ETHIOPIAN DEVELOPMENT
RESEARCH INSTITUTE
Africa’s value chains on the move:
The case of teff in Ethiopia
Bart Minten, Seneshaw Tamiru, Ermias Engeda,
and Tadesse Kuma
IFPRI ESSP-II EDRI
Nairobi, December 6th
Kenya
1
1. Introduction
• Major changes happening in food markets worldwide and
especially in developing countries:
- Supermarket revolution
- Share of high-value crops increasing
- Quality demands on the rise
- Food safety requirement export countries
- Vertical integration
- Up-scaling, dis-intermediation, and branding
• No clear to what extent value chains are transforming in
Africa and/or Ethiopia, often because of a lack of good
primary data. This is the purpose of the analysis.
2
2. Background Teff in Ethiopia
• Teff is a major crop in Ethiopia:
- 20% of all cultivated area, covering 2.7 million hectares
and grown by 6.3 million farmers (second most important
crop is maize with 15% of cultivated area)
- Value of production in 2011/12 was 1.6 billion USD, the
most important crop in the country.
- Value of commercial surplus (CS) 2011/12: 464 million
USD, as important as sorghum, maize, and wheat
combined; one-quarter less than coffee (600 million USD)
3
3. Data and methodology
• Purpose of the study is to understand major value chains
from rural producers in major production zones to Addis,
the major city in the country.
• Organization of surveys: 1/ Interviews with key informants
September – October 2012; 2/ Fielding of surveys in
November – December 2012.
• Surveys with producers and communities upstream; rural
and urban wholesalers and truckers midstream; cereal
shops, mills, and cooperative retail downstream
3. Data and methodology
• Stratified random samples at each level:
1. Upstream: 1,200 farmers in five major teff production
zones. These five zones represent 38% of national teff area
and 42% of the commercial surplus.
2. Midstream: 200 rural wholesalers (that ship teff to Addis);
75 urban wholesalers (2/3th on Ashwa Meda; 1/3rd on Ehil
Beranda);
3. Downstream: 282 retail outlets (83% mills; 10% cereal
shops; 7% consumer cooperatives)
4. Teff upstream in the value chain
• Increasing adoption of modern input use over time
Unit
Modern inputs
Adoption of improved seed
Use of chemical fertilizer:
DAP
urea
Adoption of herbicides
Adoption of pesticides
Number of 10 years
observations
ago
Now
share (%)
1199
7.3
35.8
kgs/ha
kgs/ha
share (%)
share (%)
1128
1121
1197
1197
50
34
32
4
91
64
65
13
4. Teff upstream in the value chain
• Type of teff: rapid decline of red teff; increase of
white/magna
Unit
Type of teff
Farmers' interviews:
Red teff
Mixed teff
White teff
Magna teff
share (%)
share (%)
share (%)
share (%)
Number of 10 years
observations
ago
1200
1200
1200
1200
36.2
17.6
40.7
5.4
Now
19.9
11.7
54.2
14.1
4. Teff upstream in the value chain
• Reasons for the decline of red teff:
1. Lower prices of red teff compared to white teff. Higher
prices of white teff driven by: a. lower conversion ratios
of red teff to enjeras; b. longer shelf life for white enjeras;
c. preference of consumers
2. Higher productivity of white teff now because of
availability of improved varieties; traditionally red teff
would do better compared to white teff
4. Teff upstream in the value chain
• 93% of teff farmers use chemical fertilizer; 34% uses
improved seeds
• Stated reasons for not using or for not using enough
modern inputs:
1. Chemical fertilizer: Lack of money at the time of need
2. Improved teff seeds: Unable to find them or unable to
find more
0
.5
1
1.5
Dynamics in adoption of fertilizer
0
50
100
Transport costs to Addis (Birr/quintal)
DAP now
urea now
DAP 10 years ago
urea 10 years ago
150
0
10
20
30
40
Adoption of quncho (new variety)
0
50
100
Transport costs to Addis (Birr/quintal)
150
4. Midstream - Changes in margins:
Share producer in retail price
• Trend line: share of producers has increased from 74%78% in 2001 to 76-86% in 2011
0.9
0.8
0.7
0.6
0.5
white producer
red producer
Linear (mix producer)
mix producer
Linear (white producer)
Linear (red producer)
200201
200207
200301
200307
200401
200407
200501
200507
200601
200607
200701
200707
200801
200807
200901
200907
201001
201007
201101
201107
Share in retail price
1
4. Midstream - Changes in margins:
Milling costs
Real milling costs over time
(costs of milling 100 kgs of cereals; CSA data)
18
16
14
12
10
8
6
4
2
0
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
13
5. Teff downstream in the value chain
• Teff retailing in Addis: 61% mills; 29% cereal shops; and
8% consumer cooperatives
• Traditionally (as seen in other towns or rural areas), mills
only did milling and household typically would:
a/ buy teff on market/cereal shop;
b/ clean teff at home;
c/ take teff to mill;
d/ prepare enjera at home
5. Teff downstream in the value chain
• Mills are increasingly becoming “one-stop shops”
10 years ago
Unit
No. of
Now
Value
obs.
Share of customers that get
home delivery
%
Share of customers that clean at
home
%
Share of customers that only
come for milling
%
No. of
Value
obs.
102
59
271
61
96
30
254
21
93
30
250
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5. Teff downstream in the value chain
- Competition and better service delivery improving
10 years ago
Unit
No. of
Now
Value
obs.
Number of mills in in the
kebele
number
Number of cereal shops in the
kebele
number
Often queuing of consumers
%
No.
Value
of obs.
92
6.11
250
9.30
75
2.86
202
4.10
102
30
276
12
- Food service industry sizable (20% of teff sold as prepared
enjera)
6. Drivers for change
1. Public sector: Large investments in agricultural extension system
Unit
Contact extension agents:
Received a visit of an agricultural extension agent in the last 2
years
share
In last 12 months:
Farmer visited a demonstration plot of teff
share
Farmer visited a government office of agriculture and
discussed teff issues
share
Farmer awareness of technologies:
Farmer knows the recommended fertilizer use on teff plots share
Mean/
Percent
74
37
27
51
6. Drivers for change
2. Important improvements in road and communication
infrastructure
Unit
Owners of a phone
share
(%)
Year since they own a phone
year
Used mobile phone in the last marketing share
transaction
(%)
If yes, agreed on a price with the trader share
by phone in the last transaction
(%)
Farmers Rural Urban Urban
traders traders retailers
28
100
100
98
-
2006
2007
2008
12
-
97
56
74
-
52
32
6. Drivers for change
3. Urbanization (1.2 million more people in Addis), income
growth and economic superior characteristics of teff
(doubling of income, 110% increase in teff consumption
expenditure); these factors combined might have led to
doubling of commercial surplus into Addis in last 10 years
4. Higher opportunity costs of time, especially of women;
further impetus for foodservice industry as well as for
development of a different retail sector
7. Conclusions
Important changes in the teff value chain:
1. Modern inputs increasingly adopted, especially by these
farmers living close to urban areas
2. Quality demands are on the rise, important shifts from
cheap red varieties to more expensive white ones
3. Increasing willingness to pay for convenience in urban
areas, as illustrated by the emergence of one-stop shops
as well as by a sizable foodservice sector
4. The share of rural-urban marketing, urban distribution,
and milling margins is declining, indicating improved
marketing efficiency
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7. Conclusions
Despite changes, still in early stage of agricultural
transformation:
1. Upstream: a/ Adoption of improved varieties still low; b/
Fertilizer used is below recommended level; c/ Mechanization
absent; d/ Vertical integration and coordination absent
2. Downstream: a/ Little evidence of up-scaling; b/ Small
share of modern retail; c/ Almost no branding
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7. Implications
1.Major room for improved seed development; Better
knowledge on other technologies to improve teff productivity
needed, i.e. row planting, transplanting, response to fertilizers
that contain zinc and copper, minimal tillage
2. Further investments in roads and communication (still one
of the lowest in Africa)
3. Urbanization motor for rural transformation (urbanization
also one of lowest in Africa)
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