Linked with the expansion of domestic edible oil industry and associated increased demand, soya bean production in Ethiopia has increased dramatically over the last three years. The Amhara region, in particular, has shown a very significant increase in soya bean production, with the area expanding from 46,892 ha in 2019/2020 to 248,573 ha in 2021/2022. It is estimated that over 596,000 tons of soya bean were produced last production season (2022), which is more than double the amount produced the previous year.
A large portion of the area, which was previously known for sesame monocropping has now shifted to soya bean, which is considered as a game-changer crop for the area. A number of factors contributed to this dramatic production increase, including (i) growing demand from the local and international market, (ii) emergence of domestic agro-processing industries, (iii) the economic incentive soya beans provide compared to sesame linked with higher productivity and total income per unit area, and (iv) the public support through the extension system.
Based on a quick study done by the RAISE-FS project, soya bean farmers are reporting considerable income loss. This despite the increased demand from the domestic agro-processing industry and demand for export and farmers’ positive responses in investing for increased production and productivity. These losses are associated with the considerable decline in farmgate price of soya bean along with a huge increase in cost of production associated with production, labour and post-harvest processing costs. Given the observed short period shift from sesame to soya bean production linked with the felt economic incentives, it is expected that farmers will shift back to sesame in the coming production seasons making it very challenging to supply soya bean in the required quantity and quality for the already established agro-processing industries.
The issues identified and options suggested in this quick study are based on the information generated during a national workshop that engaged all relevant actors in soya production and marketing. Primary data generated through key informant interviews related with understanding the drivers of shift from sesame to soya bean production.
Emerging soya bean marketing issues include:
- The 2023 soya bean market price has declined considerably compared to what farmers had anticipated given their experiences in 2022
- Though farmers signed contract agreement at the beginning of the season, parties failed to show up during harvesting
- Farmers have very limited options for selling their soya bean products, thus they frequently sell their products at a low price to village collectors/traders in the nearby spot market
- There is a belief that there is some sort of sabotage because traders and brokers wanted to purchase their produce at a lower price
- Processing industries claim that while they are performing under their potential due to power problems, they are nevertheless buying at present. They claim that the cost of transportation is currently rising and that they are paying between 3,500-3,650 ETB per 100 KG.
- Contract farming, with all its challenges, is not benefiting woredas, as the woredas are not allowed to tax those buyers through this system
- Farmers’ primary cooperatives and unions’ participation in soya bean marketing is quite minimal mainly due to a shortage of marketing credit
- To reduce the impact soya bean marketing challenges, there is a need to design actions that quickly fix the problem and long-term solutions to sustainably solve the problem
The study suggested what actions are required to reduce the problem. The suggested solutions are quick fixes that can be done shortly and long-term actions to alleviate the problem sustainably.
Short-term actions
- Linking farmers with processors – encouraging oil processing firms to purchase from farmers at a reasonable price
- Ministers at the federal level should discuss with the national bank about how to get banks to avail credit service to processors and exporters
- Facilitating marketing credit for farmers, primary cooperatives and unions (with the government guarantee).
- A communication and advertising campaign can help buyers know that a large amount of soya bean production is available
- It is important to quickly assess both the produce that has not yet been sold as well as the demand for all local processing companies and support processors to realize their full potential by facilitating power service
- The soya beans marketing problem needs to get the immediate attention that it deserves both at the federal and regional levels
Long term actions
- Contract farming should be handled properly; there should be a system that can prevent defaulters from participating in contract farming
- Linking Farmer Cooperative Unions with processing companies – facilitating legally bound contract farming approaches
- Soya bean should not be produced for export only, either row or processed. Instead, efforts should be made to integrate soya bean into our food system
- Important to work on reducing the cost of production, especially the threshing cost i.e. introducing threshing machines
- Starting a warehouse receipt system can help farmers not to lose much
- Banks need to follow up on whether their clients from the agricultural sector-traders are really spending the credit for the purpose
- Strengthening the collaboration between and among stakeholders in the agriculture sector
You can read more in this link for the issue brief
RAISE-FS 