Value chain

Ethiopian Wheat Value Chain: What Nigeria Can Learn – By: .

By Tiberio Chiari

Much of the 750 million tonnes (MT) of wheat produced globally is at risk due to the ongoing war between Russia and Ukraine, the two major wheat-producing countries.

The disruption is weighing heavily on the global food value chain, as the two countries are also major exporters of wheat. Africa is one of the regions hardest hit by the disruptions, as the continent still relies mainly on wheat imports to meet its production shortfalls.

In a recent report, the Food and Agriculture Organization of the United Nations highlighted the need for sub-Saharan Africa, which accounts for only 1.4% of the total wheat produced in the world, to increase its food production levels to avoid hunger and recession. arising from food shortages/higher prices caused by continued supply chain disruption.

In particular, Nigeria, the most populous country in sub-Saharan Africa, must make efforts to ensure that its 200 million people are consistently fed. Interestingly, the country can look to Ethiopia, Africa’s top wheat producing country and the continent’s second most populous country, to find out what works and what may not work in developing a robust wheat value chain. Here are some points to consider. Like Nigeria, Ethiopia has not achieved sufficient total wheat production due to demographic reasons and new consumption habits in urban areas.

In Ethiopia, the consumption of wheat has been customary for centuries and its cultivation has spread over almost the entire territory. Total demand exceeds 6.5 million tons per year, exceeding local production by about 1.5 to 2 million tons. As in Nigeria, importation is therefore a common practice in this country.

For decades, the Ethiopian government has promoted structural interventions to increase wheat production in the country and the effectiveness and efficiency of its value chain. The government strategically continues to deepen its partnership with farmers’ cooperatives and the millers’ association to achieve the wheat expansion program. Here are the highlights of government intervention in the Ethiopian wheat value chain:

The government continues to redouble its efforts to ensure that the country’s current dependence on wheat imports (of around 1.7 million tonnes) is completely reversed. After years of experimentation on the ground, in 2021 the Ethiopian government launched a new plan titled “Irrigation-Based Wheat Production: A Transformation from Import to Export”.

The objective of the plan is to reduce the importation of wheat by producing during the cold season in the pastoral drylands currently available in the basins of the Awash, Omo and Shebelle rivers. International purchase of fertilizers and pesticides, including distribution to farmers at subsidized prices; the promotion of mechanized agriculture and the multiplication and distribution of certified seeds are some of the valuable areas in which the government has constantly intervened to improve the performance of the wheat production/processing industry.

The government has identified agricultural cooperatives, bringing together 4.7 million small farmers, as strategic players in achieving the desired economy of scale both in the provision of services (promotion of innovative technologies, distribution of inputs, rental of tractors and harvesters) and in the collection of production/marketing (storage and cleaning of the product, negotiation with intermediate and final buyers).

Essentially, the Ethiopian government has a long experience in formulating policies specifically addressing the creation and improvement of cooperatives at the primary, secondary and tertiary levels. Indeed, cooperatives strengthen social stability, connect young and old generations, engage with local authorities and other stakeholders, and are able to absorb economic and climatic shocks internally.

Interestingly, to ensure that millers produce wheat-derived foods at affordable prices for the Ethiopian population, the government has generally thwarted food price spikes by importing huge tons of wheat and delivering it to registered mills at a subsidized price.

In this scheme, the millers take on the obligation to supply bread to the population at a fixed reduced price, with the authorities acting for any necessary control.

The financial burden of wheat imports is particularly high for the Ethiopian Treasury and its hard currency reserves. Therefore, massive wheat imports are emergency strategies to prevent social suffering and possible civil unrest.

Other areas where the government has continuously intervened are the large-scale provision of storage facilities and market information systems to smallholder farmers across the country. The government also provides tax exemption for the import of agro-industrial equipment for flour milling, pasta making and bakery for players. The government’s intervention efforts also include the creation and recurrent strengthening of wheat research centers, both at central and local levels.

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Dr. Chiari is the former Agricultural Value Chains Program Manager in Oromia, Ethiopia