WALN - Women in Agribusiness Leadership Network

(WALN) where over six months she received business and leadership training, shared her experience running a business and participated in a business plan competition.

Like other Ethiopian women trying desperately to grow their trades, she has no idea how to keep records of purchases, sales and profits. In WALN meetings, she and her colleagues learned to analyze the marketing side of their businesses, giving their value added products names and searching for new market channels.

“Women are often invisible in the supply chain of Ethiopia’s main agriculture goods or only doing manual labor and basic sales. WALN grants them the space to think more strategically about marketing and their potential customers,” says AGP-AMDe’s Chief of Party, Vanessa Adams.

Women in Ethiopia make up more than 45% of the agricultural labor force, yet represent less than 15% of cooperative membership, are rarely in positions of power, and have less access to resources than men.

In the first year of her WALN membership, Asmeret

took another loan, this time for $750 to increase the shop’s stock, and in 2015, she took yet another loan for $1000, which she is well on her way to paying off.

“WALN women and trainers made me realize I had the confidence to expand my business. There is no reason to settle for what I was making,” she says. She hired two employees and used her already famous shiro to network with new customers from restaurants around Gondar.

Nowadays, Asmeret Baltena is registering sales of nearly $300 per month, and perhaps most useful are the contacts made through WALN itself. Asmeret now purchases her chickpeas from WALN colleague Alemetu, and goes to a mill run by WALN colleague Alemanchi. Each of these women also “Running a business participated in the WALN training package. is like making shiro, you need to make Mentoring the Neighbors sure you have all Under the WALN program, Asmeret mentored the best ingredients. three friends and neighbors, each trying to Experience and start a shop. She mentored the women for six support can be months, meeting regularly and covering key helpful, and how WALN topics, from record keeping to business to get a loan is very planning. Tiruwerk, a retired teacher, lived on important when you practically nothing and learned from Asmeret have nothing,” how to apply for a loan.

Asmeret Mekonnen A common trait among successful WALN women is the ability to react to their surroundings and circumstances and think of ways to manage their business in a meaningful manner. All WALN members have come away with something critically important: confidence and leadership. Most of the women barely finished high school and had never received training in management or negotiations. Confidence allows them to speak for themselves, not only within their families, but also their communities.

“Dealing with customers is really how you keep them coming back. She does it well, better than I could ever do it. As her confidence grows, our family is more secure, since we rely on Asmeret for everything,” says Gebre, her husband.

Today Asmeret is searching for a new location to bring her famous shiro to more people. Thanks to Gondar’s large percentage of Ethiopia diaspora, her shiro has gone beyond Gondar, and is now famous in the US, where Ethiopian families do everything they can to get Asmereta’s shiro on a flight to Washington DC.

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E thiopia ’ s

top export earner represents one of the countr y ’ s

biggest opportunities to inject foreign capital into its economy .

AMD e

partnered with

11

major coffee farmer unions to increa se

their skills in post - harvest handling and marketing and the government to create

A frica ’ s

first industr y - wide certified

gr ading lab and laid the foundation for the countr y ’ s most comprehensive coffee tr aceability and supply chain management system to date .

coffee

Higher Quality,

20 Larger Quantity

Tracing, the Future

24 of Ethiopian Coffee

Q&A, Ermias Eshetu

27 CEO Ethiopia Commodity Exchange

Higher

Quality, Larger

Quantity

Coffee Value Chain

Comprehensive support to Ethiopia’s coffee sector gives farmer cooperatives a boost at every step in the value chain offee production in Ethiopia is as much about quantity as it is about quality. Ethiopia has more than 500,000 high altitude hectares of coffee trees, over five million farmers and thousands of coffee varietals. Add a temperate climate with ample rainfall and Ethiopia appears to have the necessary conditions to nurture a lush and bountiful coffee sector. Why then, are Ethiopian coffee farmers still among the poorest in the world?

The answer to this question is as much about quantity as it is about quality. Farmer incomes are limited by low productivity, or roughly 700 kilograms of exportable coffee per hectare, compared to 1300 kilograms in other coffee producing countries. In addition, with limited availability of improved coffee seedlings, yields suffer year on year, as trees well beyond their prime are still expected to pop high dollar cherries.

Building Capacity Quality has always been a sticking point for the Limu Innarea Coffee Farmer Union. Some member cooperatives continue to harvest coffee from old plantations. Others do not know how to properly dry their coffee and lack modern washing stations. These deficiencies have affected the overall quality of the union’s coffee product.

In 2013, the USAID funded Agriculture Market Development program—AMDe—partnered with the Limu Innarea farmer union to first build the capacity of its coffee growers, and second to fill critical gaps with better coffee plants and modern processing equipment. Through a network of farmer trainers and cascade training, more than 3,000 farmers received practical and theoretical instruction on better production and post-harvest techniques. The training included how to plant and nurse a seedling and manage a mature coffee tree, when to ideally pluck a red cherry from the tree and drying best practices. The program also provided the union with coffee testing equipment, including six moisture meters, sample dividers, sensitive scales and sieves.

“One of the biggest determinants of coffee quality is the timing of the harvest. Together with AMDe, I supervised and led various trainings on cherry maturity. Many of our farmers used to bring harvests with cherries that were not quite ready, reducing the overall quality of our coffee lots,” according to Limu Innarea Union Manager, Fekadu Dugassa. “At least half of what we were sending to ECX to be graded had too much moisture. Each time we ended up paying $50 a day to store and wait for the coffee to dry. Sometimes we were forced to wait up to 20 days. Those were big headaches.”

To assure sustainable quality, the program worked together with the Jimma Research Center—Ethiopia’s center of excellence for coffee varieties—to not only improve the center’s capacity to produce Ethiopia’s most important coffee variety seedlings, but increase the center laboratory’s ability to test coffee seeds and trees.

AMDe then provided Limu Innarea with a grant to purchase approximately 500 kilograms of certified, tested Limu coffee seed. Armed with seed and training, three primary cooperatives planted and produced 3 million seedlings and sold them to member farmers.

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“These trees will start producing excellent Limu cherries within three years. The harvest and post-harvest skills acquisition significantly increases the union’s coffee. The quality and post-harvest handling training has given over 15,000 farmers the basic understanding of how to maintain the quality of their coffee,” explains Bisrat Ermias, AMDe Coffee Value Chain Manager.

Between 2010 and 2013, Limu Innarea coffee exports amounted to an average of 180 MT of coffee each year, and approximately 70% of that was Limu grades four, five and six. Coffee graded below three does not attract specialty buyers or have any price premiums.

In 2015, Limu Innarea member cooperatives implemented better post-harvest handling techniques and 100% of the Union’s 390 MT received grades one, two and three. “This is a significant change for our farmers, and it’s all due to an increased awareness of how to treat the coffee post-harvest,” says Union Manager, Fekadu.

AMDe is also helping coffee farmer unions and cooperatives with washing, hulling and pulping stations as part of its quality-focused interventions in Ethiopia’s coffee sector. AMDe and Limu Inarea Union added two new washing stations to the union’s network of 18 washing stations. The Deme and Wodessa Cooperatives will begin this season to wash coffee, which increases quality and gets an average of 30% higher price on the world coffee market.

“A washing station changes the cooperative’s overall efficiency.

Before, each farmer managed the processing and drying on his land.

For this he needs a storage facility, sun beds and a roof to protect from the rain. With the new washing stations, that cooperative’s farmers can just bring their cherries to one place. The risk of losing quality is much lower,” explains Fekadu. “The difference not only improves quality, but saves us time.”

USAID Agribusiness Market Development - AMDe

“The relationship among stakeholders is linear in that farmers sell the coffee cherry to suppliers and suppliers sell parchment coffee to exporters.

There is little collaboration on agronomic practices, import demands, and market information among others.

These gaps lead to unnecessary competition, which results in losses and ineff cient allocation of resources.”

Tadesse Meskala

Since 2012, AMDe has partnered with 10 major coffee producing farmer unions representing over 500,000 coffee farmers. The program established 11 washing and hulling stations and 45 pulping machines for 11 primary cooperatives.

On the World Stage To improve marketing capacity, AMDe works hand-in-hand with the Ethiopian Coffee Exporters Association, strengthening the institution to be able to provide better services to farmer unions, private coffee companies, exporters and other members of Ethiopia’s coffee sector.

“The relationship among stakeholders is linear in that farmers sell the coffee cherry to suppliers and suppliers sell parchment coffee to exporters. There is little collaboration on agronomic practices, import demands, and market information among others,” explains Tadesse Meskala, former General Manager of the Oromia Coffee Union. “These gaps lead to unnecessary competition, which results in losses and inefficient allocation of resources.”

Over the past four years, AMDe has assisted farmer cooperative unions, private coffee farmers and Ethiopian coffee exporters by sponsoring their participation in international trade shows and symposiums as well as organizing national cupping events and the Ethiopian Coffee Exporters Association’s annual conferences.

“The AMDe market access strategy complements the efforts of the Ministry of Agriculture and its goal to improve productivity, sustainability and quality. We know that if there is no market, there is no incentive for farmers to produce coffee, so we work jointly, find attractive markets and deliver on time. The end result are happy buyers,” explains Fikru Amena, Director of Coffee, Tea and Spices at the Ministry of Agriculture.

For coffee unions like Limu Innarea, the invitation to attend the Specialty Coffee Association of American annual conference meant an invaluable opportunity to meet face-to-face with specialty coffee buyers and the chance to put their improved-quality coffee in the hands of clients.

“We visited with roasters and buyers we never knew existed. After the SCAA conference, people were contacting me by email and making contracts for the future. The buyers have confidence in USAID support and tasted our quality,” says Fekadu. At the 2014 SCAA conference, Limu Innarea signed new contracts for 16 containers of coffee.

The more high-quality coffee being exported out of Ethiopia, the better. Under the Limu Innarea Union, primary cooperative members receive 95% of the sales value.

“Coffee buyers are more and more interested in who is growing their coffee. Our aim is to promote our producers,” he says.

Coffee Value Chain

COFFEE program results COFFEE NURSERIES 5 million coffee seedlings sold by women and youth groups for farmers. Provided Jimma Agriculture Research Center with laboratory and irrigation equipment to increase improved coffee varieties

TRACEABILITY Partnered with coffee stakeholders and ECX to install the first traceability system which tracks from 2500 washing, hulling and cleaning stations

CERTIFIED LABS AT ECX Refurbished and equipped 4 ECX coffee cupping laboratories with quality assurance and grading equipment certified by SCAA

EXPORT MARKETING Assisted 3 coffee unions with C.A.F.E. Practice and Fairtrade certification, and sponsored participation in 9 international trade shows and 3 coffee conferences marketing trade shows helping partner coffee cooperative unions, growers and exporters deliver more than $108 million in exports to international coffee buyers

FARMER TRAINING Trained over 15,750 smallholder coffee farmers and workers from 11 coffee farmer unions representing over 700 primary cooperatives and 500,000 farmers, in management, postharvest handling and quality

PROCESSING Co-funded 11 washing and hulling stations, 45 pulping machines/drying beds for 11 primary cooperatives

CUPPING & CERTIFICATION Supported the Coffee Quality Institute certification of more than 70 Q-Graders from coops, private firms and government agencies to meet international quality protocol and demands

The graphic represents USAID Feed the Future AGP-Agribusiness Market Development program results collected quarterly from coffee beneficiaries in the period between October 2011 and July 2015, in partnership with the Government of Ethiopia, Ethiopia Commodity Exchange, Ethiopian Coffee Exporters Association, Ethiopia Coffee Growers, Producers and Exporters Association, 10 coffee farmer unions and nearly 200 private companies in the coffee sector. page

21

Tracing, the Future of Ethiopian Coffee In 2008, the Japanese government banned Ethiopian coffee imports after four types of illegal pesticides under Japanese law were detected on green coffee beans. The Ethiopia Commodity Exchange (ECX), created in 2007, had no way of tracing where the coffee lots originated or the cause of the contamination. The ban lasted nearly two years during which Ethiopian coffee growers lost out on more than 5000 MT of sales from the country’s third largest importer. The hard lesson in coffee traceability did not go unnoticed.

In 2015, a reinvigorated, better-aligned ECX plans to change the future of Ethiopian coffee. While the world of coffee moves toward verification of origin and legal compliance, Ethiopia lags due to underdeveloped infrastructure and a complicated network of smallholder coffee farmers numbering over five million.

USAID Agribusiness Market Development - AMDe

Coffee Value Chain

In January 2013, the ECX partnered with the USAID Agribusiness Market Development program and the Sustainable Coffee Program to lay the foundation for a system that will not only give Japanese buyers the name and location of the washing station where the coffee originated, but also the date and times spent in each warehouse before being auctioned to a buyer. The system will become the coffee world’s first independent and nationally owned system.

Starting with this year’s harvest, ECX will launch digital certificates that contain all this information, which will be issued to buyers with each lot of coffee. By overhauling the ECX supply chain management, the new system is going to bring consumers closer than ever to the people growing their coffee. Now, finding the source of a contaminated bag is as easy as scanning the tag.

The new tagging system—running on IBM technology—links every bag of coffee that is traded through the ECX to one of over 2500 geo-referenced washing, hulling and cleaning stations located in Ethiopia’s southern, central and western coffee growing regions. Each tag’s embedded information includes photos of the station as well as names and contact information for the station manager. Since farmers are obligated to sell their coffee to washing stations in their same kebele—which cover an average radius of 15 kilometers—each washing station typically processes a uniform coffee type, be it Sidama, Yirgacheffe, Limu, Kaffa, Tepi and more.

“True traceability goes beyond the coffee’s type or origin to tracing where the coffee has been, where and when it was washed, where and when it was stored, who sampled it, who graded it, which truck it was loaded onto and where it was shipped to. All these facts will improve our ability to move coffee and create premium value for buyers and consumers,” says ECX CEO, Ermias Eshetu.

In fact, in the past few years, buyers seeking traceability purchased Ethiopian coffee through private farmers and coffee farmer unions, who are allowed to export

directly to buyers. The ECX-run traceability system will give the other 90% of Ethiopian coffee exports the “Transparency is critical for access to bigger and better market Starbucks because it provides channels. Starbucks has a long history insight into the farmers of purchasing Ethiopian coffee and who make up the Starbucks’ through its Coffee and Farmer Equity supply chains, the volume of Program (C.A.F.E.), the company coffee being sold to Starbucks claims that 99% of its coffee is verified and key information on the as ethically sourced. coffee’s origin. The objective The price tag for the traceability and is to ensure the reliability of its implementation is approximately sustainability claims and price $4.2 million and being paid through transparency, quality, social a private-public partnership with responsibility and long-term USAID, which invested $1.8 million, supply that enables our ability the ECX, which invested $1.2 to source from Ethiopia. We million and the Sustainable Coffee believe these efforts will Program, a global initiative of buyers, create long-term stability and governments and associations, which a global standard for coffee also invested $1.2 million. traceability.”

“A supply chain management system Starbucks Spokesperson does not automatically give you the coffee’s entire story, but it gets closer than before. It will make business more ethical and create a more equal playing field for everybody,” says Mike Mamo, coffee expert from Addis Exporter who exports 20 containers of coffee annually. “Exporters will be held more accountable for what they are promising to buyers.

I like to see ECX making these types of improvements.

Overall, the system is getting better.”

Improved Grading AMDe funded the renovation of modern coffee cupping laboratories in Addis Ababa, Jimma, Hawassa and Dilla. At each lab, the program provided grinding and roasting machines, moisture testing equipment, all used specifically for grading coffee at ECX delivery centers. The improvements put ECX on the path to certification from the Specialty Coffee Association of America, and are the first SCAA-certified coffee grading labs in Africa.

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“SCAA lab certification is not only about the right machines, but everything from the lighting to the curtains must be perfect,” says Rahel Mahlet, the Hawassa ECX Branch Head. “We have achieved that and with our growing number of Q-graders our team is more prepared than ever.” The Hawassa delivery center receives over 50,000 MT of coffee for grading each year, or 25% of the country’s coffee.

To complement the new laboratories, ECX and AMDe have funded the certification of over 70 new ECX and private Q-Graders, increasing the number of Q-Graders in Ethiopia to over 100. Q-Grader certification is the most demanding coffee grading standard in the world.

“We have seen good cupping skills in Ethiopia compared to other developing nations, here the graders are very highly skilled,” says Mario Fernandez, Coffee Quality Institute’s Technical Director. “The main challenges for cupping in Ethiopia is keeping Q-Grader licenses valid and in good standing every three years and creating the new generation of cuppers to sustainably carry it into the future.”

Another step towards cupping sustainability is certifying Ethiopia’s first full-fledged Q-Grader Instructor, the ECX Quality Operations Manager, Mekonnen Haile. By the end of 2015, he is expected to be able to carry out

TEN to SIX

independent Q-Grading training on a regular basis, and meet the demand for new cuppers.

“There is a common worldwide language in coffee quality, and Ethiopia is now speaking this language.

SCAA certified labs give American buyers more confidence in ECX grading. If a buyer orders a Grade III, we deliver a Grade III. And with the traceability tags, the buyer can know even more.”

When the ECX was created in 2008, exporters feared the commoditization of coffee would undermine Ethiopia’s rich variety of coffee. The exchange platform gave farmers an easier path to international buyers, who quickly adjusted and learned to live with it. Seven years later, Ethiopia’s coffee stakeholders have delivered on increasing the transparency of a system that at once meets industry standards, is fair to coffee farmers and celebrates Ethiopia’s coffee diversity.

In 2014, AMDe facilitated technical analysis of the ECX coffee grading system, which resulted in the ECX recalibrating coffee grades and reducing the number of grades from 10 to 6. The change will increase efficiency in warehouses, cupping labs and trading

USAID Agribusiness Market Development - AMDe

Coffee Value Chain

Ermias Eshetu CEO Ethiopia Commodity Exchange (ECX)

“We’ve never had this sort of capability in the history of Ethiopian coffee.”

Ethiopia’s largest export represents $800 million each year on the Ethiopia Commodity Exchange (ECX). which is at a critical juncture adding new technology to raise the profile and price of Ethiopian coffee.

What do international coffee buyers want from ECX? For the majority of coffee buyers, quality is number one followed by sustainability, and traceability is part of that. Corporations are making commitments to sustainability and the need for traceable coffee beans is higher than ever. Consumers love the Ethiopian coffee story, and for the first time in history, the Facebook generation, as I call them, is interested in the experience more than the price. The new consumer looks for a story attached to every cup of coffee. Good taste no longer suffices, we need to market what makes Ethiopia unique.

How has ECX improved quality and grading over the past year?

When you have one specific grade and think about coffee as a commodity, it’s easy to grade and quality certify, but when you have 1000 varieties of coffee, it’s a different game.

Through partnership with USAID, this year we updated laboratories and training facilities that meet international standards, and we are certifying an army of quality graders in our 65 warehouses and delivery centers. The magnitude of sampling and cupping every sack of coffee is tremendous. This season, we brought over 200 cuppers to recalibrate the skills of our staff at the ECX institute. We’ve never had this sort of capability in the history of Ethiopian coffee.

Why is Ethiopia still behind the rest of the world in coffee traceability?

Traceability is hard to implement due to a fragmented farming community and lack of infrastructure, such as roads, telecommunications, warehousing, and

power supply. There are over five million smallholder coffee farmer, most of whom have family leases on land and with each subsequent generation partition the land into even smaller holdings. Connecting the dots from ECX to that one farmer owning all his assets on that little plot in rural Ethiopia is complicated, but we are moving in that direction.

What is the ECX traceability strategy?

Our current traceability system only references origins of certain coffees. We have defined specific areas of origin coffees arriving at specific delivery centers where we can identify the type, such as Jimma, Sidama and Yirgacheffe. True traceability goes beyond the coffee’s type or origin to tracing where the coffee has been. We want the DNA of the coffee and where and when it was washed, stored, who sampled it, who graded it, and when it was shipped. All these facts will improve our ability to move coffee and create premium value for buyers and consumers.

Critics blame ECX’s warehousing system for problems. How is this changing?

The vast majority of coffee goes seamlessly through the system. The human element of stacking sacks of coffee creates space for human error. With the new tagging system, we will become more precise in how we manage the warehouses. Before we would move stacks of coffee that we believed were of the same origin, now we can identify coffee origin to the jute bag, in addition to all the other information. ECX has much stronger oversight over inventory.

How do these changes help smallholder farmers?

If a farmer knew that if he could identify his beans as premium coffee, he would be assured a higher price and a sustainable market. The incentive to work hard and enhance the quality of his coffee would be undeniable and we would see our farmers producing better coffees than ever before.

How did the ECX consult buyers on implementing a traceability system?

What do buyers say?

We have a consultation platform with international buyers and are receiving support from USAID and the Sustainable Coffee Program under a private-public partnership. We have buy-in from major buyers and we have a monthly briefing of where this is going and open dialogue with local exporters, suppliers and stakeholders.

If the system is going to be sustainable, we need all players at every stop in the coffee supply chain.

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M ost

honey ends up in honey wine and less than

exported .

AMD e

partenered with

5

5%

is

beekeeping unions to incea se

the amount of hives and skills and co - funded

4

processing

plants , in order to position the sector for improved incomes .

honey Parodi Sticks a Hand into

35 General Manager, Parodi Apicultura

Modern Hives Give Women

38 Bounces Back

30 Ethiopia’s Honey Pot

36 Farmers New Vocation

Q&A, Santiago Herrero Beeswax

E

very year, beekeepers from the Tana Zuria Cooperative sell most of their 10 tons of honey to traders passing through their town, which lies on a rural stretch of dirt road in northern Ethiopia. The traders are not the beekeepers’ preferred customers. Regardless of the quality of their honey, the majority ends up in tej, local honey wine popular around holidays. In fact, selling their honey on the merit of its quality is the stuff of dreams of Tana Zuria beekeepers, until now.

Tana Zuria cooperative is a member of the Bahir Dar-based Zenbaba Farmer Union, which represents 20 honey producing cooperatives and over 13,000 beekeepers. Until this year, Zenbaba had never been able to purchase more than 20% of the cooperative’s total honey production, but a new combination of capital investments, strategic partnerships and improved beekeeping capacity have put Zenbaba at the forefront of Ethiopia’s honey export economy.

In December 2015, honey giant Parodi Apicultura will

USAID Agribusiness Market Development - AMDe

have received its first shipment of high-grade, Fairtrade Ethiopian honey through its investor-partnership with Zenbaba Union. Parodi Apicultura, the second largest honey trader in the world, sources over 25,000 metric tons of honey from more than twenty countries and has operations on every continent with bees.

Parodi’s incursion in the Ethiopian honey sector comes as a result of the grooming and preparation of Zenbaba Union and its member cooperatives by the USAID funded Agribusiness Market Development program—AMDe. Training in sales and marketing helped the union members promote their honey as a unique product in the context of global honey. In order to attract important buyers like Parodi, AMDe assisted Zenbaba and its cooperatives to achieve Fairtrade certification, which assures concerned consumers that their honey meets certain environmental, labor, and developmental standards.

“The major weakness among Zenbaba and member cooperatives was the complete lack of a records system.

Parodi

Sticks a Hand into

Ethiopia’s Honey Pot

Honey Giant and Beekeeper Union Launch Partnership to Bring Ethiopian Table Honey to Consumers around the World Before the partnership, Zenbaba had no clear business plan and only one staff member covered accounting, honey purchasing and administration,” explains Assefa Amaldegn, AMDe’s national honey value chain expert.

Strategic management training helped union and cooperative members develop realistic business plans while overhauling the union’s organizational structure and its accounting and financial recording systems.

Then in 2013, at the Gulfood international trade show in Dubai, Zenbaba’s General Manger, Sintayehu, and Parodi Apicultura’s Santiago Herrero came face to face.

The hard work to improve management and marketing paid off, and an extra degree of professionalism convinced Parodi of the union’s potential. In June 2013, Parodi came to Ethiopia to examine Zenbaba’s honey processing facilities and products, and visit honey producers in Tigray, Amhara and Oromia.

“Zenbaba board members and its union manager share our vision and are business oriented. We saw immense potential, and with the backing of AMDe we

felt comfortable creating a strong partnership that will last well into the future,” says Parodi’s General Manager, Santiago Herrero. “For Parodi, Ethiopia represents the future of beekeeping.”

Following the visit, Parodi matched investments with AMDe to purchase and install an industrial-sized honey homogenizer, a modern hot room and to refurbish Zenbaba Union’s processing center. In addition, Parodi signed a MoU to purchase 500 MT of honey in the first year and increase that to 1000 MT in the following year.

The success has not been without obstacles. Over a period of ten months, AMDe and Zenbaba worked to transition a forgotten library into a honey factory. AMDe also used expert staff to design the facility’s floorplan and equipment layout to assure efficiency as the honey goes from hot room to the separator before homogenization.

“The hot room was one of the biggest problems.

During set up, we were still unaware how much power was needed to achieve 45-55 degrees Celsius for 12 hours straight. All of this equipment uses a lot of energy,

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and Zenbaba is relying on the local grid to satisfy significant export orders,” explains Fertice Miller, AMDe’s food-processing expert who designed the facility. Due to country-wide energy constraints, the usage of each machine must be carefully managed in order to not overload the electric grid and lose current.

“To think that Zenbaba, who has never done anything like this before, is now positioned to achieve global standards for food processing such as ISO 22000:2005 and HACCP. They have really come a long way.”

Once the machinery was installed, processing and packaging was delayed due to the inability to acquire food-grade steel barrels, one of Parodi’s export requisites. Zenbaba finally shipped 40 MT of honey to Parodi’s Italy office in November. Since then, the export contract has given Zenbaba’s famers hope that there are markets outside of local traders looking to turn their honey into the business of tej.

“We needed a way to solve the marketing problems of our primary cooperatives,” says Shashi Fekadu, woman beekeeper and board member of Zenbaba Union. “The local traders try to cheat us and offer us low prices for honey of this quality. We know our honey is special because of its taste, color and moisture content. Now the rest of the world will know this too.”

As a result of the partnership, Parodi opened a local office under the name of its local affiliate Matrunita,

which will also market honey on the local and neighboring markets. Parodi and Zenbaba want to see Matrunita open the world’s door to Ethiopian honey.

Perhaps more importantly, the partnership means more cash flow for Zenbaba, which means more frequent investments in upgrading member farmers’ hives and equipment.

Transition to Modern Hives Tana Zuria Cooperative member and beekeeper, Yemiker Ambelu, has been collecting honey for over five years. Most of her hives are traditional, which are long woven baskets usually hung high off the ground in trees and produce an average of 10 kilograms of honey each year. This year, she saved enough money to invest in a modern hive, which has easy to remove panels, which make honey collection simple and extend the life of the hive. She expects to more than double honey production.

“The modern hive is cleaner and easy to harvest. In the traditional hives, I find it difficult to separate the honey from the bee larvae, everything is mixed and it’s very dark inside the hive,” she says.

Poor access to modern beekeeping equipment makes it difficult for Ambelu and her fellow beekeepers to achieve significant growth. The majority of Ethiopian honey producers are going through the same thing: inefficient hives producing small quantities.

Since 2012, AMDe has worked with Ethiopian beekeepers from 200 cooperatives to increase the sector’s capacity and motivation to move from

“We needed a way to solve the marketing problems of our primary cooperatives.

The local traders try to cheat us and offer us low prices for honey of this quality. We know our honey is special because of its taste, color and moisture content. Now the rest of the world will know this too.”

Shashi Fekadu, woman beekeeper and board member of Zenbaba Union.

traditional to modern hives. In addition to providing over 750 modern hives, the program’s beekeeping training has encouraged over 17,000 beekeepers to adopt modern hives and improved practices to increase hive productivity and honey quality. Over three years of intervention, program beekeepers have seen hive yields go from an average 10 kilograms per hive to 50 kilograms per hive each year.

Nevertheless, the uptake of modern beekeeping equipment by farmers is slow due to lack of accessibility and rising prices. Modern beehives, which have the capacity to produce over 25 kilograms of honey each harvest, were priced at $40 in 2014, and jumped $75 in 2015.

Quality Testing Just as harvesting traditional hives is complicated, artisanal processing is problematic. Because so much Ethiopian honey ends up fermented for honey wine, beekeepers are less concerned with the initial processing; over-smoked table honeys are common throughout Ethiopia. To better gauge programsupported beekeepers’ progress, AMDe te sted their honeys to ascertain the main challenges in quality.

“We found that to meet export-quality measures, we needed to place a stronger focus on semi-processing and smoking. That’s why we also provided beekeeper cooperatives with mechanical honey extractors and the basic equipment needed to get their honey ready for the next step on the honey supply chain,” says AMDe’s honey expert, Assefa Amaldegn.

The production of honey in Ethiopia has a long history, and the over 50,000 metric tons of honey produced each year makes it Africa’s top producer, representing 25% of African honey. Today, less than 5% of that ends up as exports. New buyers are emerging, and in 2015 Ethiopian honey exports reached buyers in Japan, Europe, the U.S. and the Middle East. Private sector players like Parodi Apicultura are joining Ethiopia’s honey sector in the early stages, and it’s just a matter of time before 25,000 MT of Ethiopian honey reaches consumers everywhere on the globe.

BEESWAX PROCESSING AND MARKETING Partnered with Comel to establish Ethiopia’s first automated beeswax factory and distributed 29,000 wax sheets to over 350 beekeepers in 2015

BEEKEEPING INPUTS Provided 320 women with protective clothing, 760 modern beehives, 14 pairs of wax extractors and printers and over 2300 kg of wax

QUALITY TESTING Tested 36 samples of honey to evaluate improvements in overall honey and funded the nationwide chemical residue certification required by the EU for export readiness during 2 years

EXPORT MARKETING AND CERTIFICATION Assisted 2 farmer unions with achieving Fairtrade certification and sponsored partner participation in 7 specialty food trade shows helping partner honey and wax unions and producers reach more than $2.7 million in exports to international buyers.

HONEY program results

BEEKEEPER TRAINING Trained some 17,500 beekeepers and workers in production, post-harvest handling, and improved semi-processing techniques

COLLECTION Supported 2 private firms, 5 beekeeping unions, over 200 primary cooperatives and over 12,400 beekeepers in the aggregation of over 1400 MT of honey worth $3.5 million and established 2 honey collection points

HONEY PROCESSING AND MARKETING Supported the establishment of 4 honey processing and packaging plants and linked Zenbaba Union with multinational honey trader, Parodi Apicultura

The graphic represents USAID Feed the Future AGP-Agribusiness Market Development program results collected quarterly from honey and wax beneficiaries in the period between October 2011 and July 2015, in partnership with the Government of Ethiopia, the Ethiopian Apiculture Board, Ethiopia Beekeepers Association, Ethiopian Honey and Beeswax Producers and Exporters Association, 5 beekeeping unions and over 10 private companies in the honey sector

USAID Agribusiness Market Development - AMDe

Honey Value Chain

Santiago Herrero

General Manager, Parodi Apicultura

“Ethiopian beekeepers are prepared for the jump to modern hives”

In 2013, the world’s second largest honey trader, Parodi Apicultura, made its first investment in African honey by partnering with Bahir-Dar based Zenbaba Cooperative Union.

Why was Parodi initially attracted to Ethiopian honey?

Before USAID staff in Ethiopia introduced us to Zenbaba Union and other stakeholders, we were studying the possibility to do business in any of the four main honey producing countries of Africa: Ethiopia, Zambia, Kenya and Tanzania. The joint venture was a big advantage that allowed us to reduce the learning curve time about honey industries in Ethiopia and Africa. Ethiopia is the ninth largest honey producer in the world and the largest producer in Africa.

What is Parodi’s strategy for Ethiopia?

We want to contribute to the modernization of Ethiopia’s beekeeping industry and eventually become the number one exporter of Ethiopian Honey. Our supply chain development approach is tailor-made for every country. We find strategic partners, such as Zenbaba, and sometimes create our own export companies. This is the first time for Parodi Group to make a joint venture with a union of farmer cooperatives.

How is working with a Farmer Cooperative Union different?

It is a challenge dealing with a manager who respond to the interests and mandate of the union’s board members. That board is democratically elected by all members, as such, decision making can take longer than with a private firm.

What gives you conf dence that Zenbaba can consistently deliver?

They are the largest honey producing union of cooperatives in Ethiopia and have an enormous source of quality honey through

their thousands of members. AMDe has worked hard to bring their management and marketing capacity in line with exporting.

Together we are prepared to achieve our mutual goals.

Nearly all of Ethiopian beekeepers still use traditional beehives. How will Parodi accelerate the move to modern beehives?

There are still more traditional beehives than modern beehives, resulting in lower honey yields. However, this means even small changes in modern beehive adoption would boost volumes and could put Ethiopia among the five largest honey producers of the world.

Beekeeping is such an integral part of Ethiopia’s traditions, we believe the beekeepers are prepared for the jump to modern beekeeping.

What technical issues affect the quality of processed honey in Ethiopia?

The inappropriate use of smoke is a major problem, it gives the honey an unpleasant smoky aroma and makes it difficult to sell.

Also, the use of excess heat to separate honey from beeswax results in unacceptable levels of key honey parameters such as HMF levels and diastase activity. Parodi introduced a new technology in Ethiopia as part of our commitment with Zenbaba Union to process honey gently in order to improve its quality. That was a milestone in Ethiopian honey industry, and we will see results soon in terms of higher acceptance of Ethiopian honey by the international market.

How will you market Ethiopian honey to the world? What are the major advantages?

Fair Trade and Organic certifications are a must since nearly all Ethiopian honeys comply with both certification schemes and they provide a critical competitive advantage over other African honeys. We also plan to explore the unique characteristics of the Tigray white honey and the potential appeal of Ethiopian coffee honey. If we can responsibly promote production of honey in the Southern Region, we may have access to unlimited volumes of the world’s first “Coffee Arabica” honey. Who can resist the coffee-honey story? Selling honey is in part storytelling, and Ethiopia has many stories to tell.

Through your local branch, Matrunita, do you also plan to market honey in Ethiopia?

The domestic market is full of opportunities since honey is consumed on a daily basis in Ethiopia. Ethiopians living in the diaspora are always asking friends and family to bring them honey. They would probably be pleased to receive some tej too. There are no commercial tej products. Maybe it’s time for somebody to develop a commercial tej product, qué no?

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Honey Value Chain

Modern Hives Give Women Farmers New Vocation Ethiopian farmer Ayelech Bekele, 55, joined the Lelistu Ogda farmer cooperative because she believed she had better chances to improve her quality of life as part of a group. She’s married with six children and a fifth grade education. She and her family have always been farmers.

Ayelech has one hectare of land that has deteriorated significantly over the years due to soil erosion and lack of maintenance. She has seen a decrease in maize and teff yields while her mango and avocado trees are bearing less fruit every year. Although the Ethiopian government facilitates fertilizer distribution, Ayelech cannot afford inputs to upgrade her soil’s fertility. In fact, most of the farmers in the farmer cooperative struggle with soil fertility. That’s why Ayelech and 19 other women now embrace beekeeping as an

USAID Agribusiness Market Development - AMDe

alternative method for increasing their income.

“Since our farm lands are poor quality and we can’t afford fertilizers, beekeeping is an alternative way for me to take care of my family since I can produce more income with this new skill. Our primary cooperative will improve too,” says Ayelech.

In August 2015, Agribusiness Market Development program provided Ayelech and 19 women in her cooperative with beekeeping equipment and technical training. The activity starter kit gives each member two to three modern hives, beekeeping attire, three kilograms of wax and provides the group with a beeswax molder, honey extractor and queen excluders.

Each woman then commits to purchasing two more beehives.

In addition, the program trains the new beekeepers in

advanced techniques in honey production. On the first day, the women receive and follow a handbook and guide to beekeeping. The next day, the women are learning handson how to stamp wax panels and set up the modern hives.

During the training, the women were excited, and their enthusiasm turned to smiles during the practical training.

Most of the women farmers do not have an education beyond the fifth grade.

“Learning the methods of using modern hives will help us achieve more and increase my income. I am excited to produce honey,” explains Farmer Ayelech.

Since 2014, AMDe has provided materials and training for over 320 women beekeepers in the four regions 40 in Oromia, 60 in SNNPR, 120 in Amhara and 100 inTigray.

Some of the women were already keeping bees while others, like Ayalech, are learning the trade for the first time. In total, 320 women received over 750 modern beehives to promote their beekeeping business.

If done properly, one hive can produce 25kg of honey per harvest. In an average season and with four modern hives, Ayelech can get two harvests and an extra $200 in plus the sales from her annual maize and teff harvests.

“In recent years, beeswax has become scarce in Oromia. The women can capitalize on this and with their excess honey they can make tej or sell it for table honey,” explains Abiy Seifu, regional beekeeping and livestock expert.

Ayelech expects her hives to be buzzing soon and to make her first harvest in early 2016.

AMDe has provided materials and training for over 320 women beekeepers in the four regions. In total, 320 women received over 750 modern beehives to promote their beekeeping business.

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USAID Agribusiness Market Development - AMDe

Honey Value Chain

Beeswax Bounces Back Bees are exact. The creation of the beehive is based on perfect geometric patterns that are best sized to the production of honey. The recreation of wax panels is not an easy task, and even less so in rural Ethiopia where farmers lack access to time saving machinery.

Mekele-based honey processor, Comel, has ramped up the production of wax panels in the hope of giving farmers a big break this year. As Ethiopian beekeepers continute to transition from traditional to modern hive, stamped wax panels improve production and can save a farmer days of work. A sustainable industry devoted to creating wax panels could give farmers succor from the difficulties of stamping inexact panels.

“This is part of our value chain. If there is no beeswax, there can be no honey. And if there’s no honey, we have nothing to process,” explains Comel’s Managing Director, Daniel Gebremeskel.

In 2013, Comel partnered with the USAID funded Agribusiness Market Development program—AMDe—to establish Ethiopia’s first automated beeswax factory. The partnership invested in wax melters, drying beds, cutters and stamp machinery. The machinery can easily produce 2,000 sheets a day. In 2015, Comel distributed 29,000 panels to over 350 beekeepers earning approximately $38,000.

Before, farmers had to share manual equipment, often resulting in messy panels. If managed properly, the panels can remain in a beehive for up to two years.

“Our prices are very low. We need to do our part to keep beekeepers going. The regional government is providing modern beehive skills training,” says Daniel. “If we all work together, we’ll create a competitive and sustainable industry.”

If more beeswax processors emerge in Ethiopia, Comel will consider sending its beeswax abroad. The cosmetic industry is one market where organic-certified beeswax is in high demand. For now, the panels will stay in Ethiopia.

AMDe also assisted Comel in finding new markets through international conferences and exhibitions in Dubai and Germany. Comel expects to export three containers of high quality honey to Europe this year, representing 80% of the firm’s honey production.

“This is part of our value chain. If there is no beeswax, there can be no honey. And if there’s no honey, we have nothing to process,” Daniel Gebremeskel, Comel’s Managing Director

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M aize

farmers are burdened with low yields , and farmer unions

lose out on higher profits due to lack of adequate stor age space .

AMD e

partnered with

harvest losses by building

8

16

maize unions to reduce post

warehouses and partnered with the

private sector to demonstr ate high yielding hybrid maize seeds for over

30,000

farmers .

maize DuPont Pioneer and USAID

42 Grains of Progress

Modern Warehouse Enables

47 Cooperative Union to Meet Delivery Deadlines

I

n 2007, Ethiopian agricultural inputs dealer Gemechew Tesmesgen answered a DuPont Pioneer ad to begin offering hybrid maize varieties in Wolega, the fertile plains of Western Ethiopia. In his first year, he sold 10 quintals of seed, enough seed for about 80 farmers.

“The farmers were not trusting, so I gave them a moneyback guarantee. By the second year, they were showing other farmers what the seeds did for them and talking about doubling their yields,” says Gemechew.

Gemechew didn’t see any profits from the seed for six years.

It wasn’t until DuPont Pioneer partnered with the USAIDfunded program Agribusiness Market Development to launch the Advanced Maize Seed Adoption Program that, finally in 2014, Gemechew and his three sub-dealers sold 1500 quintals (150 MT) of hybrid seed, reaching over 12,000 farmers.

“Although I have dozens of farmers who have purchased seed from me for the past eight years. This year and last,

USAID Agribusiness Market Development - AMDe

DuPont Pioneer and USAID

Grains of Progress Private-Public Partnership Strengthens Maize Sector and Offers Farmers Certified Maize Seed and Services the demand skyrocketed. Now they all want Pioneer varieties and are trying to increase the size of their plots.

In five years, Pioneer seed will be my number one selling product,” he predicts. Pioneer seed sales represent 25% of his total revenue today.

Gemechew has seen a change in his farmers too, expanding their farms, buying tractors and sending their kids off to university. “The poorest farmers who doubted the seeds the most, have replaced their mud huts with better houses and zinc roofing. Higher yields made their lives better,” he says.

The early success with hybrid maize seed is part of AMDe’s strategy to increase productivity in Ethiopia’s maize sector. The partnership—between DuPont Pioneer, AMDe and the Ethiopian government— provides sample seed on demonstration plots and field training sessions to advance the utilization and acceptance of high-quality hybrid maize seed, inputs

like fertilizer and improved production techniques.

Ethiopian farmer, Keriya Hassan, 45, had been planting varying amounts of maize on four hectares of land in Wolega for the last five years before she witnessed a seed demonstration. In 2014, she tried the hybrid seeds on a quarter of a hectare, in order to not risk too much of her harvest. She planted just over 6 kilograms of seed and produced 1350 kilograms of maize, more produce than she has ever coaxed out of one hectare of land.

In 2015, she adjusted her strategy and planted two hectares with two varieties of hybrid seed. She expects over 20 MT, a record maize harvest for her. “We’ll eat plenty of it, and the rest will go to the market to pay for our children’s school fees and then whatever else I can make, I’ll use to stock my small business,” she explains.

AMSAP demonstrates two Pioneer hybrid maize varieties, Shone and Limu, on lead farmers plot in low and medium altitude areas. In AMSAP’s third year, the page

41

program expanded demonstrations from 3,200 to 5,000 lead farmers.

Hybrid maize seed demos yield an average of 7 MT per hectare—compared to a baseline study results of 2 MT—and have encouraged USAID and DuPont Pioneer to extend AMSAP’s activities to 2018. AMSAP Pioneer hybrid maize seed activities take place in 27 woredas and reach over 300,000 beneficiaries.

To date DuPont Pioneer and AMDe have created a network of 25 private dealers—like Gemechew—and 13 dealers embedded in the farmer unions. Under its strategy to increase the seed network, the company provides one-on-one and group training for new and existing dealers every year.

“Our strategy is to select and train the best farmer dealers who have planted our products for at least two season and who can tell others their experience and connect them to our Pioneer Extension partners,” explains Melaku Admassu, DuPont Pioneer Ethiopia’s Operations Manager.

Conditioning the Best Seed The DuPont-USAID partnership exemplifies the type of public-private partnerships with the private sector as envisioned in President Obama’s Feed the Future initiative. DuPont has invested more than $5 million in seed multiplication, awareness campaigns, seed

demonstrations and a seed conditioning plant in Ethiopia.

After parental seed lines are imported from DuPontPioneer seed centers in South Africa and approved by the Ethiopian government, the hybrid seeds are multiplied in Ethiopian soil and then conditioned at the seed plant, located outside of Addis Ababa, before being packaged and put on the market.

“The AMSAP program has done a lot to increase demand. More and more farmers are seeing the yield advantages of hybrid seeds, and with our modern seed facility, the seeds in Ethiopia are as good as Pioneer seeds offered anywhere else in the world,” says Melaku.

The seed plant is the first plant of its kind in Ethiopia and includes automated seed cleaning, treating and packaging as well as gravity sorting and grading.

Operating at full capacity, the plant provides muchneeded employment to permanent skilled workers as well as seasonal laborers. DuPont Pioneer’s investment also includes a new seed and grain warehouse where farmer dealers can store small amounts of seed— necessary to increase seed availability—and where farmers can store their grain to wait for improved market prices.

“With just a few smart interventions, a little bit of help, famers can make huge improvements in their overall yields,” President Obama said after meeting with AMSAP farmers on a site visit in July. Obama said

Maize Value Chain

MAIZE program results SEED AND FERTILIZER Supported the demonstrations of improved maize seed varieties and blended fertilizers.

Pioneer varieties: 8520 demonstrations BH-661: 110 demonstrations Blended Fertilizer: 200 demonstrations

WAREHOUSING Supported the establishment of 7 warehouses with 5000 MT capacity each and 1 warehouse with 2500 MT capacity and provided warehouse management training.

VALUE ADDED PROCESSING Linked maize producers to Ethiopian Grain Trader and other cottage industry food processors for 29,000 MT of maize worth $9.1 million.

PRODUCTION Trained over 32,000 smallholder maize farmers and workers in good agronomic practices and postharvest handling. Partnered with 16 maize unions representing 811 primary cooperatives and over 642,500 farmers.

HARVESTING Trained 359 agriculture experts from the Ministry of Agriculture in yield estimation and supplied 292 sets of post-harvest tools to farmer unions.

MARKET CHANNELS Aggregated 49,000 MT of maize worth $15.4 million for the World Food Program. Trained maize union leaders in contract management, financial systems and business planning.

ENABLING ENVIRONMENT Successfully lobbied the Government to provisionally lift the maize export ban by allowing producers and investors (as opposed to traders) to export the maize from the 2013/14 and 2014/15 production seasons

The graphic represents USAID Feed the Future AGP-Agribusiness Market Development program results collected quarterly from maize beneficiaries in the period between October 2011 and July 2015, in partnership with the Government of Ethiopia, World Food Program, 16 maize farmer unions, and over 20 private companies in the maize sector page

43

“Connecting Ethiopia’s smallholder farmers with modern agronomic practices and products, including improved seed and storage facilities, is a pivotal step in helping them to increase their production and improve their livelihoods.

DuPont’s investment in the Ethiopian agriculture sector, particularly in conjunction with the country’s newly amended seed proclamation, is an important step in helping us do just that” Khalid Bomba, Head of the Ethiopian Agricultural Transformation Agency.

the project’s goal is to work more intelligently taking a comprehensive approach to food systems, strategically partnering with the private sector.

In 2013, when DuPont-Pioneer and AMDe inaugurated the seed-conditioning plant and launched AMSAP, the company sold just 4000 MT of hybrid seed.

Then in 2014, they nearly doubled sales, and in 2015, the company sold out of its 6000 MT stock of seed.

DuPont-Pioneer expects seed volume sales to reach 10,000 MT in 2016.

“The Ethiopian market is still flooded with inferior seed at cheaper prices, and there is a lack of knowledge which AMSAP is addressing. We believe farmers are willing to pay higher prices for quality, reliable seed,” explains Melaku. DuPont Pioneer seeds are on the market at $25 for 12.5 kilograms of seed which covers a half-hectare.

Under AMSAP, AMDe also improved the operational capacity of maize farmer cooperative unions while building up their infrastructure, especially through the construction of strategic processing warehouses. The facilities enable unions to ramp up purchasing and reduce post-harvest loss significantly as well as provide capital assets critical to accessing financial services, such as loans. The USAID program also facilitated market channels for maize farmer unions.

AMDe’s 2015 Annual Survey of 2400 smallholder farmers showed that post-harvest losses were reduced from 23% to 6.5% over the course of four years as a result of post-harvest handling training and the addition of quality warehousing.

It its final year, AMDe aims to continue reducing postharvest losses in the maize sector by completing more warehouses and helping to transition smallholder farms from subsistence to self-sustaining operations.

USAID Agribusiness Market Development - AMDe

Maize Value Chain

Modern Warehouse Enables Cooperative Union to Meet Delivery Deadlines In 2012, the Gibe Dedessa Farmer Cooperative Union restructured the management when the union could not meet a contract deadline to supply 1200 metric tons of maize to World Food Program. The union, which represents 36,000 farmers from 111 cooperatives, is located in Nekemte, in Western Oromia, a rich agricultural area home to thousands of smallholder maize farmers. The management missed the mark, not due to issues in production, but due to the FCU’s limitations in the storage, cleaning and delivery.

At that time, Gibe Dedessa was leasing a series of smaller sized warehouses throughout the town to meet its storage needs. Some of the warehouses were as far as 20 kilometers away, making aggregation, processing and delivery expensive and time consuming. The following year, having learned a few lessons, the union met its contractual obligation of 1000 MT, but then just barely.

In 2014, Gibe Dedessa FCU partnered with the Agribusiness Market Development program to build a modern warehouse with a storage capacity of 5000 MT of grain. Under a matching grant agreement, AMDe matched the union’s investment of $236,000 to pay for the warehouse, an office, bathrooms, showers and a cafeteria for employees. The new warehouse—completed in December 2014—is divided into three large spaces where grain is stored, processed and prepared for delivery.

As a direct result, this season, Gibe Dedessa requested the original 1200 MT contract. In May 2015, the union already delivered on its contract, two months ahead of deadline.

“In the past, they were not the best performing union.

We had problems reaching price agreements and they were affected by drought. In 2012, they had warehousing and financial issues and couldn’t deliver on their end, but with the new warehouse we have confidence to give them a larger contract and could give them an even larger contract next year,” explains WFP’s Procurement and Partnership Officer, Mesfin Tesfaye.

The Gibe Dedessa’s partnership with AMDe goes beyond the warehouse structure. Starting in 2012, AMDe began training union members in improved post-harvest handing and management and marketing practices while providing the organization with grain quality inspection equipment. AMDe worked side by side with the union to develop bankable business plans, who then leveraged the WFP contract to take loans from the Commercial Bank of Ethiopia.

In 2014, AMDe selected seven strategic farmer unions representing over 100,000 smallholder farmers to build modern warehouses that increase efficiency in storage, processing and delivery. Through market linkages with WFP, a total of 14 farmer unions, representing over 2000 primary cooperatives, delivered over 49,100 MT of maize since 2012, putting $15.4 million in the pockets of tens of thousands of farmers.

“Warehouse capacity has always been an issue with our partners. Today they no longer have that problem,” says WFP’s Mesfin Tesfaye.

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A ccess

to seed is a serious issue and only a fr action of farmers

obtain certified seed varieties .

AMD e investment gr ants improved the capabilities and equipment of 11 agriculture research centers in four regions while supporting E thiopia ’ s seed sector to establish 8 seed labs . AMD e also a ssisted the G overnment of E thiopia to offer establish a blended fertilizer industr y owned and run by farmer unions .

inputs

Blended Fertilizer

Seed Multiplication is

50 ...at the soil’s request 52 worth the extra effort

New Maize Seeds

54 Produce Amazing Yields

Blended Fertilizer

...at the soil’s request USAID Provides International Management Experts to Assist Blended Fertilizer Factories

E

thiopia has a varied topography and has suffered heavy erosion for many years. Farmers tend to remove all crops from the soil leaving little to no bio-material behind to decompose.

For years, the same farmers have relied on traditional fertilizers like urea and diammonium phosphate—or DAP—to fix their soils, regardless of their location.

Until recently, Ethiopian agriculture experts had no real map of the country’s soil health. Since 2013, the Agriculture Transformation Agency has sent over 45,000 soil samples to certified laboratories in Europe to once and for all map Ethiopia’s soil needs.

“Knowing the overall carbon status for Ethiopia’s soil will be a huge step towards improved agriculture practices and long term sustainability,” explains Tegbaru Bellete, Senior Technical Expert at the Agriculture Transformation Agency (ATA).

Initial mapping shows Ethiopian soils are deficient in one or some of the following: sulfur, boron, potassium, zinc and copper. The test results are critical to inform the government’s blended fertilizer campaign. Starting this year, five fertilizer blending factories, each in a strategic location serving a large population of farmers in Tigray, Amhara, SNNPR and Oromia, will bring these nutrients to the farmers’ soil.

USAID Agribusiness Market Development - AMDe

The fertilizer blending initiative is a collaboration of the Government of Ethiopia, World Bank and the USAID Agribusiness Market Development program.

The first fertilizer blending plant was installed at the Becho Woliso FCU in Oromia, and in 2015, four more plants were completed and launched at Gibe Didessa FCU in Nekemte, Oromia; Merkeb FCU in Bahir Dar, Amhara; and Enderta FCU in Mekele, Tigray. A fifth plant, owned by Melik FCU in Worabe, SNNPR, will go online later this year. The Government of Ethiopia plans to expand the fertilizer blending operation to 12 more sites over several years.

“Last year, the Ministry of Agriculture and the ATA in partnership with key stakeholders launched the program to deliver blended fertilizers to Ethiopia’s most important agricultural areas. Through our partnerships, we plan to address and introduce blended fertilizers to the majority of our farmers in the next couple of years,” explains State Minister and Soil Fertility Expert, Tekalign Mamo.

Under the initiative, AMDe committed approximately $1 million to introduce fertilizer blending plant management and best practices at the five plants.

AMDe provided funding to hire management firms with international experience and experts in the production

and marketing of fertilizers. The firms are contracted to manage the plants for 10 months implementing management systems in production, quality control, marketing and finance. The firms are also tasked with training union staff who will take over management of the plants at the end of the contract period.

Each blending plant creates at least 20 full time jobs, and even more during the peak season. The plants also create fixed capital, which enables the unions to gain access to increased funding and critical partnerships.

The factories expect fertilizer demand to rise well above 100,000 MT per year and benefit millions of farmers.

The Enderta FCU in Mekele, Tigray, has 23 full time employees, represents 20 Primary Cooperatives and 42,120 farmers and actively supplies inputs in southern Tigray. The FCU used to sell on average 19,000 MT of fertilizer annually to area farmers. Thanks to the new plant, Enderta FCU expects the demand for blended fertilizer in Tigray to exceed 300,000 MT annually within five years and benefit hundreds of thousands of smallholder farmers.

“We are making links with the sesame farmers in the Western Zone of our region, which would increase the demand dramatically. Demand could reach as high as 600,000 MT per year down the road.,” says Tadesse

Aragawi, Enderta FCU’s Deputy Manager.

At full capacity, the plant can produce 50 MT of blended fertilizer per hour, each fertilizer customized with different levels of nutrients depending on soil types, deficiencies Initial mapping shows Ethiopian and agro-ecologies. soils lack one or some of the ATA is also working with partners to following: sulfur, boron, carry out fertilizer demonstrations potassium, zinc and copper. The in the same areas sampled. The test results are critical to inform initial mapping of the soil will the government’s blended inform the recommendation for fertilizer campaign. Starting the types of fertilizers needed, and this year, the fertilizer blending through demonstrations, farmers will factories, each in a strategic witness which fertilizer works best. location serving a large Demonstrations with wheat, maize, population of farmers in Tigray, barley, teff, chickpea and sesame have Amhara, SNNPR and Oromia, already shown that blended fertilizers will bring these nutrients to the can enhance productivity and quality farmers’ soil. of all crops with yield advantages of up to 80%.

“Once the farmers in a certain area realize what they need, we hope that knowledge will become institutionalized and create demand for the improved fertilizers that are being blended in these factories,” says Tegbaru Bellete.

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Seed Multiplication is worth the extra effort In 2012, Ethiopian sesame farmer and exporter, Melkamu Abraham, multiplied seed for sesame production in partnership with a local government agency. After planting, he realized that there was not enough technical support and little guarantee of a market for the seed. He gave up, shaking his head.

While seed systems for teff and wheat are better developed, Ethiopian sesame farmers have little options for better seeds. Only 1% of all sesame farmers planting over 300,000 hectares use improved seeds. The rest buy seed from their neighbors, made available by word of mouth and through an unregulated network of smallholder farmers.

Several years ago, the government put a 15% premium on seed prices, hoping to incentivize sesame farmers to produce and market seed in addition to their sesame crop. Despite this, seed for sesame production is still scarce in Ethiopia, and improved varieties are even more difficult to come by.

In 2013, Melkamu partnered with the Agribusiness Market Development program as part of an attempt

USAID Agribusiness Market Development - AMDe

to increase the production and marketing of seed for sesame production. Melkamu multiplied 400 kilograms of Humera-I seed into over 41.5 metric tons (MT).

AMDe then linked Melkamu to sesame producer Tsehay Cooperative Union, which repackages and distributes the seed to thousands of farmers in its network. This market linkage proved critical.

In 2014, AMDe and Melkamu partnered again using basic seed from the Humera Research Center to cover approximately 800 hectares on his 2000 hectare farm and produced over 150 MT of seed. However due to rains and other issues, he ended up with 35 MT of seed and sold it to the Ethiopian Seed Enterprise. Despite the pitfall, over the last two years, Melkamu has seen revenue go from $675,000 to almost $1mn.

“Seed production requires a whole different mindset.

Farmers invest more and work harder. The plants need to be isolated and the care is more intensive,” explains Melkamu. “AMDe provided onsite technical assistance and I attended skills building workshops to make the process more effective.”

SEED SECTOR SUPPORT AGRICULTURAL RESEARCH CENTERS Provided and installed seed lab equipment at 11 research centers and irrigation equipment at 4 research centers to increase seed production and quality

INPUT DEMONSTRATION AND PROMOTION Facilitated and managed 9130 seed and fertilizer demonstration sites and 78 field days, directly benefiting nearly 14,000 farmers

SEED MULTIPLICATION AND DISTRIBUTION Approximately 140,000 hectares were covered with improved and certified seed varieties of maize, sesame, wheat and chickpea

SEED CLEANING AND PROCESSING Supported the establishment of 8 seed cleaning and processing facilities for farmer cooperative unions and private farms

AMDe uses a comprehensive value chain strategy to improve the profitability of sesame partners. The value chain starts with input supply, and in 2014 the program partnered with over 115 farmers like Melkamu to distribute approximately 200 MT of Humera-I and Setit-I certified seed varieties. The seed will cover some 50,000 hectares and produce 35,000 MT of sesame, of which up to 20% will be used for subsequent cropping seasons.

“The program gave me a lot of initiative to come up with a better farming system. The most important aspect was helping me find a sustainable buyer. As an Ethiopian farmer, I want to deliver better seed to farmers, which will improve the sector as a whole,” he says.

Melkamu is now working on certification to become an official seed multiplier and supplier, and this year, he applied for a loan to purchase a mechanized row planter for seed multiplication.

“Row planting technology is a must for farmers who want to become efficient.” In the coming years, he plans to install a processor and increase the export of value added sesame products.

GOVERNMENT CERTIFICATION Supported 8 farmer unions in achieving government-required competence certificate to multiply and market seed directly benefitting over 94,000 seed farmers

SEED MARKETING Collaborated with government agencies to facilitate direct seed marketing and linkages with private and public seed companies, research institutes, farmer unions and private farms.

ENABLING ENVIRONMENT FOR SEED SECTOR Partnered with the Minister of Agriculture to modify and improve national seed regulatory policies to develop the private seed sector.

Sponsored international benchmarking trips to Vietnam and Bangladesh to develop responsible best practices

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New Maize Seeds Produce Amazing Yields Geremew Molla a young farmer in southern Ethiopia, had never harvested more than 0.6 MT of maize grain from a plot of land next to his house that measures out to approximately one-fourth hectare. In fact, Ethiopian maize farmers average approximately 3.2 MT of maize per hectare, or just enough to feed a large family, and not nearly enough to make a profit.

Last season, Geremew took part in a new seed popularization campaign led by Agribusiness Market Development to demonstrate the high performance of the new hybrid variety BH-661. For months, Geremew worked with a development agent from his area in field preparation, planting, weeding and cultivation. He worked hard and plowed the plot five times by oxen, followed proper spacing techniques—40cm between plants and 80 cm between rows—and worked with his neighbors to stay on top of weeds.

After three months, Geremew began harvesting his little plot. After just a few rows, he passed 2 MT and kept filling sacks with corn. The cobs were large with big seeds and uniform in color. By the end of the harvest, Geremew had harvested 29 quintals, which represents a yield of 11.6 MT per hectare. Over 250 farmers came to witness the maize crop stand and learn about the new seed variety.

Geremew—which means amazes in the Amharic language—was amazed. “Many farmers have little access

USAID Agribusiness Market Development - AMDe

to good seeds. Today the supply of good seed is critical for farmers. New hybrid maize varieties give farmers the chance to produce more maize and sell more in the market,” he said.

Need for Seed The demonstrations are part of a popularization campaign carried out by AMDe and partners to show smallholder farmers in targeted areas of the SNNPR and Amhara regions a new hybrid maize seed called BH-661, which was released locally in the Bako Agricultural Research Center, Ethiopia’s Center of Excellence for maize. AMDe works with research center staff to provide upgraded seed testing equipment as well as hands-on training on usage in Bako and the South Agriculture Research Institute, which is responsible for multiplying basic seed and the delivery of seed to the Southern Seed Enterprise, primary seed provider for Ethiopia’s Southern Region.

“We cover approximately half of the SNNPR’s 20 million farmers with seed, but the demand is still very high. Our main challenges include having no solid input tracking system, and issues with our logistics and distribution systems,” explains Negussie Dana, Director General at South Agriculture Research Institute.

AMDe led the BH-661 maize seed awareness campaigns on more than 100 demonstration sites in Amhara and SNNPR maize growing regions. The new maize hybrid

Input Supply

variety BH-661 produced an average yield of 7 MT, 60% more than the previous most popular local hybrid variety, BH-660. AMDe also supported government and private seed companies to increase availability and multiply BH-661.

“Hybrid seed promotion is useful, especially due to the wide shortage of seeds in our country,” explains Sebhat Temesgen, Senior Seed Extension Expert at the Ministry of Agriculture. “The government promotes the privatization of seed production and support individuals, companies and cooperatives in seed multiplication.”

After the demonstration on Geremew’s farm, he and other farmers committed to making advance payments for the purchase of hybrid maize seed.

After harvest, Geremew took 3 MT of his maize produce to the local market in the town of Ameya and sold it for over $600, more money than he has ever collected from a single harvest. With the money, he plans to improve his house for his wife and son and add a storage space that he can rent to neighboring farmers.

“Hybrid seed promotion is useful, especially due to the wide shortage of seeds in our country, the government promotes the privatization of seed production and support individuals, companies and cooperatives in seed multiplication.”

Sebhat Temesgen, Senior Seed Extension Expert at the Ministry of Agriculture

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T he

farmer unions producing

E thiopia ’ s

second largest

commodity are new to the export game with little exporsure to international buyers .

T o increa se quality , handling and stor age , AMD e co - funded 6 industrial sesame processing machines and 4 warehouses in partnership with 12 unions .

sesame Fine Tuning the

58 Art of Sesame

Q&A, Gurinder Singh

63 Sesame Business Manager , Olam

Fine Tuning the

Art of Sesame Investments in Improved Seed, Grading Equipment, Warehousing and Cleaning Technology Ensure a Better Future for Farmers

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very year in September and October, when sesame pods are ripened yellow, thousands of laborers open and shake them over large plastic sheets to collect the little seeds. Inevitably, during the harvest, rocks, leaves and debris mix with the sesame, which is then removed in a processor. Before bagging, farmers can’t be sure if the produce is dry enough to meet buyers’ standards. Just a few percentage points of moisture impacts the sesame’s quality and weight, spelling big losses in sales.

A battery-powered moisture meter that costs less than $300 and training changed that last season for the Godebe Abderafi Primary Cooperative, giving its 500 farmers a swift start to improve quality and reduce post-harvest losses. Before the moisture meter, cooperative head, Araya Gebreselassie estimates that 1 in every 50 quintals has unacceptable moisture levels, leading to further losses in quality and extra costs in storage and transport.

“The instrument makes everything much more efficient. Excess moisture will eventually affect the sesame’s color, leads to mold and insect damage and weighs more,” explains Araya, whose cooperative sold 100 MT of sesame to Selam Cooperative Union in 2014.

The moisture meter is just a small part of the Selam Union’s partnership with the USAID funded Agribusiness Market Development program—AMDe. Progress began in 2012, when the program and Selam Union partnered to work together and address the challenges affecting Ethiopia’s sesame sector, from seed to export.

Globally, Ethiopia is fourth in sesame exports and first in Africa, yet sesame production and quality still depend on a rain-fed farming system that put farmers at high risk of failure every season. In addition, Ethiopia’s sesame farmers have no access to certified seed, suffer an overwhelming lack of warehousing, and spend large

USAID Agribusiness Market Development - AMDe

Sesame Value Chain

amounts of money in transport, processing and cleaning. Mitigating these risks while increasing access to finance and markets leads to bigger profits and gives farmers increased tools and confidence.

In 2014, AMDe and Selam Union built a 5000 MT capacity warehouse and a year later installed a high capacity, industrial sesame processing machine that cleans up to 99.5 percent purity in Abrehajira, a lowland outpost in the heart of Ethiopia’s northwestern sesame belt. Before the establishment of the warehouse and processor, Selam Union transported truckloads of sesame over 250 kilometers to small government-owned warehouses and eventually to the regional capital, Gondar, where they paid to have their sesame cleaned and processed, all this before they could even consider export options.

“It is hard enough to collect our member’s sesame in an area covering nearly 200 kilometers. We spend nearly $10 per 100 kg to get it to a commercial processor where we have to pay $20,000 each year in fees,” explains the Selam chairman, Jegne Tabekew.

Besides giving the union storage, the warehouse increases Selam’s capital assets providing critical collateral that can be used to apply for financing. Local financial institutions thus develop higher levels of confidence, and more financing allow the union to purchase more sesame from farmer members, which can be stored.

This year, Selam Union—which represents 18,000 smallholder farmers—expects to aggregate a record amount of 5,000 MT of sesame and export 2,500 MT of sesame, an increase of 40% over 2014. Selam leaders have high hopes for the purity of its sesame, which has the potential to open the union to niche markets. AMDe’s postharvest training has helped farmers reduced the amount of foreign matter in a bag of harvested sesame by 25%, according to chairman Jegne.

“Post-harvest training has made a big difference in quality of the sesame our members

Before the warehouse and processor, Selam Union transported truckloads of sesame over 250 kilometers to government-owned warehouses and eventually to the regional capital, Gondar, where they paid to have their sesame cleaned and processed, all this before they could even consider export options.

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Sesame Value Chain

are producing. We can maintain the level of quality of White-Humera sesame demanded by international buyers, and with the warehouse and processing machine, we reduced wastage and the delivery time to our customers,” he says. “We can’t buy all the sesame the farmers produce, but with better quality sesame, they too can get better prices from sesame traders.”

Improving the Seeds of Sesame Before the rains hit the lowlands this year, Tesfay Kahsay, a private farmer who owns nearly 400 hectares in the green expanse of heat and dirt, planted 175 kilograms of certified seed on 40 hectares under a partnership with Selam Union. Kahsay expects to produce 40 MT of certified Humera-I seed, or enough seed to cover the needs of nearly 5000 Selam Union farmers.

“Just a few years ago, we had no idea about the benefit of certified seed,” says Tesfay Kahsay. “Now we’re doing it right. The certified sesame pods are stronger, resist disease and even the yields are better.”

Kahsay’s new awareness about certified seed is a direct result of AMDe’s seed multiplication activities. Ethiopian sesame farmers have never purchased seed from agro-input dealers or had any choice for that matter, rather seed is informally bought, sold and exchanged among an informal network of farmers and growers. Farmers keep enough seed from the previous crop regardless of the seed’s performance.

To change this, AMDe led a campaign to popularize certified sesame seed varieties, Humera-I and Setit-I through targeted farmer field days and seed grants for Selam and Tsehay unions. Over two growing seasons, the unions took approximately 200 kilograms of certified seed and multiplied it into 100 MT, enough to cover 20,000 hectares of land and produce 12,000 MT of quality sesame for the next season.

“In the big picture, the number of farmers using improved seeds is still very small in North Gondar,” explains Ms. Ledia Gorebe, Selam Union’s agronomist, hired to help manage seed multiplication activities. “But sesame is self-pollinating and these seeds can be used and multiplied for another three or four years, so the potential is great.”

AMDe facilitated the seed multiplication licensing for both Selam and Tsehay Farmer Unions through the regional agricultural bureau regulating the region’s seed industry. As part of the licensing, each union must own and have the know how to use seed lab and quality grading

USAID Agribusiness Market Development - AMDe

equipment—like the moisture meter—and employ an agronomist.

Seed multiplication is proving to be good business as well. The farmer unions reported an extra income of $172,000 from seed marketing, a win-win that gives their members access to better seed while increasing the union’s cash flow. After one season of multiplication, certified seed represents just 3% of Tesfay Kahsay’s revenue, however, he expects this to reach 10% within the next three years.

White Gold Every year, hundreds of thousands of Ethiopian farmers descend on the steamy lowlands to plant sesame, find seasonal labor and harvest what people in these parts call white gold. Selam Union’s main office is located far from any major commercial centers on a mountainous road over 800 kilometers from Addis Ababa. Due to the isolation, international buyers seem to be living on another planet.

Since 2012, AMDe worked with farmer union export managers, local government officials and the federal cooperative agency to increase the unions’ capacity to directly export their sesame and rely less on local traders. Over three years of technical working group meetings, export workshops and sponsorship to attend international trade shows—like SIAL in Paris, Gulfoods in Dubai and ANUGA In Germany—the unions have more tools and confidence on export marketing.

“At these shows we met buyers, showed people samples, and created a database of potential buyers. Three years ago, we felt that we couldn’t compete on our own, but now we know we can,” says Meseret Lijalem, Tsehay Union’s export officer. Tsehay Union proved progress has been achieved when the union nearly tripled sesame exports from 332 MT in 2012 to 828 MT worth $2 million in 2013.

International sesame trader, Olam, is one of Ethiopia’s largest sesame buyers, trading over 17,000 MT of sesame over the past two years.

AMDe sponsored site visits with farmer unions in North Gondar including the Metema Farmer Union.

“Olam prefers to buy directly from the farmers, and a major part of that is traceability. From our point of view, we can know exactly where the sesame is coming from, important when it comes to quality,” explains Gurinder Singh, Olam’s country manager. In 2015, Olam made its first purchase from a farmer union, buying 200 MT of Humera sesame from Metema Union.

“It is all about the quality of the sesame, especially the quality of Humera sesame.

Compared with other countries, the sesame from Ethiopia is very good.” The Humera brand name so oft associated with Ethiopian sesame is highly prized due to its size, color, oil content and its aroma. So prized, in fact, Nigerian producers have used the name to market sesame from West Africa.

Business Intelligence The union managers continue to face major challenges. Farmer unions still experience interference from government agencies regarding export contracts, staffing and salaries.

Even if some unions are now equipped with capital assets, the paperwork and business management skills are weak and some are unprepared to link with local banks for loans.

AMDe assisted union managers and board members with business management and loan applications to access capital.

“Tsehay Union learned quickly that they have to take on the responsibility if they want loans. We taught them how to create a viable business plan to convince bank loan officers that they are serious,” says Ephrem Tesfaye, AMDe access to finance specialist.

Tsehay Union had never had a loan before partnering with AMDe. Three years and three loans later, the union paid back each loan on time. “The financial management training and coaching helped us look at our business from a long term perspective, now we are determined to take advantage of this source of capital,” according to Lijalem.

Last year, Chinese buyers purchased more than 60% of Ethiopia’s sesame, so when China found lower prices from other sources, Ethiopian sesame producers had to decide whether to wait for a price recovery. Tsehay Union’s export team, led by Lijalem, made a swift decision to sell its stock on the ECX, while others, such as Selam, decided to wait.

“We ran a financial analysis and although the profit margin was lower than last year’s, the alternative was not promising. We knew we had to sell quickly,” he says.

After October, the sesame pods are empty and the bags are full. Selam, Tsehay and other farmer unions will once again face the international market, this time with more experience, marketing skills and technology than ever before.

Tsehay Union proved progress has been achieved when the union nearly tripled sesame exports from 332 MT in 2012 to 828 MT worth $2 million in 2013.

Over three years of technical working group meetings, export workshops and sponsorship to attend international trade shows—like SIAL in Paris, Gulfoods in Dubai and ANUGA In Germany— the unions have more tools and conf dence on export marketing.

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SESAME program results

IMPROVED SEED 50,000 ha. were covered with 200 MT of improved Humera-I and Setit-I seed varieties, which will produce 35,000 MT of sesame, 30% higher than traditional seeds. Provided 2 research centers with irrigation and laboratory equipment.

GRADING AND CLEANING Co-funded 6 industrial cleaning machines for 6 sesame unions and federations and provided 24 sets of grading equipment for primary cooperatives

EXPORT MARKETING Sponsored participation in 4 international trade shows for 9 sesame unions and federations to deliver more than $48 million in exports sales to international buyers.

Sponsored 4 EPOSPEA’s international conferences, which attract an average of 400 buyers, suppliers and sesame experts each year.

FARMER TRAINING Trained over 15,785 smallholder sesame farmers and workers in management, post-harvest handling, and processing.

Partnered with 12 sesame unions representing 438 primary cooperatives and 258,000 farmers.

WAREHOUSING Cost-shared the establishment of 4 warehouses with 5000 MT capacity each

VALUE ADDED PROCESSING Partnered with private sector to invest in and establish 1 sesame hulling processing plant and 1 tahini processing plant.

The graphic represents USAID Feed the Future AGP-Agribusiness Market Development program results collected quarterly from sesame beneficiaries in the period between October 2011 and July 2015, in partnership with the Government of Ethiopia, Ethiopia Commodity Exchange, Ethiopian Pulse Oilseeds Spices Processors and Exporters Association, 12 sesame unions and more than 20 private companies in the sesame sector.

USAID Agribusiness Market Development - AMDe

Sesame Value Chain

Gurinder Singh

Sesame Business Manager , Olam

“Olam would prefer to buy directly from farmer unions”

Olam, one of the world’s largest sesame suppliers, is a top buyer in Ethiopia. AMDe helped link Olam with cooperative union management teams through site visits and business to business meetings.

How has the market changed since Olam’s initial incursion in 2004-05?

In the last three years, Ethiopia has significantly improved upon its position as one of the largest suppliers of high quality sesame.

Introduction of sesame on ECX changed the market dynamics, and the number of participants in the industry have increased. Government has facilitated easy short and long term funding that, when coupled with interventions from non-governmental bodies like USAID, strengthen industry infrastructure and improve the ease of doing business.

What do you like about Ethiopian sesame?

We like the consistent product quality that Ethiopia is able to supply, be it the Humera or Wollega sesame types. Year round availability is also a huge plus.

What are some ways Ethiopia can improve the quality and business of sesame?

The Ethiopian authorities decide what is best for their economy, and ECX has certainly been a positive change. However, we can share some of our experiences in our countries where a more open and transparent systems have helped develop and increase production at a much faster pace. Countries like Tanzania, Uganda, Mozambique and Nigeria have seen their sesame crop production double in the last four years, and are now competing with Ethiopia for the top position. Amateur exporters are being driven into the industry, not to build a long-term export business, but for quick access to foreign currency, and to meet their export volume requirements, they do not mind paying higher prices on ECX. Stricter measures to monitor export product quality and export contract performance will help the industry in the long term.

Do you see farmer unions as capable of being producers and exporters?

AMDe linked us to farmer unions, and we tried to agree on pricing structures. One of the major challenges when dealing with farmer unions is the long decision-making time. By the time a union decides to accept a deal or not, the market dynamics change—either the decided price becomes irrelevant or one ends up purchasing from another source. We hope the situation is improving. A couple of months back we bought a quantity of sesame from a cooperative union. The price was decided quickly, and the contract was executed as per schedule.

We are pleased with the quality and the process.

How do you prefer to buy sesame, through the ECX or directly from producers?

We currently buy sesame from both Ethiopian exporters and the cooperative unions. Given price parity, we would prefer to buy directly from the farmer cooperative unions, as it assures traceability and product quality consistency. We can know for sure where the sesame is coming from and serve our customers’ requirements confidently.

How does this affect the sesame sector?

Interestingly, over the last couple of years, Ethiopian sesame farmers and cooperative unions have earned a higher price by selling to ECX than directly exporting themselves. In the short term, it is an excellent proposition for the sesame farmers and cooperative unions, but in the long term industry growth may be hampered as serious and larger exporters start moving out due to perpetual losses. Plus, farmers and farmer cooperative unions are missing out on opportunities to build linkages with buyers.

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A s E thiopia ’ s

population continues to rise , the dependence

on imported wheat means farmers are missing out on a big opportunity .

AMD e

worked with

24

farmer unions to improve

the sector by cost sharing new technologies and facilitating crucial marketing link ages between farmers and tr aders .

wheat Planting the

66 Seeds of

Self Reliance

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Q&A, Gebregziabher Abay Head of Planning, Ethiopian Grain Trade Enterprise

Planting the Seeds of

Self Reliance More seed, warehousing and processing increase productivity and competitiveness in wheat sector

E

thiopians eat a lot of injera, however they also eat a lot of bread. As the country’s population rises, it is the latter that concerns agriculture experts. Ethiopia leads Sub-Saharan Africa in wheat production with an estimated 4.5 million wheat growing households, yet cannot satisfy the population’s demand. Each year, the government imports more and more foreign wheat to guarantee supplies. In 2014, the government imported over 500,000 MT of wheat, and plans to increase that to 650,000 MT in the current year.

The wheat shortage has resulted in several policy changes including a ban on cereal exports and the distribution of subsidized cereals through flour mills. the USAID-funded Agribusiness Market Development program worked with partners toward replacing subsidized imports with locally grown wheat by stimulating cooperatives and processors within the value chain. Technology adoption, improved input supply chains, and market linkages moved Ethiopia toward a more productive, competitive sector, and contributed to future wheat independence.

USAID Agribusiness Market Development - AMDe

Seeds of Improvement Storage is critical for seed. Proper conditions can make a big difference in the lifespan and effectiveness of the seed. The Edget Cooperative Union, which is composed of 19 certified wheat seed multiplying cooperatives, meets approximately 30% of the wheat seed demand in the country’s Southern Nations and Nationalities Region, enough to plant the land of 40,000 farmers.

Despite the important role Edget’s members play in Ethiopia’s wheat value chain, every year the union is forced to store member’s grain and seed in seven separate storage facilities due to a lack of warehousing.

In 2015, the seed will be stored in a centralized and standardized warehouse. AMDe co-funded a 2500 MT warehouse in the town of Butajira, south of Addis Ababa. The warehouse will allow Edget FCU to both increase the amount of seed collected from members and reduce post-harvest losses.

AMDe’s three year partnership with Edget Union represents a significant role the program plays in Ethiopia’s wheat sector. Although, average wheat yields in Ethiopia, 2.5 tons per hectare, are relatively high for East

Africa, they are much lower than major wheat producers in North Africa and Asia. The availability of good seed is a powerful first step in increasing wheat production.

Since 2012, AMDe has provided union lead farmers with TOT training in post-harvest handling and members with marketing training. In 2014, AMDe provided a grant to purchase 30 MT of basic wheat seed, which cooperative members planted and turned into 800 MT of seed for its members. To assure seed quality, AMDe also provided the union with seed quality testing equipment like moisture meters and seed sample dividers.

“Wheat farmer unions like Edget have years of experience in quality seed production. With a little investment and modern farming equipment, they can really change the reach of their seed, benefitting thousands of farmers each year,” explains Dr. Zewdu Yilma, AMDe’s Wheat Value Chain Team Leader.

The Wheat Belt The western part of the Amhara regional state— known as West Gojjam—is one of Ethiopia’s main wheat growing regions. Here, Baye Mekonnen and his

family own over 850 hectares and have been producing wheat and maize for generations. For Baye “We can’t simply pile seed in Mekonnen, the wheat shortages shoddy warehouses. Seed is are opportunities, and have led grain with life. And deserves him to expand the business into a higher degree of attention,” milling in order to get more of Edget’s General Manager, Tesema Alem. his neighbors’ wheat onto the market.

To accelerate the business growth process, AMDe partnered with Baye Mekonnen to procure a high capacity flour mill, worth $115,000, in Bahir Dar, the regional capital. Under the agreement, Baye invested over $275,000 into the facility’s warehouse and paid for the transport and installation of the mill.

“We plan to establish distribution centers in strategic points. We know that there is a national shortage going on, and we have access to one of Ethiopia’s main centers of wheat. We are also working to improve our farmers’ production by increasing the offer of improved seed,” explains Baye Mekonnen. page

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When the new facility goes online this season, Baye will purchase over 9000 MT of wheat from West Gojjam-based farmer unions, representing over 50 primary cooperatives, some of which also receive training in post-harvest handling and marketing through AMDe. Once the wheat is milled and packaged, Baye will distribute the flour in West Gojjam, and the rest to new markets as far as Addis Ababa.

“The capability of Ethiopia’s wheat processors is heavily impacted by low wheat supplies, and they usually end up operating below capacity.

These processors will be able to compete with the imported wheat if the local wheat producers are incentivized for production and can access improved seed varieties, inputs and better technology.”

Dr. Zewdu Yilm, AMDe’s Wheat Value Chain Team Leader

USAID Agribusiness Market Development - AMDe

Farmer to Processors Historically, the link between farmer and miller has been marred by distrust. To begin filling these gaps, AMDe developed and led a multi-stakeholder approach to bring wheat producers and processors to the same table. The first link was made in 2013 when AMDe, seven Oromia-based wheat farmer unions and the Ambo Multipurpose Wheat Processing Union sat down to discuss wheat supply. At the talks, the two parties signed a contract for the sale of 1800 MT of wheat. The millers paid a small premium of $1.25 per ton, and the unions assured the millers that future wheat would go to them. Behind the agreement were over 9,000 farmers and millers.

“Our factory has been working at 40% of its full capacity due to lack of supply. This is a significant step towards a sustainable supply of wheat,” said Kasaye Kekeba, the Ambo Processors Union Manager.

“AMDe was critical in bringing EGTE and farmer unions to the table. At first we started with a small amount not more than 250 MT, and then in 2014 we scaled up the supply thanks to the arrangement made through AMDe. We now reach out to more farmer unions in more areas, and they have become a dependable supplier of Ethiopian wheat. We think the relationship will last. For the unions, the linkage created a strong market channel for their producer members,” according to EGTE’s Head of Planning, Gebreegziabher Abay.

Since the landmark agreement, the EGTE has sourced more than 89,000 MT of wheat, benefiting over 14,000 smallholder farmers.

Wheat Value Chain

wheat program results

IMPROVED SEED 1137 ha were covered in basic seed to multiply seed, enough to produce over 4600 MT of certified wheat seed

PROCESSING Co-funded 1 wheat mill with private grain processor and 3 wheat cleaning machines with 3 primary cooperatives

FARMER TRAINING Trained over 19,600 smallholder wheat farmers and workers in input utilization, post-harvest handling, business management and marketing from 24 farmer unions representing over 220 primary cooperatives

HARVEST TECHNOLOGY Introduced and cost-shared 56 portable wheat threshers for 40 primary cooperatives and popularized the technology for thousands of farmers

MARKET CHANNELS Facilitated market linkages between producers and processors resulting in sales of wheat worth $29.1 million, and established historical market linkage between Ethiopian Grain Trade Enterprise and farmer unions, leading to sales 89,000 MT of wheat over two years.

The graphic represents USAID Feed the Future AGP-Agribusiness Market Development program results collected quarterly from wheat beneficiaries in the period between October 2011 and July 2015, in partnership with the Government of Ethiopia, Ethiopian Grain Trade Enterprise, 24 wheat farmer unions and more than 10 private companies in the wheat sector.

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Wheat Threshers Increase Efficiency and Grain Quality Last season, Wodera Cooperative Union farmers threshed over 700 MT of wheat worth over $10,000. The activity is important because it’s the first time in history that union members used this type of technology to thresh and prepare wheat. The new machine also chopped leftover straw into animal feed.

“The threshing machine has relieved not only the individual farmer and his family members from days of work, but also our cattle from such heavy task,” explains Shiferaw Dadi, lead farmer and member of the Wodera Union. “Farmers used to spend many days threshing and grinding the wheat stalks to feed cattle. The thresher is a big advantage for us.”

Traditionally, Ethiopian wheat farmers thresh grain using oxen, trampling the grain for hours. This process often results in a lower quality grain mixed with pebbles and dirt. Women then spend days winnowing the pile to separate the grain from the straw resulting in further post-harvest losses. However, with a portable thresher, a pile of wheat that might take a farmer 10 days to thresh now only takes less than a day.

The portable thresher—which Wodera Union farmers estimate saves

USAID Agribusiness Market Development - AMDe

them approximately two-thirds of their threshing labor budget—is part of AMDe’s intervention in the wheat value chain. In 2014, AMDe provided 14 threshers to the primary cooperative members of the Wodera FCU, in the Amhara Region.

In total, the program has provided 56 portable threshers to benefit approximately 50,000 wheat farmers in four regions of Ethiopia.

Each machine represents an investment of $3,150, and each union committed to matching the investment by purchasing another thresher or a tractor. They also pay transport, training of operators and other associated costs such as fuel.

Getachew Tefera, President of Debre Birhan’s University, saw the Wedera farmers threshing their wheat at a public demonstration in February 2015. He realized how a simple technology could save time and energy. After the demonstration, he linked with the union and a local vocational college to further research the technology. The thresher could be used in demonstrations for agriculture students, and he said he plans to look at designing spare parts for the machines. Being able to maintain the machines will increase the technology’s lifespan and sustainability and provide marketable skills to Ethiopian youth.

Wheat Value Chain

Gebreegziabher Abay Head of Planning, Ethiopian Grain Trade Enterprise

“Wheat farmers need access to finance and more storage.”

Ethiopian Grain Trade Enterprise EGTE one of Ethiopia’s largest buyers of wheat plans to increase wheat purchasing by 40% to a record of 100,000 MT in 2015.

EGTE now focuses on buying from farmer unions.

AMDe assisted EGTE in making the f rst wheat purchase directly from a farmer cooperative union in 2013. Will this become a long term EGTE strategy?

We plan to definitely purchase more wheat from farmer cooperatives.

The overall government strategy is to meet the wheat demand of the people without importing wheat from outside sources, and the only way to do with is through local production. The farmer cooperatives play a critical role. The goal is to remove our dependence on wheat imports within five years.

Why did it take this long for EGTE to buy wheat directly from Farmer Cooperatives? What obstacles had blocked this relationship?

There are three main reasons. Unlike with other crops, EGTE waits to hear from the Ministry of Finance, Economy and Development for the purchase price to be offered. In the past, most unions have not been able to aggregate enough wheat to fulfill EGTE orders. When wheat supplies are low on the national market, EGTE is forced to withdraw in order to avoid unnecessary competition with millers and private traders so as to avoid rising prices.

Why do wheat processors and wheat farmer unions not get along?

The main reason why processors and wheat farmer unions do not get along is that wheat processors will first look to subsidized wheat to source for milling and food processing, because it’s cheaper. If they still need wheat, they may look at farmer unions, who still haven’t fully developed their capabilities to fulfill large supply agreements. Unions often expect higher prices than the processors want to pay.

How did AMDe assist the EGTE to make this market linkage? What has been the most effective activity from the program?

AMDe was critical in bringing EGTE and farmer unions to the table.

At first we started with a small amount not more than 250 MT, and then in 2014 we scaled up the supply thanks to the arrangement made through AMDe. We now reach out to more farmer unions in more areas, and they have become a dependable supplier of Ethiopian wheat. We think the relationship will last, and for the unions, the linkage has created a reliable market channel for their members. It’s a win-win.

Why are Ethiopian consuming more wheat than before?

As Ethiopia’s population grows, so does household bread consumption.

In parallel, urban families are more likely to choose wheat-based products such as spaghetti, pasta and biscuits.

Overall, in the wheat value chain, what are the major issues still making it diff icult to meet Ethiopia’s demand for wheat?

Over the last 10 years, the growth in population has exceeded production. Ethiopian farmers cannot keep up. We need to become more efficient at every step in the supply chain to not waste any of our wheat and significantly increase domestic production.

What are other ways the farmer unions can make their wheat more marketable?

Farmers unions should make it a priority to solve their financial and storage problems. Secondly, capacity building in both post-harvest handling and marketing are urgently needed.

Where does the Ethiopian government source foreign wheat, and is it working to reduce its dependency on wheat subsidies?

Trading companies who have the capacity to win tenders end up supplying foreign wheat to Ethiopia. The wheat itself comes from different places and since the tender requires specification of the product and not the source, we do not have the exact knowledge to the source of the wheat. Logically, we know the wheat subsidies are loaded at European ports, which are closer to Ethiopia, meaning lower overhead costs. In the coming years, Ethiopia will continue to import wheat to fill the demand gaps, but the pricing model will eventually change from subsidized to the actual cost of the product to allow Ethiopian farmers to better compete.

How do government wheat subsidies affect the market of wheat grain?

Since the demand for wheat has been big, the impact of government wheat subsidies is insignificant. The government is always cautious on the volume of wheat imports in order not to disincentivize local wheat production.

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E thiopians

consume significant amounts of chickpea but have yet

to capitalize on the promise of its export .

10

AMD e

partnered with

farmer unions to reduce post harvest losses and provided

cost sharing gr ants to introduce new technologies , such a s the countr y ´ s first large scale processor .

chickpea Making Chickpea

74 Synonymous

with Ethiopia

How to Promote

78 Ethiopia’s Most Famous Dish

Expert Notes, Fertice Miller,

79 Processing Specialist, acdi voca

Making

Chickpea

Synonymous

with Ethiopia Processor Takes Position to Target High Value Export Markets with Chickpea and Oilseeds

T

he chickpea should be synonymous with Ethiopia. Even in isolated, rural outposts, the most popular dish among regular Ethiopians is a blend of spices and chickpea powder known as shiro.

When most Orthodox Ethiopians refrain from animal products during nearly half of the year, the chickpea steps in to the local diet. Many people who come to Ethiopia fall in love with the chickpea too. Remember the first time you discovered hummus? Wait until you try a spicy Ethiopian shiro or chickpea kolo served with the coffee ceremony.

USAID Agribusiness Market Development - AMDe

In 2014, one million Ethiopian farmers produced over 450,000 MT of chickpea and exported around 60,000 MT. Even though Ethiopia leads Africa in production and is sixth in the world, low productivity and lack of processing hinders the chickpea’s path from farmer to consumer as well as the sector’s ability to put quality chickpea on the international market.

Due to gaps in quality, Ethiopian exports go to lesser value markets. In addition, exporters sell to high volume food processing companies in India and Pakistan where the chickpea end up bulked with other chickpea lots.

Ethiopian food processor and exporter Agro Prom has plans to change the course of Ethiopian chickpea history by establishing the country’s first industrial chickpea processing and cleaning machine in Adama, 100 kilometers southwest of Addis Ababa. Agro Prom invested over $1 million in the warehouse and processor in partnership with USAID funded Agribusiness Market Development program, which invested nearly $200,000 under its matching grants program.

AMDe approaches agribusiness development by expanding the availability of certified seed, increasing

the post-harvest capabilities of farmers, improving farmer cooperative management and marketing systems, increasing warehousing space, and stimulating the use and investment in new technologies, such as the processor. Over the past four years, these activities reached over 13,500 chickpea farmers with training and support and helped farmers sell approximately 5000 MT of chickpea at farmgate, worth $2.8 million.

With the processing equipment, Agro Prom is poised to sell to the more demanding and higher value American, European and Middle Eastern markets. The machinery page

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cleans chickpeas to above 99% purity using gravity separators and electromagnetic technology to remove soils and other impurities.

While the Ethiopian chickpea is smaller than most chickpeas on the world market, it makes up for size with its rich taste. Within the next two years, Agro Prom plans to turn its cleaned and sorted chickpeas into value added products, especially hummus, before exporting.

“Quality is our biggest problem preventing us from entering the big markets. Yes the Pakistanis buy from us, package it and sell it for more to better markets. Now that will change. If we want to reach quality standards, we had to put up a quality machine. We now have that machine,” says Agro Prom founder and CEO, Elias Geneti.

Agro Prom has been in the pulse and oilseed business for ten years and exported 1000 MT of chickpeas in 2014. While the majority of Agro Prom’s revenue comes from sesame, Elias Geneti sees this changing over the next five to ten years, as the company shifts its focus to chickpeas. Agro Prom’s first export target in 2016 is 4000 MT of quality chickpea to high value markets such as the US and Europe.

“USAID’s partnership with Agro Prom is a prime example of the new model of development in which the private sector is making big investments. These types of partnerships guarantee better prices for farmers and are important for the entire value chain,” explains Dennis Weller, USAID Ethiopia’s Director.

How to Find a Sustainable Source In 2005, Agro Prom became the first Ethiopian agro-processor to use contract farming with nearly 5000 smallholder sesame farmers in Northern Ethiopia. For chickpea, Agro Prom is using the same contract farming model to source grain for the new processing plant. Under the contract farming structure, Agro Prom provides financing, guarantees prices, provides on-site agronomists and gives training to farmers.

“Agro Prom is replicating the same contract farming model with Ethiopian chickpea farmers. We need to link the entire value chain to guarantee fair distribution of the benefits and nurture sustainability,” says Elias Geneti. “As the first chickpea producer in Africa, Ethiopia should be a major player in the export market. With higher returns, farmers will be less likely to turn to other less-valuable crops like cereals.”

While USAID uses development funds to stimulate these types of investments, perhaps more valuable to Agro Prom is AMDe’s initiative to link Agro Prom with chickpea farmer cooperatives under the Erer Farmer Union, which agreed to provide 2000 MT of chickpea to Agro Prom in the first year, an activity that benefits over 2000 farmers.

Under the contract, Erer Union Manager, Mekonnen Hailu, can guarantee income for two of the union’s member primary cooperatives representing over 1000 farmers each. “The advantages are that farmers

USAID Agribusiness Market Development - AMDe

do not have to worry about a market for their produce and when they get better prices, they are encouraged to increase production,” Mekonnen says.

In 2016/17, Agro Prom and each cooperative will increase the contract to 1500 MT, which will allow Erer FCU to incorporate more primary cooperative members into the chickpea supply chain.

“Agro Prom is doing everything it can to work with local producers to guarantee quality chickpea for processing and has agreed to pay premium prices to the farmers,” explains Agro Prom’s CEO. “Locally, the biggest challenge is finding a sustainable source.”

Indeed, few Ethiopian farmers produce Kabuli chickpea variety, which sees higher demands from the international market. To this end, Erer and eight more farmer unions partnered with AMDe to multiply certified Kabuli chickpea seed and have produced 550 MT of seed leading to the production of over 22,500 MT of chickpea.

Mechanization on the Farm Chickpea farmers also made history in 2015. Earlier this year, chickpea farmer Million Meskele—owner of Bale Green in the Oromia Region in Southeastern Ethiopia—made the first mechanized chickpea harvest with a combine harvester on 75 hectares.

Chickpea is typically harvested by uprooting the entire plant. Pulling out the roots deprives soils of nitrogen-fixing benefits. Once collected, farmers allow the plant to air dry and then thresh piles of chickpea on the ground using animals. The week-long process is arduous and the chickpeas suffer losses in both quality and quantity.

In February 2015, Million harvested, threshed and winnowed 125 MT of chickpea with the combine. Area farmers came and witnessed so they too could understand the benefits and opportunities of the new farm machinery. These types of technologies improve the chances of reaching a higher quality grain and the ability to stock processors such as Agro Prom. In addition, the combine increases Bale Green’s chickpea harvest by approximately 15% compared to a manual harvest.

“This has been a great contribution to Bale Green and represents a turning point in the development of the chickpea sector. We will serve as a model for others trying to expand into mechanized farming,” explains Million Meskele, owner of Bale Green.

The combine is part of AMDe’s strategy to assist farmers in expanding production and leveraging technology. In partnership, AMDe and Bale Green invested $110,000 in the combine harvester. In addition, Bale Green is a certified seed multiplier that distributed improved Kabuli seeds to over 1000 smallholder farmers in 2015.

Chickpea Value Chain

chickpea program results IMPROVED SEED 18,000 ha were covered with over 5000 MT of Kabuli varieties of certified seed, enough to produce over 40,000 MT of chickpea

SALES AND LINKAGES Supported partners to sale over 3500 MT of chickpea worth $1.8 million through domestic market channels and linked 5 farmer unions with private sector processors

EXPORT MARKETING Sponsored 4 EPOSPEA’s international conferences, which attract an average of 400 buyers, suppliers and sesame experts each year. Sponsored the participation of 4 farmer unions in 4 international trade shows to display products and link with new buyers.

FARMER TRAINING Trained over 13,700 smallholder sesame farmers and workers in post-harvest handling, quality grading, business management and marketing from 10 farmer unions and 1 private farm

HARVESTING AND GRADING Partnered with private sector to acquire 1 combine harvester and thresher and provided 9 farmer unions and cooperatives with grading equipment and training

PROCESSING AND VALUE ADDITION co-funded 2 industrial-grade food processing lines for food production and grain cleaning, and helped 2 women agro processing cooperatives acquire mills

The graphic represents USAID Feed the Future AGP-Agribusiness Market Development program results collected quarterly from chickpea beneficiaries in the period between October 2011 and July 2015, in partnership with the Government of Ethiopia, Ethiopian Pulse Oilseeds Spices Processors and Exporters Association, 10 chickpea farmer unions and more than 10 private companies in the chickpea sector. page

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How to Promote Ethiopia’s Most Famous Dish Engidu Legesse has big plans for Ethiopian chickpeas. His food processing company, Guts Agro Industry, created a product that he’s convinced everyone will love. His biggest worry is not being able to meet the demand of 100 million Ethiopians.

Ethiopians love chickpeas. They eat them raw and cooked.

The blend of chickpea powder and spices is one of Ethiopia’s most well-known dishes and consumed regularly all over the country. Despite this, Yanet Shiro is Ethiopia’s first branded, mass-produced shiro, according “There were no brands of to Engidu Legesse, CEO of Guts. shiro in Ethiopia. People may Yanet Shiro comes as a result have a favorite store where of the company’s partnership they buy it, but they don’t with Agribusiness Market necessarily know the name, Development program, which or in most cases the shiro assisted the company through doesn’t have a name,” strategic grants and linkages with chickpea farmers. AMDe facilitated a link with two chickpea producing farmer unions Lume Adama and Becho Woliso and in the first year, Guts purchased 300 MT of Kabuli chickpea worth $120,000.

Under a matching grants program, AMDe also contributed $60,000 towards the acquisition of a packing and packaging machinery. Guts invested over $150,000 to add sieving, cleaning and other equipment to the food processing line.

In addition to the grant, AMDe provided the company with a technical expert, specialized in snack food, who helped Engidu and staff with flavors using local spices for Yanet Shiro and a roasted chickpea snack.

USAID Agribusiness Market Development - AMDe

Yanet Shiro has since become Guts’ big hope. It took three years for the Yanet Shiro to reach the current 5% of the company’s sales, which total over $750,000 each year. However, on the back of an innovative marketing campaign and quality ingredients, Engidu expects the Yanet Shiro line to represent half of the company’s revenue by 2020.

“All those condominiums the government is building prove the people are moving to the cities and adopting a new kind of lifestyle. None of them will have time to prepare their own shiro. The biggest challenge is marketing,” he says.

He has an innovative plan for that too. By using women on bicycles as wholesalers, Guts has designed a consumer-targeted campaign to spread the savory goodness of Yanet Shiro to 12 large cities across Ethiopia.

Nearly half of Guts sales come from the company’s Super Mom line of supplementary food for infants and children and ready-to-use-supplemental products for the World Food Program. For these products, the company is sourcing maize, soya and chickpea from Ethiopian farmers. Guts also specializes in salt processing, which currently represents 35% of company revenue.

Chickpea Value Chain

Fertice Miller

Value-Chain Processing Specialist for ACDI-VOCA Ethiopia, analyzes Ethiopia’s current state of food manufacturing

Innovation in Ethiopian Food Processing

T

he Ethiopian diet is still traditional in its consumption of injera and wot, but the rise of outside influences on food in restaurants, small shops and supermarkets is fundamentally changing the face of the Ethiopian consumer. In fact, westernized, imported packaged products on average cover over 70% of the floor space in Ethiopian supermarkets.

Rising rates of urbanization, increased transport times, and more women in the workforce have created a stronger interest in ready-to-eat foods and eating out.

Traditionally, a family depends on house workers for food preparation, but as wages rise, this too is shifting. This shift is seen in the preparation of injera, a multi-day task of milling teff grains and fermentation. Today, buying injera is perhaps as common as making injera. The acquisition of refrigerators, ovens and microwaves has led families towards a diversity of foods, from frozen chickens to processed meats, humus, and yogurts.

Ethiopian food manufacturers are facing a unique opportunity to cash in on the uptake of processed foods. A wider offering of innovative and value-added healthy food products will not only benefit these companies, but also farmers, traders and a variety of actors along Ethiopia’s primary crop value chains. These products have the potential to make a significant impact on improving the overall nutrition and food security of Ethiopian consumers.

Risk of Innovation

The food processing industry accounts for approximately 40% of the gross value of production in large and medium size manufacturing. There are over 550 companies in Ethiopia’s food processing industry, which is worth $900 million and creates over 60,000 jobs, according to a 2013 study from Wageningen University.

The majority of these processors use local ingredients. As food crop production expands in area cultivated as well as yields, Ethiopian cereals, pulses, spices, honey, aquaculture and

poultry, among others, are ripe for expansion in food processing. Many processors have already acknowledged the benefits of value-addition, but production and market execution remain a concern.

In actuality, the risk of product innovation is low. Processors need to emphasize stylistic quality, taste and packaging. Ironically, while expensive imported products exceed consumer budgets, they consistently sell, and this shows that the desire for high-quality, affordable products is strong.

The need to improve overall processing standards remains a vital component that the Ethiopian food industry cannot ignore.

Under its Growth & Transformation Plan, the government is primarily concerned with food fortification and preservation. Greater phytosanitary compliance and increased nutritional content will soon attract greater consumer loyalty. Ethical purchasing issues, equitable employment and safe working conditions in supplier factories, as well as environmental controls and safeguards are still lacking.

New Technology Adoption

Globally, food-processing equipment has increasingly sophisticated levels of control to reduce processing costs, increase efficiency, and enable rapid changeovers to allow for shorter production runs. The automation of entire processes from reception of materials, to cleaning, packaging, and environmental controls is a reality.

While labor in Ethiopia is still inexpensive and intermittent electricity continues to impact productive capacity, especially in the cold chain, an effective combination of handprocessing methods and new technologies would carry food processors toward profitability and larger market share.

As food-processing technology grows, mechanical engineering expertise in food equipment servicing is necessary to address repairs and machine tooling, and quality assurance standards such as product testing are necessary to the sector’s

sustainability. Localized manufacturing and the development of cottage industry food processing equipment must be further expanded to create jobs and business opportunities.

To acquire and install these technologies, companies will need financial services from banks or investors. Once new technology is paired with quality assurance, Ethiopia can meet the demand curve of a leading local and global food manufacturer.

Food Marketing

In Ethiopia, savvy marketing development for food products is still very low, especially when compared with the alcoholic beverage industry. Quality food products with engaging labels and effective advertising campaigns have the potential to influence consumers.

Food processors attempting to win export markets should leverage the global demand for specialty ingredients and labeling—such as Non-GMO, Gluten-free and Organic— to grab the attention of niche markets.

Promoting Ethiopia’s ‘healthy and natural’ image will not only increase revenue, but also contribute to the overall reputation of Ethiopian products.

Product innovation, technology adoption, and improvement in marketing will allow companies to open the doors on a growing processed food market. Once the doors are open, improved nutrition and food security will hopefully follow.

Ethiopian tastes are changing.

Growing numbers of Ethiopian diaspora and foreign communities are exerting a stronger in luence over the local diet and palate than ever before. Furthermore, the youth, Ethiopia’s largest and fastest growing demographic, is driving this culinary shift.

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The Fruitful Life The Agribusiness Market Development program employed a multi-pronged approach to reach over 50,000 farmers (45% women) with nutrition sensitive agriculture and household dietary diversity trainings and messaging over nearly five years. AMDe collaborated with farmer unions and government agencies to emphasize maximizing production and consumption of adequate, nutritious food, to ensure food quality, to invest income in nutritious food, and to empower women.

Nutrition Training and Cascade Messaging

In August 2015, AMDe conducted a KAP Survey of 400 smallholder farmers to determine the adoption of nutrition behavior change messaging: New Crop Cultivation: 23% said they would cultivate new crops.

Intercropping 25% said they are more likely to begin intercropping.

Handwashing 23% said they are more likely to wash their hands after using the toilet Nutrition Knowledge 24% said they can identify types of food that provide energy and 33% said they can identify types of food that are important for growth

AMDe created the brand, known as Fruitful Life, to increase visibility of the program’s behavior changing messages. The messaging, which goes beyond nutrition to input usage and gender equipty, is fruitful for farmers and their families.

1,212 lead farmers (24% women) received train the trainer experience and nutrition posters to expand nutrition sensitive agriculture messages to nearly 40,000 farmers.

63 Farmer Union Managers (11% women) and agriculture office heads participated in basic nutrition and nutrition sensitive agricultural interventions.

Participatory Films 16 women farmers developed 8 short films demonstrating healthy recipes, home gardening tips and new ways to increase diet diversity to over 3000 farmers in their communities.

Cookbook & Nutritional Materials

Developed cookbook and distributed 750 copies to home economic agents and lead farmers, and distributed 650 nutritional posters to cooperative leaders

Ladd

Senior Nutrition Technical Director, ACDI/VOCA

Reaching Women through Men AMDe takes innovative approach to reach thousands of households with behavior change messaging to improve nutrition and family wellness The Agribusiness Market Development program targeted 1 million smallholder farmers, mostly members of cooperative unions, with nutrition messaging. When we started, union membership was mostly male, and the first project objective was to increase the membership of women. Building on a membership drive that reported over 78,000 new women members, AMDe then designed nutrition behavior change messaging that target men, with the women in mind.

We created messaging using analogies that draw on familiar subjects. An example is comparing the use of fertilizer to increase crop production and health with the value of micronutrients for the growth and health of children. Discussions about the importance of timing, the use of appropriate fertilizer, and proper amounts were discussed and easily understood by the farmers. From that common understanding, the team introduced the concept of a diverse diet to provide appropriate micronutrients for growth, at the right time and in the appropriate amounts for a pregnant or lactating woman, a growing child, or a working farmer. The training was very interactive and the farmers quickly understood the concepts in the format we provided them.

Embedded Nutrition

In recent years, development aid projects have sharpened their focus on nutrition-sensitive agriculture. Implementers have learned that leveraging activities in non-nutrition and non-health sectors—such as agriculture—are effective in improving nutritional outcomes.

The reprogramming of agricultural programs in today’s development context is making nutrition a priority.

Agriculture programs can play a significant role in moving households towards improved nutrition, and that they are capable of carrying out “nutrition activities”. Agriculture programs influence food security by increasing the availability of and access to foods in the market or at the household level by improving production, processing, and post-harvesting handling.

Many people assume that increased incomes will automatically lead to improved nutritional status.

Research tells us this is not necessarily true. Agriculture

beneficiaries do not magically jump from increased incomes to improved nutrient intake, rather we need to purposely design program activities to move farmers first to spending more money on food and then to consuming more nutritious food.

Activities that an agriculture program can easily implement to help move farmers along the income pathway include: • Budget training for household expenses • Targeted behavior change messaging • Savings and loan groups for year-round access to income Some may balk at AMDe’s results, saying they are not significant. It is important to remind ourselves that the target participants were men who are not typically involved in decisions about the family diet.

One of the challenges of infusing a nutrition-sensitive approach into an agriculture program is the program’s target participants, in this case male farmers. AMDe successfully adapted nutrition behavior change messages to target predominantly male participants in a manner that was understood and adopted by them and their households.

The farmers will ultimately choose if they adopt and implement new behaviors the new knowledge and that it trickles down to the household level where women have the main responsibility of caring for the family.

W ith

little access to capital , farmers and agribusinesses

are disadvantaged and struggle to grow .

51

AMD e

coached

farmer unions on financial management and creating

bank able business plans to receive loans worth from

8 E thiopian

banks .

$137

million

access to finance Making Agriculture

87 Serves Entire Village

Q&A, Feyera Ejeta

88 Co-founder of RENEW LLC

84 Bankable

86 Vice President, Cooperative Bank of Oromia

Savings Coop Now

Expert Notes, Matthew Davis

Making Agriculture Bankable Sisay Yohannes, the general manager of Sidama Elto farmer union, has heard all the reason banks won’t give his organization a loan. ‘No collateral, too risky, no business plan’ are among the most popular. Thousands of iterations of this scenario happen every day, and have as much to do with the farmer organization as it does with the banks.

The farmer’s inability to adequately present their financial needs has resulted in automatic rejections all over Ethiopia, and the refrain ‘agriculture is risky’ has been ingrained in every banker’s mind.

Sidama Elto Farmer Union, created in 2004, is an example of a farmer union that had no working relationship with any Ethiopian banks, despite having 20,000 members from 87 member primary cooperatives and working with a variety of commodities.

The lack of collateral, such as a warehouse has always gleaned rejections from banks.

The New Paradigm Despite encouraging growth in the agricultural sector, access to financial services in rural Ethiopia remains difficult. Smallholder farmers have little to no recourse for accessing even small amounts of capital, leaving them vulnerable to emergencies and events that require large sums of money.

The majority of Ethiopian farmers have little formal education and lack the knowledge of how financial services work. On the other side, Ethiopian banks have few risk management mechanisms, low levels of linkages with other financial service providers and lack product innovation.

With a strong grasp of the challenges, the USAID funded Agribusiness Market Development program modeled an approach to access to finance that takes a fresh look at the needs of the banks and farmers.

The first step was to promote loans guaranteed with future sales contracts. The Cooperative Bank of Oromia—CBO—regularly loans to farmer unions on the grounds of reasonable business plans and buyer contracts. In partnership, AMDe promoted the concept among other banks and farmer unions.

“Loaning for business is the main way CBO has broken the perception that agriculture is risky. We believe in business and if that business returns profits, there is no problem,” explains CBO Vice President, Feyera Ejeta.

AMDe matched investments in warehouse and processing equipment that allow

USAID Agribusiness Market Development - AMDe

Banking on Rural Farmers The Cooperative Bank of Oromia is mostly owned by farmers and farmer unions and provides financial services to rural communities. Towns in Oromia region, like Bedele and Agaro, previously had no CBO branches despite being centers of agriculture commerce. As partners, AMDe and CBO selected the two towns due to their strategic location in the heart of coffee and maize growing areas.

As a way to expand the financial reach of CBO to rural farmers, AMDe and CBO matched funds to open new branches in each town in order to give over 1.2 million people the chance to access bank loans and services.

According to a feasibility study conducted by the bank, both branches showed potential for profitability within the first three years of operation. In the first two years of operation, the new branches created 18 jobs and reported over $1 million deposited in bank accounts.

“The customers are out there. AMDe helped us see that and helped us reach our goals. They taught us that there is room for innovation in the financial services sector,” says CBO Vice President, Feyera Ejeta.

borrowers to upgrade the quality of their products and services and trained over 400 key staff in farmer coops and unions in accounting, business planning and management.

All this is easier said than done. Institutionally, most farmer cooperative unions do not have the skilled manpower to prepare bankable business plans, to project and analyze their cash flow, to update their internal bylaws, and communicate professionally with commercial banks. To create a platform for farmer unions to even be considered for a loan, AMDe supported the unions by first restructuring old debts and passing new bylaws to make the necessary adjustments.

“Some farmer cooperative unions didn’t even know they had outstanding debts. Others didn’t know under whose names the debts were sourced. We realized to restructure these unions, cleaning the slate was necessary,” explains Tadele Gelan, AMDe Deputy Chief of Party and Access to Finance Lead.

AMDe held stakeholder workshops on agricultural financing and presented lessons learned to policy makers, industry associations and a network of financial institutions. A clearer understanding of cooperative unions and a strong business acumen on the part of farmers convinced the financial institutions to take action, but only with AMDe support.

Over four years of partnership, AMDe facilitated the disbursement of over $137 million in loans to over 50 organizations including unions and small businesses with eight banks. Those four years of capacity building have given partners the tools to create bankable business plans, mitigate risks and make sound capital investments in purchasing, new technology and business expansion.

“Our partners’ perception of the risk of farmer unions and farming changed from the first to the fourth year. Even smaller unions are getting loans, and the number of banks interested in

lending to agricultural actors is increasing,” says Tadele.

Today, thanks to trainings and the coaching services provided

by AMDe, over 40 partner farmer unions and cooperatives accessed bank loans for the first time in their history.

Business Collateral In 2012, under its partnership with AMDe, Sidama Elto union members received training in finance and business planning, quality and post-harvest handling. By linking the union with the World Food Program and the resulting contract, AMDe assisted Sidama Elto with the union’s first loan.

“We had no collateral, but the Commercial Bank of Ethiopia accepted the WFP contract and loaned us over $350,000, which we used to aggregate and store our members maize and deliver to WFP,” explains Sisay, the union’s general manager.

Thanks to the loan, the union met WFP’s contract of 4000 MT of maize, and in 2013, AMDe support Sidama Elto again to apply for a bank loan, this time for $670,000.

“In addition to the WFP contract, AMDe showed us how to write a business plan, how to communicate with loan officers,” he says. “We always knew that we had to buy more to make more, but didn’t know how to access the capital, now we know.” In 2014, the union took $860,000 and paid it back within five months.

In 2015, AMDe co-funded a 5000 MT-capacity warehouse with the union, which gives the union critical space to store members’ grain, reduce post-harvest losses, and a new asset allowing them to reach even higher levels of capital. As the warehouse nears completion, Sisay and his team have already prepared a bankable business plan and will present their loan application for $1.4 million.

This time, they will do it all without involving AMDe.

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Access to Finance / Investment

Feyera Ejeta

Vice President, Cooperative Bank of Oromia

“Farmers are smart and know their market. We are not financing collateral, we are financing business.”

60% of the Cooperative Bank of Oromia is owned by famers and cooperatives, and the bank leads in agriculture lending, give approximately $265 million in loans last year.

What is CBO’s relationship with the agriculture sector and farmers?

Our main objectives is to support agriculture.

Many commercial banks are not interested in agriculture financing due to the perceived risk, but CBO has taken risks to support agriculture from the beginning. The results have always been positive and allowed us to expand to every region except Afar.

What percentage of CBO loans are made to ag-related businesses?

Agriculture-related loans represent approximately 40% of our loans. As we continue to target the agriculture sectors, we expect this number to reach 50% within 5 years.

What loan default rates does CBO see in the agriculture sector?

When we compare farmers with commercial businesses, they are just as good at repaying loans. The difference is that we do not give loans to single farmers, rather we go through unions and cooperatives. The default rate is below 1%, which is very good when compared with other sectors, and less than the average default rates across all loans.

Why have farmers and ag businesses lacked access to loans?

Many commercial banks are not willing to offer services to rural areas due to the high cost of transactions. The further you get from the center, the more costs are incurred, and it becomes too expensive to make a profit. Next, those banks wrongly associate agriculture with risk and think the money they are lending to farmers is lost. There was a time when the government made loans for fertilizer and many farmers defaulted, but that has as much to do with the lack of monitoring systems as it does with the farmer’s ability to repay loans.

The history of defaulting government banks USAID Agribusiness Market Development - AMDe

has created a sector-wide stereotype that cooperatives are not trustworthy and thus not bankable. Unfortunately, this perception continues today, but not at CBO. There is a misconception that farmers need collateral to get loans. What do you say to groups without assets?

I tell farmer unions that you do not need collateral to turn farming into a business.

CBO looks at the merit of the farmer union’s business plan. That is how CBO has broken the perception that agriculture is a risky business.

We believe in business and if that business returns profits, there is no problem. Farmers are smart, and have been doing this for many years.

They know their market. We are not financing collateral, we are financing business.

What types of challenges continue to block access to f nancial services for rural farmers?

The main challenges lie in the capacity of the farmers. Through our partnership with AMDe, we have improved the financial capacity of unions, but only at the highest level. To make it more sustainable, we need to go further and cascade down to all farmers the skills in financial management, the importance of saving, and early repayment. It is challenging but we have to go further to bring them up to our expectations and show them how to make their money more productive.

In 2015, Are Farmer Coops and Unions responsible enough to repay loans?

Yes, very responsible. CBO and AMDe have done capacity building with 24 savings and credit cooperatives on governance, financial management, internal controls, business preparation, loan management, and monitoring. They have a better understanding and based on the new knowledge and skills,

they make changes. In 2014, CBO provided single loans worth $1.5 million to several farmer unions. That’s a big leap from the past.

CBO loaned 30 million birr to Becho Woliso, Limu Innarea, and Lume Adama farmer unions. Through AMDe’s facilitation, we have already loaned these unions two or three loans. They met the repayment deadlines, and our relationship is very good. We still provide coaching and advisory services, but we are confident they use the money in a productive way. We don’t worry.

What other f nancial mechanisms does CBO promote for farmers?

CBO has also started agency banking, which is banking through agents living and working in rural areas where establishing a branch would not make financial sense. The agent accepts small transactions, deposits and withdrawals.

CBO currently has 13,000 new customers through a network of 50 agents. We are still in pilot phase and will expand in the future.

What makes CBO different from other banks in terms of agriculture loans?

We have an appetite for agriculture financing.

We have done agriculture loans since 2004, and have influenced other banks to follow suit.

In Amhara region, a beekeeping union called Zenbaba approached commercial banks for loans again and again. When CBO opened in Bahir Dar, they visited us and got a loan with no collateral for working capital. They repaid the loan on time and there were no problems.

Afterwards, the commercial banks saw the chance they missed and went knocking on their door. You see, this is the CBO way.

Zenbaba Union has a very low rating and appears to be one of the least bankable unions.

CBO took a big risk on Zenbaba, but CBO also saw the union’s potential, the market behind it, and went for it. That’s the difference.

Savings Coop Now Serves Entire Village In Ethiopia, rural Savings and Credit Cooperatives—known as SACCOs—have poor performance records due to constraints like low access to technology, poor infrastructure and low levels of institutional capacity.

The basic tenet of a SACCO is for members to save their money together and make loans with reasonable interest rates. Money earned from interest on loans covers the interest cost on savings and administration costs. Especially for farmers, savings coops provide a valuable service in rural areas where other financial services are nonexistent.

Hadas Belay is a member of the Embaba Haya SACCO, in a rural area of Tigray in Northern Ethiopia. Hadas has five children and farms wheat, maize and sorghum on less than one hectare of leased land. She has never looked at farming as a business or a source of expendable income and relies on her husband for spending money as well as money to support her children. Like her neighbors, she joined the Embaba Haya Savings Coop over ten years ago, because there are no readily available financial services in her village. In mid-2014, she took a three-year term loan worth $1400 and purchased two oxen to plough her field, one cow and six sheep. In the first year, she expanded her herd to three oxen, three cows and 14 sheep. Now she offers her oxen to other farmers at a fee, earning nearly $400 in the first season. With the money, she purchased a television, electric stove and ran a water line to her home.

The Embaba Haya SACCO was created in 2003 and currently serves some 1500 people, or literally every household in the coop’s coverage area. Before 2013, the community savings and loan never had the capacity to make loans over $500.

“All the transactions were made using paper, nothing was automated or stored in a database. In fact, blanket processes such as applying interest to all savings payments regardless of the deposit date was actually losing money for the coop,” explains Ephrem Tesfaye, AMDe access to finance expert. “They urgently needed to be updated.”

AMDe started by training six SACCO employees in basic computing skills including how to use Excel. The second phase of training provided the organization with Peachtree accounting software and computers. Finally, the program refurbished Embaba Haya’s office building, adding a wall to wall counter with teller windows and office furniture. The professionalization of the organization created confidence among members to save more frequently. During the partnership, Embaba Haya increased loan disbursement by 112% and savings mobilization by 79% between 2013 and 2015.

“This is no longer a SACCO, it’s more like a rural bank,” anecdotally exclaimed Tigray’s Regional President, Abay Woldu, at the inauguration of the new facility in 2014.

Farmers like Hadas Belay expanded agriculture activities, and the profits from these activities are changing the village. “I will take a larger loan next and help my son to open a metal workshop in the village. He has received training and will be the first blacksmith in our village,” she says.

Now, her husband and two oldest children are SACCO members, and her two younger children are enrolled in the SACCO’s children’s savings program. The program is designed to teach children the virtues of saving and allows them to use the savings when they are older.

Savings Culture

After assessing over 1,200 SACCOs, AMDe partnered with 45 high-potential SACCOs with over 10,000 farmers to increase membership and services.

Since mid-2014, AMDe-supported SACCOs mobilized more than $2.5 million in savings and disbursed over $4.5 million in short and long term loans to approximately 4,000 individual farmers.

An additional 3,140 (1,523 women) new smallholder farmers joined savings and credit cooperatives and 157 new primary SACCOs joined unions.

AGRICULTURAL GROWTH PROGRAM

www.ethioagp.org