Tiberio Chiari Istituto Agronomico per l’Oltremare Overseas Agronomic Institute ________________________________________________________________________________________

The Durum Wheat Value Chain in Ethiopia - Expo Milan 2015 - Auditorium, Cascina Triulza- 6 July 2015

The Agricultural Value Chains Project : concept, implementation and

prospects

Ethiopia Total population: about 90 millions Total surface: 1,1 millions Km2

GDP: 54,8 billions USD (2014 - WB) Agriculture: 42,3 % GDP Industry: 15,4 % Services: 42,3 Growth Population: 2,5% (2014) Growth GDP: 10,3 % (2014) Rural population : 81% Cultivated surface: 15 millions of ha Agricultural surface: 35,7 millions of ha (from World Bank , FAO, data 2014 )

Ethio-Italian Cooperation Framework

Growth and Transformation Plan 2010-2015

The PROJECT background

The PROJECT background

within the Arsi Bale Rural Development Project (ABRDP)

The PROJECT background

within the Arsi Bale Rural Development Project (ABRDP)

with some research and support

activities till the workshops on Durum Wheat at Adama in 2008

1-The Why

Huge consumption of pasta by Ethiopian citizens

1-The Why

Huge consumption of pasta by Ethiopian citizens

Strong demand of durum wheat

by pasta-making industries

Huge and expensive import of durum wheat

Data from Ethiopian Revenues and Customs Authority (www.erca.gov.et/)

-

50

100

150

200

250

300

-

100

200

300

400

500

600

700

800

900

1,000

2009 2010 2011 2012 2013 2014

Import of durum wheat in Ethiopia

Quantity (ton x 000) Value CIF (USD x million)

ton USD

Data from Ethiopian Revenues and Customs Authority (www.erca.gov.et/)

-

5

10

15

20

25

30

35

2009 2010 2011 2012 2013 2014

Import of pasta in Ethiopia

Quantity (ton x 000) Value CIF (USD x million)

2 -The Opportunities

a. Natural resources

b. Linkages among Research - Extension service - Farmers

c. Unions/cooperatives

• a -Natural resources

Wheat: Bale zone (Oromia Region)

• b - Linkages among Research - Extension service - Farmers

• Sinana Agricultural Research Center (SARC) mainly devoted to on farm research and operating in strict partnership with extension service and farmers’ communities

• c - Unions/ cooperatives

UNIONS MembersPrimary Persons

No Name coops Male Female Total1 Sikko mendo 75 19,082 1,157 20,239 2 Agarfa kejewa 14 3,558 351 3,909 3 Dire 20 2,897 356 3,253 4 Oda roba 33 6,167 404 6,571

Total 142 31,704 2,268 33,972

Primary Cooperatives MembersNo Name Woreda Type Male Female Total

1 Selka Sinana Multi P. 920 43 963 2 Sanbitu " " 600 38 638 3 Dureti Tulu " Seed M. 69 6 75 4 Shalo " Multi P. 231 14 245 5 Alage " " 402 8 410 6 Walte i Barisa " " 282 34 316 7 Ali Kejewa Agarfa " 432 77 509 8 Elebidu " " 451 100 551 9 Fenkel Goro " 803 18 821

10 Meliyu Burka " " 1,490 82 1,572 11 Ebisa Ginir " 625 28 653 12 Kebena " " 555 129 684 13 Elani doyo " " 460 34 494 14 Selam Gololcha " 529 144 673 15 Dire gudo " " 336 150 486

Total 8,185 905 9,090 From: Cooperative Promotion Office of Bale Zone (2014)

The Challenge

To substitute Durum Wheat Importation by local Durum Wheat production

with Bale zone leading the process toward an yearly production of about 500,000 quintals of DW

The Market

The Market

FINAL PRODUCT PASTA FINAL CLIENTS ETHIOPIAN CONSUMERS

RAW PRODUCT DURUM WHEAT GRAIN

- High protein content - Huge bulks - Homogeneus - The same over time BUYERS PASTA FACTORIES

DURUM WHEAT GRAIN

- High protein content - Huge bulks - Homogeneus - The same over time

Good seed of good varieties (Bakalcha and Ejersa) Suitable soils and crop management (Nitrogen: Urea) Huge amount of seed Rigorous grain bulking (no admisture at harvest and storing) Maintenance of seed purity

The Market…how?

Quality & Quantity or

Quantity & Quality

… over time!

The Strategy

¾Embracing ALL interested aspects (seed multiplication, grain production, harvesting, bulking, etc.)

¾Involvement and strenghtening of ALL key actors

¾Rigorous control of inputs and methodologies (only good seed stocks, suitable soils, good practices, etc.) and of final products (multiplied seed and grain)

(…as in any Process Innovation)

The Strategy

Durum Wheat: PROJECT STRATEGY (2)

¾ Starting from a small-but-complete Value Chain

¾ Fast and progressive scaling up of activities, and involvement of new farmers

…..HOW?

Pull-Push Relationships and Roles

The Supply Contract

The Supply Contract

Minimum unit for marketing

PRICE SCALING ACCORDING TO QUALITY (protein content)priceETB

↑ 830Protein % MAXIMUM 12.5 830

12.4 820. .. .. .. .

10.8 66010.7 650

10.6 640Protein % MINIMUM 10.5 630

↓ prevailing bread wheat price

The Supply Contract

The check-analysis by the buyer

The check-analysis by SARC as a Third party

NIT instrument to SARC…25 seconds for full analysis from grain (about half million ETB).

…solving the delay in payment by purchasing of

SN Cooperative/Union ETB/qt

Dire Dawa Kaliti1 Agarfa Kajewa Union 600 660 514,800 7802 Selka 1600 820 586,300 7153 Sambitu+Alage 775 101 78,780 7804 Dureti Tulu 400 320 242,240 7575 Meliyu Burka 2400 890 2,215 2,314,255 7456 Dire Union 11,200 3,901 1,485 4,244,700 7887 Oda Roba Union 4,000 2,134 1,616,942 758

20,975 5,552 6,974 9,598,017 766↙

By contract 11,635 9,340 16,072,043 ca. 890,000 USD

Total

Grain agreed to

be supplied

by contract

Grain supplied till Aug 2013 (qt)

Total money paid (birr)

Some selling through contract on 2012/13

New infrastructures and equipments

Instruments

15 stores for cooperatives 3 stores and 1 shelter for Unions 1 store for SARC

cost: 370,000 ETB

3 seed graders for Unions

Training and technical assistance

Instruments

Conical helical spring model

Smart- tornado model

-extremely weak at its start: it needs a “push” -at each new rotation there is an increase of energy

- till a “pulling” effect is activated

Smart- tornado model

The first rotations

DUR.Wh. (q) A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A50.000

45.000

40.000

35.000

30.000

25.000

20.000

15.000

10.000

5.000

2.500

A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A

"Meher season" "Grain" of Durum Wheat (for industries) "Seed" of Durum Wheat

Value of "grain"(ca 30 € /q)

400 q2.300 q

5.000 q5.000 q

20.000 q

50.000 q

2011 2012 2013 2014

PROJECT

DURUM WHEATVALUE CHAIN

10.000 q

ca 150.000 q

2015

150.000 € 600.000 € 1.500.000 € 4.500.000 €

1.150 q

The Scaling-up

The Scaling-up

The Project’s Governance

PROJECT MANAGING BODIES PROJECT STEERING COMMITTEE (governing body)

¾BoFED ¾BoA ¾Italian Development Cooperation Office

IMPLEMENTING AGENCIES ¾OARI/SARC ¾OTMDB – Oromia Trade & Marketing Development Bureau ¾OCPA- Oromia Cooperative Promotion Agency ¾6 Woreda administrations

AGRICULTURAL TEAM (techn. guidance and assistance) ¾OARI/SARC ¾OTMDB ¾OCPA ¾BoA ¾IAO

Cooperatives/Unions

Cooperatives/Unions

Industries

PROJECT MANAGING BODIES

money

grain

Public institutions framework - Enabling environment

The key relationships within the project

Contract

Cooperatives/Unions

Industries

Producers & Buyers joint platform

(“Borsa”)

money

grain

Standard Contract

Public institutions framework- Enabling environment

….which the relationships for the future?

The “magic” concepts

•Market- /Demand- driven approach

•Product and Process innovations

•A to Z Traceability along the Value Chain

• Transformation of Roles and of Relationships among Public and Private Actors

Thank you !

Amasagenallo !

Grazie!

Tiberio Chiari Istituto Agronomico per l’Oltremare Overseas Agronomic Institute