VOL 6(2), 41-55

Copyright © Madda Walabu University

ISSN: 2523-1901 (Online)
URL: http://jessd.mwu.edu.et/
Email: [email protected]

DOI: https: //doi.org/10.20372/mwu.jessd.2023.1548

Full Length Research Paper
Ethiopia’s Oilseed Export: Performance, Opportunities, and Challenges
Kassahun Gofe Balami1,Mengistu Ketema (Prof)2, Andualem Goshu (Ph.D)3
1
College of Development Studies Centre for Regional and Local Development Studies, Ethiopia
2
CEO of Ethiopian Economic Association, Ethiopia
3
College of Development Studies Center for Regional and Local Development Studies, Ethiopia

Article Info Abstract

Article History This study examines the trends in Ethiopian oilseed exports and the challenges and
Received: 12 Apr 2022 opportunities related to export performance. It analyzes export earnings, volume,
Accepted: 13 Dec 2023
export share, and destinations over the past decade. The study uses both qualitative
and quantitative approaches, collecting data from primary and secondary sources,
including interviews, focus group discussions, and export data from the Ethiopian
Customs Commission. Descriptive and explanatory analyses are conducted to gain
Keywords: insights into global trade and export dynamics. The findings reveal that Ethiopia's
Oilseed export, oilseed industry is an important source of foreign exchange earnings. However, ex-
Performance, op-
port earnings have declined from $323.5 million in 2010/11 to $263.8 million in
portunities, chal-
lenges, Ethiopia 2021/22 due to falling prices since 2015/16. Similarly, the oilseed export share has
decreased from 19.7% in 2013/14 to 6.6% in 2021/22. The market is sensitive to price
fluctuations, requiring exporters to closely monitor factors and adjust pricing strat-
egies. Additionally, the industry heavily relies on China, which poses risks due to
changes in demand or trade policies. To enhance competitiveness and sustainability,
it is crucial to address challenges related to logistics, high local prices, regulatory
compliance, and quality control. By tackling these issues, improvements can be made
in the performance of oilseed exports in Ethiopia.

___________________________________________________________________________________
Licensed under a Creative Commons * Corresponding Email: [email protected]
Attribution-Non Commercial 4.0 International License.

41
 1. Intoduction Identifying the challenges leading to the down-
ward trend in exports has been the focus of
This article examines the potential benefits and most researchers during the past decade. Gov-
drawbacks of Ethiopian oilseed exports, focus- ernment and other stakeholders have empha-
ing on their current state and future implica- sized the need to detect limitations, take cor-
tions. The decision to focus on oilseed in this rective action and contribute to policy. How-
article stems from its significance in Ethiopia's ever, satisfactory results have not been
agricultural and economic landscape. Oilseed achieved to improve the country's export per-
production plays a vital role in the country's formance and this field continues to be an area
economy, contributing to employment, income of interest to many researchers.
generation, and export earnings. Oilseed crops,
such as sesame, Niger, castor seed and sun- There are different opportunities and chal-
flower, are among Ethiopia's major agricultural lenges that need to be understood to increase
commodities. With favourable agro-ecological the export performance of oilseeds. This arti-
conditions and a long history of cultivation, cle, therefore, provides a comprehensive re-
Ethiopia has the potential to be a key player in view of the oilseed exports for the last decade.
the global oilseed market. It is in the top 5 pro- The study attempts to contribute in searching
ducing countries for sesame seed, linseed and for remedies for the challenges identifying g in
Niger seed. In addition, specialty seeds like this study. In particular, the study focuses on
sunflower seed and castor beans are grown in opportunities and challenges related to Ethio-
Ethiopia (USDA, 2021). Ethiopia’s oilseed pia's oilseed exports. Therefore, the objective
sector plays an important role in generating of the study is to describe the main opportuni-
foreign exchange earnings and supporting the ties for improvement and the main constraints
livelihoods of market actors across the value hindering oilseed exports and outline the pol-
chain. Oilseed crops are the third largest for- icy implications. Variables like export volume,
eign exchange earner, next to coffee and cut value, export share, price, and destinations are
flowers. used in examining the export. In addition, dif-
ferent macro-level as well as sector-specific
Ethiopia is one of the major global oilseed ex- opportunities and challenges are also identi-
porters. However, annual export volumes have fied.
declined, for example from 2017/18 – 2021/22
on average by 14.6% over the past decade. In- 2. Literature Review
dustry experts mention that international price
fluctuations, currency fluctuations, excessive This part discusses the theoretical and empiri-
speculation, domestic market price distortions, cal literature together, but in clear order. Com-
illegal trade, and productivity decline are the petitiveness is a widely used concept in eco-
main causes leading to the decline in export nomics, but its precise definition remains elu-
trade efficiency in previous years (USDA, sive. It was coined in the 1970s to describe the
2021:5). degree of competition among rival economies.
The study of competitiveness has been popular

42
for half a century, but there are still many ques- regional, firm-level, country-level, and indus-
tions about its meaning and measurement. Na- try-level levels, with various studies examin-
tional competitiveness can be understood as a ing different aspects of competitiveness
country's ability to assert itself in foreign mar-
kets due to price or other factors, but also as a Empirical evidence support the importance of
path to higher income, low unemployment, and exports in economic growth, and the relation-
long-term sustainable growth. ship between export performance, diversifica-
tion, and competitiveness has been the subject
Cellini & Soci (2002) argue that the concept is of much research.
ambiguous and cannot be easily measured and
evaluated quantitatively. A precise and ac- Developing countries' exports are increasingly
cepted definition of competitiveness comes concentrated in a narrow range of product cat-
from Balassa, who states that a country be- egories compared to more advanced econo-
comes more or less competitive if changes in mies, with Africa having the highest concen-
costs and prices of other factors improve or de- tration of exports. Asia, the most export-de-
teriorate its ability to sell in domestic and for- pendent region, has the lowest concentration of
eign markets. Nevima (2014) highlights the exports, suggesting a more diversified export
multi-level and ambiguous nature of capacity portfolio. A more diversified export portfolio
competition, which contributes to the quantifi- leads to a more stable export income stream.
cation and analysis of determinants of internal Diversification can reduce volatility in export
and external competitiveness. earnings, increase earnings, increase value-
added, and promote growth through factors
Various scholars have defined competitive- such as enhancing technological capabilities,
ness, including Porter et al. (2008) and Scott facilitating backward and forward linkages,
(1985). Porter et al. (2008) defined competi- and increasing market complexity. As exports
tiveness as a country's share of world markets become more diversified, knowledge spills
for its products. Generally, competitiveness is over in the form of productivity improvements,
the ability to produce goods or services meet- efficient management, and increased technical,
ing international market standards while main- technological, and business knowledge.
taining and expanding the real incomes of the
population. National competitiveness is a However, many developing countries do not
country's ability to create, produce, distribute, achieve the same level of diversification as de-
and/or service products in international trade veloped countries. African countries remain
while earning rising returns on resources. vulnerable to external shocks, as their exports
are often concentrated in a few products ex-
Export competitiveness (EC) is widely recog- ported to a few destinations. The growth in ex-
nized as a medium for achieving global com- port diversification between 2020 and 2015 in-
petitiveness. EC is the capability to produce dicates that many African countries have diver-
and sell goods and services at competitive sified between 2020 and 2015, either in prod-
prices compared to other suppliers. Research- uct or both in product and destination. How-
ers have evaluated competitiveness at various ever, for some countries in Africa, Latin Amer-
levels, ranging from macro-perspectives to mi- ica, and Europe, the trend is the opposite.
cro-economic terms. Studies have focused on

43
Opportunities of Ethiopian oilseeds export Alemayehu (2019) has produced data and con-
clusions that diverge from those of the afore-
According to Amsale's research from 2017, mentioned researchers. Alemayehu established
there are three main general prospects for and examined six aspects that affect export per-
oilseeds, notably sesame seed, which accounts formance, including managerial skills, busi-
for 80% of all oilseeds: demand opportunity, ness capacity, product qualities, foreign market
resource availability potential, and market op- qualities, marketing strategy, and institutional
portunity. Within the demand category, oppor- support-related elements. Surprisingly, except
tunities were seen in the rising demand for from elements related to institutional support,
Ethiopian oilseeds on the global market due to none of these variables were shown to be driv-
the high demand for organic seeds, the indus- ers of export market performance. Alemayehu
trialization of agriculture in China and India, asserts that exporting is not an exporter's direct
and the rise in consumption in Europe and or primary activity. Exporters engaged in the
Asia. In terms of resource availability, there export business with the intention of importing
were prospects for favourable agro ecologi- goods using the foreign currency earned from
cal conditions, affordable labour, and an abun- the export as well as for the purpose of obtain-
dance of fertile land. The market opportunity ing an inexpensive loan to be used for the im-
was viewed as one where processed seed had a port business and the financing of capital
better marketing position and a larger market goods (illegal means of trade not recognized by
than raw seed (Amsale, 2017, p. 34–36). the government) (Alemayehu, 2019, p. 30-58).
Challenges of Ethiopian oilseeds export
3. Material and Method
Gebrehiwot (2018) claims that the produc-
This study employs qualitative and quantita-
tion/productivity, product quality, real effect
tive mixed approaches to examine the complex
exchange rate, infrastructure/rural road feed-
global trade area of exports. The chosen meth-
ers, and foreign price level are all separate var-
odology allows for a comprehensive under-
iables that affect how well oilseeds and pulses
standing of dynamics that may not be captured
export. Other factors, besides infrastructure,
by quantitative data alone. Case studies are uti-
have demonstrated a favourable and significant
lized to gain insights into real-life phenomena
correlation with export success (Gebrehiwot,
within their respective contexts, enabling an
2018, p. 44–56). According to the majority of
assessment of current events without artifi-
research findings, infrastructure and rural road
cially manipulating behavioural events. Data is
feeders have a favourable and significant rela-
collected from primary and secondary sources,
tionship with export performance. The factors
including government organizations, private
mentioned by Gebrehiwot were described by
sector stakeholders, and think tanks. Key in-
Amsale (2017). Amsale claims that there are
formants include government officials, depart-
problems with manufacturing and quality, in-
ment heads, and experts, while private sector
cluding concerns with the quality and quantity
participants include export associations and in-
of products produced and the availability of
dividual exporters. Primary data is collected
quality.

44
through interviewees and focus group discus- million in 2010/11 to $263.8 million in
sions, while secondary sources include agency 2021/22, with an average growth rate of 0.8%.
reports, research results, and the Ethiopian The overall trend shows that there was a gen-
Customs Commission. eral increase from 2010/11 to 2015/16; while
In the same manner, qualitative and quantita- the next years (2016/17 to 2021/22 depicts a
tive analysis tools are used to analyse the data, declining trend. To elaborate more using vital
Qualitative data collected through key inform- years that show the trend clearly, oilseed ex-
ant interviews, focus group discussions, and ports declined significantly in 2013/14 due to
observations is analysed using content analy- falling of oilseed prices; while increased from
sis. Descriptive statistics are utilized to exam- 433,400 tons in 2015/16 to 171,200 tons in
ine oilseed trade performance in relation to 2021/22. Once again, since 2015/16, the value
shares, value, and volume and unit prices. The and volume of oilseed exports have declined
findings are then displayed through the use of despite improved prices. The reasons for this,
figures and tables. Both Descriptive and ex- according to the focus group discussions and
planatory analysis methods are applied to pro- key informant responses, are attributed to the
vide insights into the dynamics of global trade poor quality of the product, demanding stand-
and exports. ards from European markets, and some uneth-
ical behaviour from some exporters that erodes
trust in the exporters.

700 Oilseed value in mn USD

Oilseed Volume in 000 Tonnes
600

500

400

300

200

100

4. Result and Discussions Figure 1: Value (millions of USD) and volume

(000 of tones) of oilseed export (2020-2022)
Performance of Oilseed Export (source: authors' calculation based on ECC (2010-
Ethiopia's oilseed industry is crucial for for- 2022)
eign exchange earnings and supporting market
The Ethiopian oilseed export unit price data
actors. Potential sectors include sesame, Niger
from 2010/11 to 2021/22 reveals a volatile
oil seed, and sunflower, flax, and castor seeds.
trend. From 2010/11 to 2013/14, the unit price
Ethiopia's oilseed exports ranged from $323.5

45
increased steadily, indicating a higher demand 2017/18 and 2018/19 demonstrate a relative
or value for Ethiopian oilseeds. However, from stability. The next three consecutive years ex-
2014/15 to 2016/17, the price decreased, indi- hibit a downward trend with sharp decline. Un-
cating a reduced or oversupply of oilseeds and til the 2018/19 financial year, it was the sec-
rapid competition in the international market. ond-largest contributor to the country's export
From 2017/18 to 2019/20, the unit price recov- earnings. However, from 2019/20, it has
ered slightly, increasing from USD 1.2/kg in dropped to third place, with cut flowers taking
2017/18 to USD 1.5/kg in 2018/19 and the second largest role. The average oilseed ex-
2019/20. In recent years, the unit price has re- port share was 13.3% during the study period.
mained relatively stable at around 1.4 USD/kg This indicates that Ethiopia heavily relies on
and 1.5 USD/kg, indicating continued stable oil seed exports for income generation. Diver-
market conditions for Ethiopian oilseed ex- sifying the export basket beyond oilseeds can
ports. Factors such as global market dynamics, help reduce dependence and strengthen the ex-
supply and demand changes, and fluctuations port sector's resilience.
in international trade may have contributed to
these fluctuations.

Figure 2: Unit price of oilseed/kg in USD (source:

Factors contributing to the downward trend in-
Authors' calculation based on ECC (2010-2022)
clude increased competition, demand, and
Ethiopia's oilseed export share has experienced prices, as well as limited processing value.
a fluctuating trend. The share increased from Challenges such as logistics, high local prices,
2010/11 to 2011/12. Then it declined in regulatory compliance, and quality control
2012/13 and reached its pick in 2013/14. Since need to be addressed to improve the competi-
2014/15 to 2016/17 it registered a decline. tiveness and sustainability of Ethiopia's oilseed

46
export industry. value increased significantly to USD 29.4 mil-
lion, followed by a slight decline in 2021/22.

Figure 3: Oilseed share to total merchandize export

value (2010-2022) (source: Authors' calculation
based on ECC (2010-2022)
These fluctuations suggest that the value of
The export value of sesame, which contributes oilseed exports from NIGER can change sig-
to over 90% of oilseed exports, varies year nificantly over time, with growth periods indi-
over year. It started at $300.6 million in cating potential market demand or favourable
2010/11 and increased to 618.3 million USD in conditions, while periods of decline can be in-
2013/14. However, it declined from 2014/15 to fluenced by factors such as global market dy-
2016/17, followed by stability with minor fluc- namics, international production levels, and
tuations until 2019/20. In 2020/21, the export country or export policy.
value decreased to 288.3 million USD, and
The evolution of oilseed income in NIGER has
continued to decrease in 2021/22. The average
shown significant fluctuations over the period
annual sales change for SESAME oilseeds was
under consideration. In 2011/12, export turno-
1%, indicating no major change in the sector.
ver dropped by 28.28%, followed by a sharp
Similarly, the value of oilseed exports from NI- increase of 99.78% in 2012/13. The following
GER fluctuated over the same period, starting years were marked by alternating positive and
at $16.5 million in 2010/11 and falling the fol- negative growth rates, showing an inconsistent
lowing year. It then trended up from 2011/12 trend. Notably, two notable peaks with high
to 2013/14, reaching a peak of $23.6 million in positive growth rates were 2016/17 (129.50%)
2011/12. It fell after that until 2015/16, then re- and 2020/21 (169.10%), showing growth po-
mained relatively stable with minor fluctua- tential through contribution to total export.
tions until 2019/20. In 2020/21, the export- However, still one can assert that t given the
production potential and real production, the

47
amount exported is very minimal. For exam- rate suggests there is still room for export rev-
ple, 777.4 thousand tons of oilseed was pro- enue growth in the SESAME oilseed sector,
duced in 2020/21(Daniel and Rozina, 2022); despite some volatility.
while only 171.2 thousand tons, which is 22% NIGER oilseed export value and revenue are
of the total production was exported. fluctuating and volatile, going through periods
The export value of the "Other" category, of growth and decline. This highlights the im-
which includes different oilseeds, shows dif- portance of gaining a comprehensive under-
ferent trends. In 2011/12, there was a strong in- standing of market dynamics and implement-
crease of 425.25%, followed by a sharp decline ing effective strategies to successfully navigate
in 2012/13. From 2013/14 to 2014/15, the the ever-changing conditions of the NIGER
growth rate decreased markedly. However, oilseed export market.
from 2015/16 to 2018/19, a significant positive
growth rate indicated an increase in export
earnings. The following years have high nega-
tive growth rates, especially in 2020/21 (-
76.11%) and positive growth in 2021/22
(330.70%).

The mixed positive and negative growth rates Figure 4: Value of oilseed export items in millions
of SESAME oilseed sales implies that a rela- of USD (Authors' calculation based on ECC (2010-
tively volatile market for this product. The de- 2022)
clining growth rate in consecutive (2017/18 –
The volume of oilseed exports from NIGER
2021/22) years shows potential challenges fac- has experienced volatility in terms of volume
ing the industry, such as competition from
and value. From 2010/11 to 2012/13, produc-
other sesame-producing countries, changing tion increased from 24,900 tons to 29,700 tons,
market demand, limited domestic production
indicating positive growth. However, produc-
capacity, regulations, and internal security is- tion declined in subsequent years, reaching a
sues. However, the occasional positive growth

48
low of 11,400 tons in 2015/16. In 2016/17, vol- steady trend for the first SESAME entry. Start-
umes increased significantly, reaching 27.9 ing at 92.9% in 2010/11, the ratio fluctuated
thousand metric tons, followed by slight fluc- between the 1980s and mid-1990s, eventually
tuations in the remaining years. The average reaching 90.8% in 2021/22. This indicates
export volume was 20.7 thousand tons, with an Ethiopia's dominant position in the sector, in-
average growth rate of 12.4%. Sesame oilseed dicating a strong dependence on SESAME
exports showed remarkable growth from production and export earnings. Any volatility
2012/13 to 2015/16, but a consistent down- or disruption in the SESAME market could
trend from 2015/16. significantly impact the overall performance of
Ethiopia's oilseed exports.
Niger seed's share in oilseed exports shows a
mixed trend, starting at 5.1% in 2010/11 and

Figure 5: Volume of oilseed items in thousands of dropping to 2.5% the following year. However,
tones (source: Authors' calculation based on ECC it tended to increase from 2011/12 to 2013/14,
(2010-2022) reaching a peak of 5.3% in 2011/12. The mar-
The "Other" category of oilseeds shows fluctu- ket share fell again until the 2016/17 season
but increased to 8.6% in 2020/21. In 2021/22,
ating volume without a clear upward or down-
ward trend. The highest volume was in the rate dropped slightly to 7.0%, indicating an
average of 4.7% of Ethiopia's oilseed exports.
2011/12, with 27,600 tons, while the lowest
was in 2021/22, with 6,300 tons. This portfo- The "Other" category represents a slightly
lio's growth rate reflects high volatility and a changed but relatively weaker percentage,
lack of stability. showing significant fluctuations over the
years, with a peak of 7.2% in 2020/21 and a
Share of oilseed items to oilseed export low of 0.8% in 2017/18. On average, "Others"
account for about 3.4% of Ethiopia's oilseed
The table displays Ethiopia's oilseed export
market trends over several years, revealing a exports.

49
 related to price fluctuations, market fluctua-

Figure 6: Share of oilseed items in % (source: Au- tions, or changes in international trade policy.
thors' calculation based on ECC (2010-2022) The trends of value and volume emphasize the
importance of closely monitoring market con-
The fluctuating market share of NIGER and
ditions and adapting strategies accordingly.
"Others" in Ethiopia's oilseed exports indicates
Understanding changing needs, identifying
that demand for specific oilseed products can
emerging opportunities, and diversifying
change over time. Understanding these market
oilseed exports can help Ethiopian producers
dynamics is crucial for policymakers and oil
and exporters navigate market dynamics and
seed stakeholders. Adapting strategies to
maximize their potential in the global oilseed
match changing preferences and taking ad-
trade. In summary, a balanced approach to the
vantage of emerging opportunities is essential.
Ethiopian oilseed industry is needed, focusing
NIGER has experienced growth and decline,
on maintaining and improving SESAME's ex-
but it has the potential to expand its market
port efficiency while expanding the market
presence and capture a larger share of oilseed
share of other oilseed products.
exports with targeted strategies. The "Other"
category represents different oilseed products Unit price of oilseed items
that could be further exploited to improve com- The table displays the trend in Ethiopian
petitiveness and contribute more significantly oilseed exports' unit prices over several years,
to Ethiopian exports. revealing fluctuations in prices for each type of
Sesame's dominance (approximately on aver- oilseed. For NIGER oilseed exports, prices
age 92 % of oilseed export from 2010/11 to ranged from $0.66/kg in 2010/11 to $1.14/kg
2021/22) in Ethiopia's oilseed exports provides in 2021/22, with an average of $0.87/kg. The
reliable market stability and established com- average percentage change in price was 6.3%,
mercial relationships. However, reducing de- indicating varying volatility without a clear up-
pendence on a single commodity and diversi- ward or downward trend. Sesame oilseed ex-
fying export portfolios can help reduce risks ports also experienced fluctuations, starting at
$1.38/kg in 2010/11 and peaking at $2.30/kg in

50
2013/14. The average unit price during the pressure on profits. Understanding and manag-
tested period was $1.50/kg, with an average ing cost structure, productivity levels, and mar-
percentage change of 3.8%. ket competitiveness is essential for exporters to
Unit prices for the "Other" category, represent- achieve sustainable profits despite price fluctu-
ing other oilseeds, showed volatility, ranging ations.
from $0.63/kg in 2016/17 to $1.21/kg in
2011/12. The average price for the period ex-
amined was $0.88/kg. Unit prices did not show
a consistent upward or downward trend.

Figure 7: Unit prices of oilseed items/kg USD

(source: Authors' calculation based on ECC (2010-
Investment in quality control measures, brand-
2022)
ing, and product innovation can also enhance
As it clearly reads from the graph, Ethiopian Ethiopia's oilseed exports' value. Overall, ex-
oilseed market is highly sensitive to fluctua- porters must carefully monitor market condi-
tions in unit export prices, indicating a need for tions, focus on quality, and strategically posi-
exporters to closely monitor these factors and tion their products to adapt to market changes,
adjust their pricing strategies accordingly. The discover value-adding opportunities, and re-
unit price difference between oilseeds indi- main cost-competitive to optimize profits in
cates differences in quality, market demand,
and perceived value, emphasizing the im-
portance of maintaining quality standards and
meeting market demands to achieve higher
prices. Higher prices can lead to increased rev-
enue for exporters, while lower prices can put

51
the global oilseed trade.

Oilseed Destinations

Generally speaking, in the period covered by Figure 8: Major Destinations of oilseed (source:
this study, Ethiopia's oilseed industry is heav- Authors' calculation based on ECC (2010-2022)
ily reliant on China, in terms of destination,
Opportunities and Challenges
with a 43.7% share. This reliance poses risks,
as changes in Chinese demand or trade policy Ethiopia is a major producer of oilseeds due to
could significantly impact the industry. Israel its diverse climate conditions and large peasant
is the second destination with an 18.1% market farms. It is in the top 5 producing countries for
share, highlighting potential market to expand sesame seed, linseed and Niger seed. In addi-
and reduce risks of concentration. Though, the tion, specialty seeds like sunflower seed and
share is minimal, Ethiopia has made efforts to castor beans are grown in Ethiopia (USDA,
diversify its market by exporting oilseeds to 2021). These cash crops are labour-intensive,
various destinations, such as the United Arab low-input, and rain-fed, with the potential to
Emirates, Turkey, Vietnam, and the United increase production significantly. Ethiopia ex-
States. The US receives 3.4% of Ethiopia's ports a large quantity of these commodities to
oilseed exports, while other countries like Sin- the international market, and the country's
gapore, Jordan, Japan, and Saudi Arabia have abundant labour and rural population make it
smaller market shares. These percentages re- an attractive market for the oilseeds sector. Re-
flect different levels of business relationships search has identified market opportunities in
and market penetration in these countries. organic and conventional sesame, organic and
Working on these markets can help to reduces conventional Mung beans, soybeans, sesame
reliance on a single market and enables Ethio- oil, and tahini.
pia to spread risks more effectively by expand-
The government's commitment to agro-ecol-
ing its client base and venturing into various
ogy and labour availability is evident in vari-
markets.
ous plans and initiatives, such as the Growth

52
and Transformation Plan of 1 and 2, the home- foods will push international demand upward.
grown economy initiative, and the construction The popularity of sesame seeds in various cui-
of industrial parks to expand the production of sines, confectionaries, and pharmaceutical and
value-added products. These initiatives aim to medical applications will drive global demand
double agriculture production and expand the for sesame seeds. Additionally, the growth of
production of value-added products in Ethio- other niche segments producing sesame-based
pia. foods is expected to increase demand in the
Ethiopia's competitiveness in oilseeds can be coming years. Ethiopia's export potential for
boosted by the quality of Humara-type sesame, oilseeds is significant, with sesame seeds being
a benchmark for the sesame sector. These prod- considered to have high potential.
ucts are increasingly popular in European mar- Ethiopian oilseed export opportunities are con-
kets, in addition to traditional Asian markets. vergent with international demand for Ethio-
However, major oilseed export destinations are pian seeds and beans, abundant arable land,
shifting their imports away from Ethiopia, such and cheaper labor costs. Government eco-
as China, which have been the second-largest nomic structuring and government economic
destination for Ethiopian sesame seeds and the structuring also present opportunities for Ethi-
third largest for Ethiopian Niger seeds. This opian oilseeds and pulses exports.
has led to a decline in Ethiopia's exports to The main problems faced by oilseeds, particu-
China over the past three years. Key inform- larly sesame, are in production, collection, and
ants and experts from the Ministry of Trade grading. The majority of farmers are small-
and regional integration believe that pests, dis- holders on fragmented land, often lacking
ease, higher domestic prices, and market dis- training in good agricultural practices, profit
tortion by illicit traders are the main reasons optimization culture, and economic under-
for the loss of the Chinese market. standing. Commercial or investment farmers
The increasing concern for the environment, may own farms just for exports or as collateral
food safety, and nutrition in the international for property development in cities. However,
market has led to increased certification there are large commercial export farmers with
schemes and sustainability labels, particularly good knowledge and influence in their com-
in the European market. However, Ethiopia's munities.
use of agrochemicals, pesticides, and organic Out-grower schemes have been used to resolve
certification is limited, and there is limited similar issues in Ethiopia, but they have had
quality infrastructure. Exporters primarily fo- little success due to a lack of contract culture.
cus on the Asian market, with China, India, and Exporters have negotiated contracts with indi-
Pakistan being the main destinations. About vidual farmers or farmer organizations, only to
44% of exports are destined for China, with find their business partners defaulting on the
growth potential in this market. terms later. This lack of culture increases the
Despite the expectation of high-quality stand- risk of default for exporters. Some faults can
ards, Ethiopia has a huge opportunity to ex- be assigned to not finding the right "package"
ploit. The increasing health consciousness, with which to provide farmers, such as not of-
growing veganism, and demand for specialty fering a premium for their organic product.

53
The representatives of the oil export sector dis- specialty food demand.
cussed the challenges and opportunities in
commodities and the general picture. The fol- The industry faces challenges such as in-
lowing commodities appeared to have the creased competition from other oilseed grow-
greatest potential: organic sesame, organic ing countries, and limited processing value.
mung beans, conventional sesame, soybeans, Addressing logistics, high local prices, regula-
and sesame oil. tory compliance, and quality control is crucial
for improving competitiveness and sustainabil-
5. Conclusions ity. The Ethiopian oilseed market is sensitive to
Ethiopia's oilseed industry is crucial for for- price fluctuations, requiring exporters to mon-
eign exchange earnings and market support. itor factors, adjust strategies, maintain quality
Exports increased from $323.5 million in standards, and understand market competitive-
2010/11 to $263.8 million in 2021/22 but de- ness for sustainable profits. Ethiopian export-
clined due to falling prices since 2015/16. The ers must focus on quality, competitiveness, and
market is sensitive to price fluctuations, requir- market conditions for value-adding opportuni-
ing exporters to monitor factors and adjust ties in the oilseed sector.
pricing strategies. Ethiopia's oilseed export References
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