An overview of world sesame production and sales

3.1 World sesame production

World production of sesame seeds is estimated at 2.25 million tones, of which, 70% is consumed
in the producing countries themselves. Annual trading volumes are estimated at 600,000 mt,
valued at US$500 million. India, China, Myanmar in Asia, Nigeria, and Ethiopia and Tanzania in
Africa and Guatemala in Central America are the major producing and exporting countries with
Japan the world's largest importer. Production, imports, exports and consumption, of sesame is
shown by geographic region in table 3.1 below. In these groupings, imports rarely match exports.
According to FAO statistics, one can also observe that:
 Asia produces 64% of the world's supply of seed and Africa 31%, the two regions
contribute a total of 95.3% of total global production.

 28% of sesame produced in the world enters international trade.

 Africa's exports represent 40% of its production.

 While Asia exports 17% of its production, it imports nearly twice as much as it exports.

 Europe is a major net importer.

Table 3.1 REGIONAL SESAME PRODUCTION, TRADE, AND CONSUMPTION 2007

Region Area Harvested Production Imports Exports Net Imports Consumption

(000 hectares ) (000 tons) (000 tons) (000 tons) (Exports) (000 tons)
Asia 11,182 2,397 749 409 340 2,737
Africa 7,273 1,152 39 463 (424) 728
Europe 1 1 145 23 121 122
N/America 0 0 54 3 51 51
C/America 257 63 43 57 (14) 49
S/America 377 108 5 90 (85) 23
Oceania 0 0 8 0 8 8
World 19,090 3,726 1,042 1,046 3,736
Source: UN / FAO
Of the fourteen countries who are the major producers in the world, as shown in table 3.2 below,
six are in Asia, seven in Africa and one in Latin America; these countries together account for
84% of the world sesame production.

Table 3.2 MAJOR SESAME PRODUCERS 2007

S. No Country Area Harvested Production Share of total

(000 acres) (000 tones) production
1. India 4,324 739 23.7
2. Myanmar 3,954 661 21.2
3. China 1,534 615 19.7
4. Sudan 3,781 287 9.2
5. Uganda 692 185 5.9
6. Ethiopia 544 181 5.8
7. Nigeria 484 110 3.5
8. Paraguay 148 58 1.9
9. Bangladesh 198 55 1.8
10. Tanzania 284 51 1.6
11. Thailand 162 47 1.5
12. Central African Republic 99 44 1.4
13. Egypt 77 41 1.3
14. Pakistan 210 41 1.3
Total 16491 3115 100
Source: - UN/ FAO FAO
FAO statistics reveals that in 2007, 16.49 million acres were cultivated, producing 3.1 million tons of
sesame seed for an average yield of 390 lbs/acre. Generally speaking, there is a high correlation
between yield and the amount of rainfall. Much of the sesame in the world is grown in semi-arid
areas where there is very little irrigation.
3.2 The global sesame demand
Since sesame is an export commodity whose price is highly affected by global market demand, it
is very imperative to see the nature and structure of global sesame market. According to the data
obtained from FAO, in 2005, there were 1,042 thousand tons of sesame seed reported as
imported. The major importers were as follows:

Table 3.3 Major Sesame Importers 2005

S.N Country Import (000 tons) Export (000 tons)

1. China 214 57
2. Japan 179 -
3. Turkey 95 -
4. Republic of Korea 58 -
5. United States of America 47 -
6. Saudi Arabia 33 -
7. Germany 28 -
8. Syrian Arab Republic 25 -
9. Mexico 25 -
Source: UN / FAO statistics

China, Japan and Turkey are the major sesame importers in the global market. Many countries
such as China, Japan, Guatemala and Thailand are involved both in import and export of sesame
in a year. Studies reveal that the world sesame trade measured as imports continues to increase.
The most significant country in world sesame trade is China because of its shift from a major
exporter to the major importer as shown in table 3.4 below.

Table 3.4 China Sesame Trade (in 000 tons of whole sesame)

Year Exports Imports Net imports (Exports)

2000 113 41 (73)
2001 75 43 (32)
2002 108 45 (63)
2003 114 108 (7)
2004 46 153 107
2005 57 214 157
Source: As above
As the Chinese economy grows, disposable incomes improve and the demand for sesame
increases. This can be seen in imports, which have steadily increased to more than fourfold in six
years (see table 3.4). Despite the high variability in quantity exported, the increased demand for
sesame of China has caused it to be a net importer to satisfy local demand. Japan is the other
biggest world importer of sesame seed (table 3.3). Sesame oil, particularly from roasted seed, is
said to be an important component of Japanese cooking and traditionally this is the principal use
of the seed. Because of quality problems in the past, Ethiopia could not be an important exporter
for Japan. Figure 3.1 Sesame export by major exporting countries (in tons 1998-2004)
The major exporters during the period 1998-2004 were India, Ethiopia and Sudan. Since
production is rain fed the amount of exports could vary depending on the amount of rain in each
country.
3.3 Ethiopia’s share in world sesame production and market
Ethiopia is the sixth largest producer of sesame in the world and the third in Africa in 2007 (table
3.2). The total sesame production had shown a 26 % increment during 1997 to 2004. (For the
details see annex 1). A steady growth in Ethiopia’s share of global sesame market is depicted in
annex 2. As can be observed from annex 2, the country’s market share had grown more than
double for the stated years. UN/FAO statistics revealed that there were 111 countries which
participated and competed in world sesame trade during the period 1997-2004. These competing
countries may be categorized in to two. The first category includes those countries which are
primary producers (mostly developing countries) and the other category includes those countries
which import sesame and resale after cleaning/ processing. The countries which re-export
sesame are mostly the developed countries who buy sesame at a low price and resale after adding
value through cleaning and/or processing to improve its quality. These countries include Japan,
England, Netherlands, Germany, Israel, Italy, France, Belgium and South Korea. The total world
export of sesame in the above mentioned years stood at 750.44 thousand tones. The total export
has grown by 25.4% while the foreign currency earning has increased by 45.4% which amounted
a total of USD 557.89 million. During this period, the share of Ethiopia was 181 thousand tones
(5.8%). In the world market for sesame, 16 countries have a share of 80-90% of both export
volume and value. These countries are India, Sudan, China, Myanmar, Ethiopia, Mexico,
Netherlands, Venezuela, Guatemala, Japan, Nigeria, Tanzania, Pakistan, Thailand, Burkina Faso,
and England. A study by MoARD (2007) indicated that in the years between 1997 and 2004, the
following countries have shown a radical improvement in export of sesame both in volume and
value:-
1. Ethiopia 531.9% in volume and 625.4% in export revenue,

2. Burkina Faso 202.4% in volume and 77.5% in export revenue,

3. Tailand169.2% in volume and 196.5% in export revenue,

4. Tanzania 143.7% in volume and 90.45% in export revenue,

5. Sudan102.7% in volume and 39.7% in export revenue,

6. Netherlands78.9% in volume and 46.2% in export revenue,

7. Nigeria 56.1% in volume and 47.4 and in export revenue,

8. India 32.2% in volume and 39.4% in export revenue.

Ethiopia’s share of 1.5% in export volume and 1.9% in value in 1997 had grown to 8.9% and
8.3% in 2004 respectively. In the stated years, Ethiopia ranks 4th in export quantity and revenue
following Sudan, India and China. According to the data obtained from Ministry of Trade and
Industry (MoTI), the number of exporters has also increased from 81 in 2007 to 94 in 2008.
According to FAO statistics the exports of oilseeds of Ethiopia in general and sesame in
particular is expanding and the country’s total exports are performing better in the growing world
market. Significant public and private investments in infrastructure including warehouses and
cleaning machines, ensures that the entire range of operations from collection, storage, quality up
gradation, packing, transportation and shipping are improving in Ethiopia. All these have
resulted in tremendous increase in export volumes in a very short time span of 5 years, making
Ethiopia a significant participant in the sesame seed trade from Africa. This signifies that
maintaining and improving this steady growth in the export of the product requires expansion of
land cover, improvement in productivity, enhancing product quality, infrastructure development
and market information network to maximize the country’s comparative advantage in the export
market of the product. The other aspect of sesame trade in the global market is the variation in
the selling price across countries. As can be seen from figure 4.2, countries such as Japan and
England, bought sesame and resale it at more than 50% higher price than primary producer
countries. In the stated 8 years the average price of a tone of sesame was sold USD 1896.15 in
Japan, 1893.87 USD in England, and USD 1025.5 in the Netherlands, while Ethiopian sesame
was sold at 771.6 USD/tone for the same period. The selling price of sesame for some countries
such as Nigeria and Burkina Faso was by far lower than that of Ethiopia. Reducing the wide gap
in the selling price among different countries of the world demands market research, quality
improvement and export promotion. One can observe from figure 3.3 that the export revenue of
Ethiopia from sesame in the period during 1997-2004 stands as the fourth largest in the world
(both in export volume and value). This makes Ethiopia an important producer and exporter of
sesame which can make a difference in the global sesame trading.

Sesame Production in Ethiopia

4.1 Land suitability for Sesame Production
Owing to the availability of suitable soils and climate, oilseeds are important agricultural
commodities widely grown in Ethiopia. The major oilseeds are sesame, Noug or Niger,
groundnuts, soy beans (partly used for oil extraction), rapeseed (Gomenzer), linseed, sunflower,
cottonseed and others. Ethiopia ranks among the top 6 world producers of sesame. Sesame seeds
are partly used for domestic oil extraction and mostly exported to international markets for
human feeds and oil extraction. Most of the sesame production is used for export to Middle East,
European and Far East countries. The by-product of oil extraction (oil cake) is sold as animal
feed.
4.2 Types and Characteristics of Ethiopian sesame seeds
A large number of sesame seed varieties exist in Ethiopia. However, in the international trade,
three varieties are well known as trade names: Humera, Gondar and Wellega. The three main
export varieties have their own characteristics such as colour, oil content, and taste. The Humera
variety is appreciated world wide for its aroma and sweet taste. It has good uniform white seeds,
which are quite large in size. This makes it very suitable for bakery products. The Gondar type is
also suitable for the bakery market. For this market a high level of seed purity is demanded,
which has sometimes proven to be problematic for Ethiopia. The major competitive advantage of
the Wellega type is its high oil content. Type and quality are very important factors in the world
sesame market. According to CSA data, all sesame seed varieties are produced during the main
or meher crop season.
Ethiopia is well known for its quality sesame world wide. As can be seen from table 4.1 below,
out of the total cultivated land area of 8.67million ha. of grain production, oil seeds had a share
of only 6.58% in 2003/04. In terms of area coverage, sesame had a share of 16.04 % of oil seeds
in 2003/04, however, its share of oilseeds has grown to 26.3% in 2007/8. The total cultivated 15
land for grain has increased to 10.95 million ha. in 2007/08 exhibiting an increase of 12.6% in
five years, while the area under sesame has grown more than double and reached 185912 ha.
from 91527 ha. for the same period. It is also evident that while the area covered under the other
oil seeds has marginally increased, the land used for sesame has increased drastically. Some
studies reveal that the expansion in farm size is attributed to the rising international price of
sesame in the last five years. When we see the case of sesame seed cultivation separately, its land
cover had grown more than double for the same period.

Table 4.1 Estimate of Hectare of cultivated Land (Main /Meher Season)

Type of 2003/04 2004/05 2005/06 2006/07 2007/08

Crop
Total Grain 8,669,295 9,811,070 10,170,911 10,592,755 10,954,722
Cereals 6,998,977 7,637,524 8,081,401 8,471,920 8,730,001
Pulses 1,099,535 1,349,116 1,292,170 1,379,046 1,517,662
Oilseeds 570,783 824,430 797,341 741,791 707,059
Neug 281,718 358,828 306,877 274,720 285,236
Linseed 142,899 250,702 215,107 174,108 152,129
Sesame 91,527 136,220 205,153 211,312 185,912
Coffee 232,439 260,201 261,175 295,238 407147

Source: CSA Agricultural sample survey Reports (2003/04-2007/08) Likewise, according to the
data obtained from the CSA, there is a steady rise in annual yield of all annual and perennial
(permanent) crops. Annex 3 indicates that the total grain production has an annual growth rate of
6.84% in the years between 2003/04 and 2007/08 while the growth rate of oil seeds in general
was 21.74% and that of sesame production was 35.53% for the same period. Sesame seed
production has grown more than double during the last five years owing to favorable weather
conditions; the market oriented production system and encouraging international price.(See
annex 3). Figure 4.1 and 4.2 indicate that in terms of area, oil crops cover 6% of cultivated land
and 3% of total produce for the year 2007/08. Globally, improvement in sesame productivity is
low and even declining in some countries. During the period 2001/02 to 2004/05, some countries
have managed to improve their productivity including, Lebanon (85%), Iran (37%), Turkey
(29%), Uganda (23%), Vietnam (21%), Thailand (12%), Ethiopia (10%) and India (9%).
Countries having a productivity of more than one tone per hectare include Central African
Republic, China, Egypt, and Lebanon (MoARD 2006/07). Productivity for several crops
including oilseeds (in quintal per ha) are presented in annex 4,. For most crops, yields are below
1 ton /ha. Sesame productivity in Ethiopia is 0.67-1.0 tons per ha (see annex4). Though the
productivity of other crops fluctuates 18 from year to year owing to weather conditions, for
sesame seed, there is a good potential of enhancing production and productivity. Sesame
productivity of Ethiopia has improved in the last two years and is better than the major producing
countries of Africa such as the Sudan, Nigeria, Uganda, and Tanzania. This level can, however,
be improved to more than one tone per ha in light of its land suitability and conducive climate.
According to a study by MoARD, the types of seed variety used by the farmers (especially in the
North Western regions) are local varieties obtained from the Sudan and since these varieties have
been used repeatedly, they are exposed to diseases and as a result, their productivity is low. Even
though expected results were not obtained, ten different varieties of sesame had been approved
by the Ethiopian Agricultural Research Institute and distributed to sesame farmers. As a result of
high rainfall intensity and repeated cultivation of the land without better farming practices, loss
of soil fertility is now a days appearing to be a threat to sesame growing lands. Fig.4.4 Manually
harvested sesame

The Plan for Accelerated and Sustained Development to end Poverty (PASDEP) document,
indicates that oilseed production will be doubled during the period 2005 to 2010. The growth
could be achieved through expanding cultivated land and improvement in yields per hectare.
Until now, farmers have practiced a low input, rain fed agriculture without the use of any
fertilizer. The use of improved seeds is also very limited and both sesame production and
harvesting are performed manually. The productivity of sesame varies across regions ranging
from 6.23 in Oromia to 18.17 in Amhara. Its productivity at the national level is 10.05 quintals
per hectare whereas in the preceding two years it was estimated to be 7.26 and 7.07Qts/ha
respectively (table 4.5). Higher yields for marketable surplus can be achieved with improved
farm practices on smallholder level (better seeds, fertilizers, crop protection and farm
management in general as well as through expansion of cultivated land in the low lands of the
country using rain-fed agriculture.
4.4 Production Regions of sesame
In the North West and South Western lowland areas of the country, sesame is currently
cultivated on fertile lands and there seems to be less need for fertilizers. During the year 2007/08,
there were about 527,819 sesame growers with an average acreage of 0.3 ha are involved in
sesame seed production who produced 18,677.3 tones most of which are small holder farmers.
Besides small holders, there are a limited number of investors or large commercial farmers
(having more than 100 ha). The share of the latter is less than 2% (Winands and Biersteker
2007). Due to the low input levels, sesame production in Ethiopia meets organic standards. This
is the case for most small holders and large commercial farms. The main Ethiopian sesame
production regions are situated in the North West and South West. This fragmented faming
system has resulted in many collectors gathering quantities suitable for trading.

Table 4.2 Sesame production by regions

Region No of Area in ha. Production in % Share of Yield(Qt./ha)

holders Quintal national
Tigray 115,570 66,877 527,888 28.3 7.89
Amhara 168,222 49,859 906,173 48.5 18.17
Oromia 169,747 47,711 297,304 15.9 6.23
Benshangul 65,857 20,800 131,429 7.0 6.32
National1 527,819 185,912 1,867,727 100 10.05
Source: CSA Agricultural sample survey Report 2007/08

The major producing areas of sesame in Ethiopia are Tigray, Amahra, Oromia and Benshangul
Gumuz. However, a small amount of sesame is currently produced in SNNPR. Tigray, Amahra
and Oromia have a total share of 92.7% of 2007/08 production. In most of the cases sesame is
produced in low land areas of the country where relatively large tracts of arable land exist.

Fig.4.5 Regional share of sesame production. By and large, the sesame producers include
indigenous farmers, settler farmers and commercial farmers using man power, oxen plough and
tractors (in the case of commercial farms).

Table 3.4 Percent of crop utilization for the year 2007/08

Type of Crop Percent utilized for

Household Consumption Seed Sale In kind wages Animal Others
wages Feed
Total Grain 60.12 14.05 21.63 1.31 0.66 2.23
Cereals 64.76 13.79 16.60 1.44 0.80 2.62
Pulses 58.65 15.49 22.82 0.95 0.45 1.63
Oilseeds 31.33 12.34 53.89 1.29 0.16 0.99
Neug 23.91 13.49 59.95 1.54 0.18 0.92
Linseed 47.11 15.39 35.59 0.82 0.26 0.83
Sesame 14.54 10.01 72.74 1.65 0.10 0.96
Root crops 71.42 9.24 16.6 0.33 1.07 1.34
Permanent crops 51.60 1.09 42.91 0.84 0.86 2.71
Source: CSA Agricultural sample survey Report 2007/08
In Kafta Humera woreda alone, there were 358 small, medium and large scale commercial farms
who cultivated 110,000 ha of land in 2006/07. However, the extension service provided to the
small holders of sesame farmers is minimal (MoARD 2006/07). As can be observed from table
4.3 above, in contrast to cereals and pulses, the largest share of annual production of sesame
(72.74%) is destined for market and only14.5% of produce is utilized for household
consumption. Data obtained from the crop and livestock utilization report of the CSA reveals
that the percentage of sesame sales varies across the producing regions of the country. In
2007/08, it was as high as 79.8% in Tigray and 76.9 and 63.2 percent in Benshangul Gumuz and
Amhara regions respectively while that of Oromia region was nearly equivalent to the national
average. This high proportion of sales volume implies that sesame can be regarded as a cash crop
with high price elasticity of supply and the market price of sesame could have a huge impact on
sesame production and supply.
4.5 Major sesame seed producing zones
According to the CSA 2007/08 survey report, the major sesame seed producing areas in the
country are Tigray region, Western and North Western zones, (especially Humera, Tsegede and
Welkaite woredas); Amhara region, North Gondar Awi and west Gojam zones (specifically
Metema, kuara, West Armachiho, Tach Armachiho and Tegede woredas); Oromiya region,
(Western, Eastern and Kelum wollega, Jimma, Illubabor as well as West Hararge zones); and
Benshangul Gumuz region (Metekel Assossa, and Kemashi zones). The total estimated yield of
sesame in the major producing zones of the regions is presented in table 4.4 below.

Table 4.4 Share of total production of major producing regions /zones (2007/08)

Region/Zone Production (in % share of national % utilized for sale

Qt.)
Tigray 527888 28.3 79.8
N.West Tigray 94030 5.0 69.5
Western Tigray 425051 22.8 85.9
Amhara 906173 48.5 63.2
N.Gondar 257113 13.8 78.1
Awi 533771 28.6 82.1
W.Gojam 56733 3.0 85.1
Oromia 297304 15.9 72.0
W.Wellega 63857 2.0 81.9
E.Wollega 61452 3.3 80.3
Kelem Wollega 32149 1.7 69.4
Illubabor 52435 2.8 78.5
Jimma 28719 1.5 50.4
W.Harrarge 17751 0.9 43.3
Benshangul Gumuz 131429 7.0 76.9
Metekel 53426 2.9 78.4
Assossa 26309 1.4 68.2
Kemashi 38034 2.0 79.9
Others 4933 0.3
National Total 1867727 100 72.7
Source: CSA Agricultural sample survey Report2007/08
Sesame is produced by smallholder farmers, and commercial farmers.the share of the former is
estimated to be 98% while the later contributes only 2% (Winands and Biersteker 2007). The
CSA estimated that 527,819 holders (farmers) were engaged in sesame farming who cultivated
185,912 hectares in 2007/8 during the main cropping season. At the national level, the bulk of
the harvest (more than 70%), of sesame is exported. The percentage of output utilized for sale
varies across the producing zones. It ranges between 43.3 % in West Hararge to 85.9 % in
Western Tigray.
4.6 Product quality of sesame seed
Sesame quality grading was performed by the Ethiopian Quality and Standards Authority until
the recent inclusion of sesame in the Ethiopia Commodity Exchange (ECX) system. Export
sesame seed types have to fulfil the standards set by the authority as well as the minimum agreed
international standards. Ethiopian sesame is mostly identified and graded as Humera, Gondar,
and Wellega and to some extent mixed types and its oil content is 43-56%. The minimum
international standard of oil content is 52%, 48%, and 45% for first, second and third grades
respectively. On the other hand, the minimum acceptable moisture content is 6-8% for all grades
(Winands and Biersteker 2007). Before reaching at export processing and storage level, sesame
production in Ethiopia has to pass through a series of long chains as explained in section 5.2.
MoARD (2006/07) disclosed that sesame exporters are facing problems of impurities such as
dirt, branches, stones etc. The percentage of these foreign bodies is estimated to be 7 - 9% where
as the internationally agreed standard is 2% for first grade, 4% for second, and 6% for third
grade sesame. Cleaning this low quality sesame to make it exportable would obviously require
high costs of labour and machinery which in turn reduces competitiveness in the global market.
One of the most challenging tasks in sesame marketing in Ethiopia is therefore, reducing the
market chain of the product. In line with the goals and objectives of the Ethiopia Commodity
Exchange (ECX), relentless efforts have to be made to reduce market chain and discover sesame
prices based on the level of quality. To this end, the role of cooperatives in this sub sector has to
be enhanced with a view to benefit smallholder producers through offering better farm gate
prices.

Sesame seed supply and marketing

5.1 Market supply of Sesame Marketable supply collected through the value chain is party
locally consumed but much of it is exported. Based on the CSA crop utilization report of
2007/08, out of the total estimated yield of sesame the market supply for the current year is
estimated in in table 5.1.

Table 5.1 Estimated market supply of sesame in tones (2007/08)

S/N Description Quantity

1 Total sesame produced 18677.3

2 Add 10% beginning left over from previous year (time) 149.4

3 Less 6% impurities and leakage 1129.6

4 Less 4% for local industries inputs 753.1

5 No. 3 plus 4 1864.7

7 Total exportable supply (1+2-5) 16962

8 Less ending leftover to be transferred to 2008/09 1696.2

Source:- computed based on CSA data & MoARD estimated parameters

From table 5.1 it can be observed that a significant share of the produce (6%) is lost because of
quality problems. The other problem is associated with speculation of higher prices in the future
could also reduce the quality of sesame due to prolonged storage time (shelf life). Estimated leftover
of 10% of annual produce is also very high because old sesame seeds usually change their color and
lose their taste (aroma). The need for an efficient supply chain is therefore, indispensable.
5.2 Sesame seeds value chain
Reliable data on domestic use in the form of whole sesame seed as well as in edible oil are not
available. However the CSA estimated that on the average, more than 72% of sesame produced is
marketed. The oilseed crushing and refining industry produces exclusively for the domestic market.

At local levels, small villager traders, cooperatives or agents are involved in collection and trade. At
regional and national levels, private and public entities are engaged in this process. Winands and
Biersteker (2007) indicated that approximately one third of the oilseeds are sold directly to the
consumers by the farmers, and 60% of the oilseeds are traded. The big estates and commercial
farmers seldom practice direct marketing to consumers. Their buyers are exporters and/or
processors. The procurement operations start at the first point of collection, where the sesame
seeds are delivered by the farmer or small buying agents in lots weighing just a couple of kilograms.
With its network of buying units and agents, few trading companies are able to aggregate the
supplies into sizable quantities.

5.3 The major actors in sesame trading

There are various actors in sesame value chain. These include producers, small traders (collecting
middle men), Wholesalers/brokers, oil millers, retailers, local consumers and exporters (ECEA 2009,
Winands and Biersteker, 2007).
Producers Producers include the small holders and commercial farmers who sell their produces to
small village trader or collectors. In some cases producers sell directly to oil millers and
brokers/wholesalers with out the use of collectors. They also sell their products in small quantity to
oil millers, retailers, local consumers and exporters. Commercial farms do have better bargaining
power than small producers and hence, they directly or through brokers sell to exporters.
Village traders or collectors
These are small trading individuals who collect the product in small quantity directly from producers
and resell to brokers/wholesalers, oil millers and exporters in a more marketable quantity. They act
as middle men who do not add value but merely snatch the benefit which could have accrue to the
producers. Farmer’s co-operatives and unions are also involved in the collection of sesame.

Wholesalers/brokers Brokers/Wholesalers are the third layer of actors in the supply chain of
sesame trading. They are larger suppliers who have better capacities in terms of finance and other
facilities. They resell the seeds to retailers, oil millers and exporters. Oil milers There are private
and public owned oil milers especially in the major towns which produce edible oil exclusively for
local market. Improvement in the production quality could enable the larger oil refining plants to
produce for export market.

Retailers Retailers are those firms that purchase both sesame seed and sesame oil from
wholesalers and oil milers for resale to local consumers.

Local consumers Local consumers are the end users of both sesame seed and edible sesame oil.
Figure 5.1 depicts the various stages in sesame seeds value chain. This long supply chain will
naturally reduce the benefit to be obtained by the producer, this in turn kills the incentive to
produce more.
Processors/Exporters These are public and private firms which buy the seed from collectors and
wholesalers to sell in the export market after processing and packing. Cooperatives seem to work
well in the coffee sector. However, the question of whether cooperatives might work in the
oilseed sector is yet to be answered. Cooperative members need a shared strategy, higher benefits
than without a cooperative, willingness to share power and the avoidance of opportunism. The
latter means that irrespective of the market price, especially in the case of higher prices, all of the
products have to be handled by the cooperative. For export products, world market prices are in
general leading. Ethiopia has to compete on the world market with a number of other suppliers.
The world market prices are therefore the starting point in price formation. Each link in the chain
has costs (labour, storage transport, broker commission, etc.) and will lower the return for the
previous link in the chain. The price of sesame at farm gate will be the end result. Low world
market prices will result in very low farm gate prices. Table 5.2 illustrates an estimate of the cost
structure of the sesame seed value chain. 29

Table 5.2 An estimate of cost break down of sesame value chain (export Br/quintal)

Type of costs Birr High market Low market

price price
Land clearing 150 21.43 21.43
Weeding 420 60.00 60.00
Harvesting 360 51.43 51.43
Trashing and packing 36 5.14 5.14
Seeding, spraying, guarding, 30 4.29 4.29
Land preparation (tractor rent) 140 20.00 20.00
Local seed 4 Kg/ha 15 2.14 2.14
Chemicals 180 25.71 25.71
Bags 100 kg 45 6.43 6.43
Loading and unloading 42 6.00 6.00
Store rent (1 birr/qt per month) 14 2.00 2.00
Food expenses for labourers 150 21.43 21.43
Transport expense from farm to Village market 91 13.00 13.00
Land rent 29 4.14 4.14
Salary expense 240 34.29 34.29
Total cost 1942 277.43 277.43
Farmers margin (depends on world market 1500 214.29 13
price)
Producer price 491.71 290.43
Packing 1.00 1.00
Loading and unloading 5.00 5.00
Store rent 3.00 3.00
Storage loss (2%) 9.83 5.81
Loss in transportation& handling (1%) 4.92 2.90
Assemblers margin 15.69 15.69
Assembler Wholesale Price 531.16 323.83
Municipality fee 0.68 0.68
Loading and unloading 4.00 4.00
Transport 15.00 15.00
Seed cleaning (input 95% purity) 7.60 7.60
Bag 6.18 6.18
Miscellanous and cost impurity 13.28 8.10
Store rent (0.43*three month) 1.23 1.23
Transport: Gondar-Djibouti 40.38 40.38
Standard fee 2.38 2.38
Forwarding 23.75 23.75
Interest (7.5%, three months) 12.11 8.12
Exporter’s margin 10.14 10.14
FOB Price (100 kg) 703.02 475.13

As can be seen from the above cost break down, transaction costs in the Ethiopian sesame seed
value chain are generally high due to:
  The large number of producers, brokers and buyers. Producers (farmers) sell to a local
collector, this collector in general sells to another larger broker and this process is
repeated a few times mostly without adding value.

 Problems in finding information on quantities supplied and prices.

 Poor negotiating capacity of producers on contractual agreements (price, purity, quantity,

delivery time and terms of payment).
The buying price of sesame for export is largely determined by the evenness (uniformity) of
color and bean size, taste, dryness and purity. These are important purchasing quality
requirements for sesame traders. Hulled sesame seeds and bleached hulled seeds have a higher
market value than untreated seeds. The purity of the sesame seed is specified in terms such as 99-
1 implying that no more than 1% contains impurities such as dirt, branches, stones etc. Small
holder farmers in the Ethiopian sesame value chain are generally in a weak bargaining position.
They only have very small volumes to sale, they lack market information and are fully dependent
on middlemen (traders). Mostly they sell their output immediately after harvesting, which is
when the supply is abundant and consequently the prices are relatively low. Price discovery is
not based on forces of demand and supply reflecting the current international market prices. This
results in a very low price offer to the producers. The long value chain in the collection process
complicates tracking out the origin of the product and meeting the requirements of highly
developed consumer markets. Europe and other highly developed consumer markets increasingly
demand more information on production, origin, storage and quality aspects. This requires
professionally managed supply chains with tracking and tracing systems. On the other hand,
many commercial farmers with large areas of land deliver directly to the cleaning or exporting
companies, due to their large volume /lot size/. In some cases, at the start of the season farmers
and traders agree on bonuses above the market price. These bonuses depend on the volume,
quality and purity of the seeds. Investment in reorganizing the value chain in an efficient way is
inevitable to enhance competitiveness and gain higher prices for the sesame seeds. Almost all
buyers of the high-income countries demand tracking and tracing systems. Some stakeholders
are developing a certified chain in organic sesame seed. These demands a system to guarantee
the organic production method and to promote that Ethiopian sesame seeds are exclusively
organic.
5.4 Market Infrastructure
Market infrastructure in the case of sesame includes modern storage facilities (warehouses), seed
cleaning facilities, and sesame seed crushing and refining plants, road infrastructure, availability
of means of transport, and market information networks among others.
5.4.1 Sesame Warehouse facilities
MoARD (2006/7), disclosed that in the case of Tigray and Amhara regions, modern storage
facilities are established recently in and around Humera, Metema, Gondar, and Shehdi towns.
These warehouses are owned by private exporters, wholesalers, commercial farms, cooperatives
and unions, as well as public enterprises. On the other hand, in the sesame producing areas of
Oromia and Beshangul Gumuz where 20-25% of total annual sesame production originates, there
are no modern warehouses and seed cleaning plants.
Due to lack of such facilities, small sesame traders and wholesalers around East Wellega,
Kamashi, Assossa and Metekel use wood and mud houses (without cemented floors) to store the
seeds. This has resulted not only in reduced quality and competitiveness, but also in elongated
market chain which in turn reduces the farm gate prices of producers and thereby killing the
incentive to produce more.
5.4.2 Road access and transport facilities
Ethiopia has a good main road infrastructure, although with 21 to 31 km/ 100,000 ha the road
density is quite low considering the African average of 50 km/ 100,000 hectare (Winands and
Biersteker (2007). In recent years, however, road network, telecommunication and information
technologies have dramatically improved. Large investments are made to improve further the
road, rail and ICT infrastructures. The bulk (98%) of international trade is handled by Djibouti.
Transport of sesame from the producing regions to the port of export, port Sudan and Djibouti, is
mainly done by truck. The distance between the producing regions and Djibouti is about 1000-
1500 kms. Transport costs to Djibouti port are indicated as USD 35 per ton/km, but in many
areas very high transport costs are incurred (Winands and Biersteker (2007). Though there are
access roads from the producing woredas to the zones, their grade in many cases (especially in
East Wollega and Kemashic zones) is low and seasonal. Lack of maintenance of some roads such
as Woreta-Woldiya road has compelled exporters to transport sesame from Gondar to Djibouti
port via Addis Ababa with an additional 500 kms of road. This has eroded the competitiveness of
sesame from Metema area. The asphalt road linking North Gondar zone of Amhara National
regional state and Gedarif state of the Sudan (Gondar - Metema -_Galabat - Gedarif road) is
under construction. This high way is expected to provide a good opportunity for sesame export
through Port Sudan. Sesame produced in Western Tigray Zone is being exported via Port Sudan.
However, upgrading the existing seasonal road between Humera and Port Sudan and expanding
new access roads in the producing areas of Kafta Humera is very important. Absence of adequate
road infrastructure in the sesame producing Woredas of Oromia and Benshangul Gumuz has also
resulted in high transport costs especially during harvest seasons.
5.4.3 Market Information Networks
As explained in the earlier chapter, the major sesame producing areas of the country are located
around North Western and South Western low lands where communication networks are not yet
expanded to the required level. This has resulted in low bargaining position of farmers due to
lack of adequate market information. Sesame being an export commodity requires the
dissemination of market information on regular bases. From the discussions held with the heads
of EPOSPEA it was disclosed that many producers and small traders tend to hold large stocks of
sesame while the international price was showing a declining trend. This obviously will incur
costs and results in loss of money.
5.4.4 Seed cleaning and processing
Seed cleaning and information on origin are of great importance for sesame seed marketing.
Farmers and traders blend different seed types, such as Humera, Gondar, and Wellega, with
particular qualities. This decreases the overall value of the seeds: tracking the origin of the
product and matching the particular qualities of the seeds with the specific requirements of the
end users are hampered. Cleaners remove impurities such as straw, dead seeds, soil and pods,
resulting in up to 99% or 99.5% purity. Up-to-date cleaning machines capable of 99.5% purity
are available in some companies such as Ambasel, but the total capacity is limited and does not
meet export quality standard. Machines with lower cleaning results, below 99.0% purity, are
often locally made (Winands and Biersteker, 2007).
Until recently, market orientation in Ethiopia is weakly developed. Market studies on the
Ethiopian sesame crop are scarce. A better knowledge of applications by buyers and end-users
would benefit the chain. Selected seed varieties can be grown, answering specific demands for
selected purposes. Characteristics such as colour, oil content, fatty acid composition, taste and so
on, are hardly known. The marketing chain can definitely be improved. Traceability, sufficiently
high quality seed cleaning capacity, hulling facilities and quality certified processing and
refinery plants are important in this respect. Since the existing cleaning facilities are quiet
insufficient, investment possibilities for cleaning facilities for sesame are immense. Seifu (2004),
as cited in Winands and Biersteker (2007), mentioned that by and large, there is a lack of good
cleaning facilities in the country (although a few units of excellent standards exist). Clearly both
improved and enlarged cleaning and hulling facilities (for foreign investors as well as Ethiopian
entrepreneurs) should be considered, and look into this in more depth as an opportunity in the
light of rising world food prices.
5.4.5 Sesame seed Crushing and oil Refining
Most of the oilseeds crushed locally are without any refining. In rural areas crude oil is preferred
for cooking purposes. Winands and Biersteker (2007), estimated that the production of refined
oil in Ethiopia is very limited (about 20,000 tons). The domestic market for oil crops is partly
developed and backed- up by an oil extracting industry. According to a recent study carried out
by Winands and Biersteker, there are approximately 130 registered oil extraction companies of
which the majority are registered micro-companies. The number of big oil extraction companies
operating in a large scale is not significant. More than 1,000 small crushers (mostly with
Chinese/ Indian machines) are operational on village level. These local crushers, with a very
limited capacity, have low hygiene standards and high risks of contamination with mineral oil.
The working environment is far from ideal. Safety risks (e.g. slippery floors, no protection on
belts etc.) for employees have been observed at most of these establishments (Winands and
Biersteker, 2007). Unsustainable poor quality sesame seed supply with too much impurity needs
more labour cost for cleaning and get ready for export or oil extraction. The technology of the oil
mill cannot make complete extraction of oil some portion of the edible oil is disposed with the
oil cake. (N.B.The oil cake with 3% oil content is said to be uncomfortable for animal feed and is
a loss for the company). At present, in most of the oil refining companies, there is no technology
that helps to check standard and quality inspection in the process. 35 Only a few larger crushing
or refining companies such as Addis Modjo seem to have adequate safety and hygiene standards
compared to European industry standards. There are also other crushing or refinery units owned
by the private sector. Given the available equipments, sesame oil is manufactured for local
markets, though sanitary problems are possible. This risk can be reduced by investments in oil
refining industry. The other problem is that the edible oil refining industry is generally
confronted with competitive imports of refined oils from abroad; including those donated edible
oils as food aid. As a result, although, the country is one of the largest producers and exporters of
sesame, Ethiopia is a net importer of edible oil. Sesame oil has a high demand in the world
market but whole sesame seed is get exported instead of being processed here at cheaper labor
cost. To this end, smaller crushers need to be improved and building new facilities with better
capacity will be instrumental for import substitution.
6 Demand Analysis and economic importance of sesame
6.1 Trends in sesame demand
The market penetration of Ethiopian sesame seed covers quiet a wide range of countries all over
the world. Export destination countries include the Middle East, Europe, Far East, and America
indicating that there is a possibility of market expansion in the already existing trade roots. The
major importing countries are listed in the following figure in accordance with import size. As
can be seen from the above cost break down, transaction costs in the Ethiopian sesame seed
value chain are generally high due to:

 The large number of producers, brokers and buyers. Producers (farmers) sell to a local
collector, this collector in general sells to another larger broker and this process is
repeated a few times mostly without adding value.

 Problems in finding information on quantities supplied and prices.

 Poor negotiating capacity of producers on contractual agreements (price, purity, quantity,

delivery time and terms of payment).

The buying price of sesame for export is largely determined by the evenness (uniformity) of
color and bean size, taste, dryness and purity. These are important purchasing quality
requirements for sesame traders. Hulled sesame seeds and bleached hulled seeds have a higher
market value than untreated seeds. The purity of the sesame seed is specified in terms such as 99-
1 implying that no more than 1% contains impurities such as dirt, branches, stones etc. Small
holder farmers in the Ethiopian sesame value chain are generally in a weak bargaining position.
They only have very small volumes to sale, they lack market information and are fully dependent
on middlemen (traders). Mostly they sell their output immediately after harvesting, which is
when the supply is abundant and consequently the prices are relatively low. Price discovery is
not based on forces of demand and supply reflecting the current international market prices. This
results in a very low price offer to the producers. The long value chain in the collection process
complicates tracking out the origin of the product and meeting the requirements of highly
developed consumer markets. Europe and other highly developed consumer markets increasingly
demand more information on production, origin, storage and quality aspects. This requires
professionally managed supply chains with tracking and tracing systems.

On the other hand, many commercial farmers with large areas of land deliver directly to the
cleaning or exporting companies, due to their large volume /lot size/. In some cases, at the start
of the season farmers and traders agree on bonuses above the market price. These bonuses
depend on the volume, quality and purity of the seeds. Investment in reorganizing the value
chain in an efficient way is inevitable to enhance competitiveness and gain higher prices for the
sesame seeds. Almost all buyers of the high-income countries demand tracking and tracing
systems. Some stakeholders are developing a certified chain in organic sesame seed. These
demands a system to guarantee the organic production method and to promote that Ethiopian
sesame seeds are exclusively organic.
5.4 Market Infrastructure
Market infrastructure in the case of sesame includes modern storage facilities (warehouses), seed
cleaning facilities, and sesame seed crushing and refining plants, road infrastructure, availability
of means of transport, and market information networks among others.
5.4.1 Sesame Warehouse facilities
MoARD (2006/7), disclosed that in the case of Tigray and Amhara regions, modern storage
facilities are established recently in and around Humera, Metema, Gondar, and Shehdi towns.
These warehouses are owned by private exporters, wholesalers, commercial farms, cooperatives
and unions, as well as public enterprises. On the other hand, in the sesame producing areas of
Oromia and Beshangul Gumuz where 20-25% of total annual sesame production originates, there
are no modern warehouses and seed cleaning plants.
Due to lack of such facilities, small sesame traders and wholesalers around East Wellega,
Kamashi, Assossa and Metekel use wood and mud houses (without cemented floors) to store the
seeds. This has resulted not only in reduced quality and competitiveness, but also in elongated
market chain which in turn reduces the farm gate prices of producers and thereby killing the
incentive to produce more.
5.4.2 Road access and transport facilities
Ethiopia has a good main road infrastructure, although with 21 to 31 km/ 100,000 ha the road
density is quite low considering the African average of 50 km/ 100,000 hectare (Winands and
Biersteker (2007). In recent years, however, road network, telecommunication and information
technologies have dramatically improved. Large investments are made to improve further the
road, rail and ICT infrastructures. The bulk (98%) of international trade is handled by Djibouti.
Transport of sesame from the producing regions to the port of export, port Sudan and Djibouti, is
mainly done by truck. The distance between the producing regions and Djibouti is about 1000-
1500 kms. Transport costs to Djibouti port are indicated as USD 35 per tone/km, but in many
areas very high transport costs are incurred (Winands and Biersteker (2007). Though there are
access roads from the producing woredas to the zones, their grade in many cases (especially in
East Wollega and Kemashic zones) is low and seasonal. Lack of maintenance of some roads such
as Woreta-Woldiya road has compelled exporters to transport sesame from Gondar to Djibouti
port via Addis Ababa with an additional 500 kms of road. This has eroded the competitiveness of
sesame from Metema area. The asphalt road linking North Gondar zone of Amhara National
regional state and Gedarif state of the Sudan (Gondar - Metema -_Galabat - Gedarif road) is
under construction. This high way is expected to provide a good opportunity for sesame export
through Port Sudan.
Sesame produced in Western Tigray Zone is being exported via Port Sudan. However, upgrading
the existing seasonal road between Humera and Port Sudan and expanding new access roads in
the producing areas of Kafta Humera is very important. Absence of adequate road infrastructure
in the sesame producing Woredas of Oromia and Benshangul Gumuz has also resulted in high
transport costs especially during harvest seasons.

5.4.3 Market Information Networks

As explained in the earlier chapter, the major sesame producing areas of the country are located
around North Western and South Western low lands where communication networks are not yet
expanded to the required level. This has resulted in low bargaining position of farmers due to
lack of adequate market information. Sesame being an export commodity requires the
dissemination of market information on regular bases. From the discussions held with the heads
of EPOSPEA it was disclosed that many producers and small traders tend to hold large stocks of
sesame while the international price was showing a declining trend. This obviously will incur
costs and results in loss of money.
5.4.4 Seed cleaning and processing
Seed cleaning and information on origin are of great importance for sesame seed marketing.
Farmers and traders blend different seed types, such as Humera, Gondar, and Wellega, with
particular qualities. This decreases the overall value of the seeds: tracking the origin of the
product and matching the particular qualities of the seeds with the specific requirements of the
end users are hampered. Cleaners remove impurities such as straw, dead seeds, soil and pods,
resulting in up to 99% or 99.5% purity. Up-to-date cleaning machines capable of 99.5% purity
are available in some companies such as Ambasel, but the total capacity is limited and does not
meet export quality standard. Machines with lower cleaning results, below 99.0% purity, are
often locally made (Winands and Biersteker, 2007).
Until recently, market orientation in Ethiopia is weakly developed. Market studies on the
Ethiopian sesame crop are scarce. A better knowledge of applications by buyers and end-users
would benefit the chain. Selected seed varieties can be grown, answering specific demands for
selected purposes. Characteristics such as colour, oil content, fatty acid composition, taste and so
on, are hardly known. The marketing chain can definitely be improved. Traceability, sufficiently
high quality seed cleaning capacity, hulling facilities and quality certified processing and
refinery plants are important in this respect. Since the existing cleaning facilities are quiet
insufficient, investment possibilities for cleaning facilities for sesame are immense. Seifu (2004),
as cited in Winands and Biersteker (2007), mentioned that by and large, there is a lack of good
cleaning facilities in the country (although a few units of excellent standards exist). Clearly both
improved and enlarged cleaning and hulling facilities (for foreign investors as well as Ethiopian
entrepreneurs) should be considered, and look into this in more depth as an opportunity in the
light of rising world food prices.
5.4.5 Sesame seed Crushing and oil Refining
Most of the oilseeds crushed locally are without any refining. In rural areas crude oil is preferred
for cooking purposes. Winands and Biersteker (2007), estimated that the production of refined
oil in Ethiopia is very limited (about 20,000 tons). The domestic market for oil crops is partly
developed and backed- up by an oil extracting industry. According to a recent study carried out
by Winands and Biersteker, there are approximately 130 registered oil extraction companies of
which the majority are registered micro-companies. The number of big oil extraction companies
operating in a large scale is not significant. More than 1,000 small crushers (mostly with
Chinese/ Indian machines) are operational on village level. These local crushers, with a very
limited capacity, have low hygiene standards and high risks of contamination with mineral oil.
The working environment is far from ideal. Safety risks (e.g. slippery floors, no protection on
belts etc.) for employees have been observed at most of these establishments (Winands and
Biersteker, 2007). Unsustainable poor quality sesame seed supply with too much impurity needs
more labour cost for cleaning and get ready for export or oil extraction. The technology of the oil
mill cannot make complete extraction of oil some portion of the edible oil is disposed with the
oil cake. (N.B.The oil cake with 3% oil content is said to be uncomfortable for animal feed and is
a loss for the company). At present, in most of the oil refining companies, there is no technology
that helps to check standard and quality inspection in the process. Only a few larger crushing or
refining companies such as Addis Modjo seem to have adequate safety and hygiene standards
compared to European industry standards. There are also other crushing or refinery units owned
by the private sector. Given the available equipments, sesame oil is manufactured for local
markets, though sanitary problems are possible. This risk can be reduced by investments in oil
refining industry. The other problem is that the edible oil refining industry is generally
confronted with competitive imports of refined oils from abroad; including those donated edible
oils as food aid. As a result, although, the country is one of the largest producers and exporters of
sesame, Ethiopia is a net importer of edible oil. Sesame oil has a high demand in the world
market but whole sesame seed is get exported instead of being processed here at cheaper labor
cost. To this end, smaller crushers need to be improved and building new facilities with better
capacity will be instrumental for import substitution.
Trends in sesame demand
The market penetration of Ethiopian sesame seed covers quiet a wide range of countries all over
the world. Export destination countries include the Middle East, Europe, Far East, and America
indicating that there is a possibility of market expansion in the already existing trade roots. The
major importing countries are listed in the following figure in accordance with import size
Source: Ministry of Agriculture and Rural Development Fig.6.1 shows that China, Israel and
Turkey are the major importers of sesame seed which constitute 66.1% of Ethiopia’s total
sesame export volume and 64.8% of value in 2007/08. As shown in annex 5, although the export
volume of the above countries has declined probably due to the recent economic crises, the
export value has shown increment as compared with the preceding year.

Another major phenomenon related to sesame trade is that, since recently, China does not
produce enough sesame seeds to meet its own demand. This has led to a strong increase in
Ethiopian sesame exports to this country in the past two years. Ethiopia is the main supplier of
sesame seeds to Israel too, with a market share of around 20% for the period under discussion.
On the Turkish market, the Ethiopian share is around 17%. In the past years, Ethiopia had also
gained market share in the Middle East. As mentioned in chapter three, the Economic
development of China and other emerging countries will increase the demand for oilseeds and
edible oils on the world market. The increasing use of oils and fats for the production of bio
energy also leads to higher demand. For these reasons, in the medium and longer term relatively
high prices for sesame seeds and oils can be foreseen. The major importers of Ethiopian sesame
seed during the stated period in Europe were Turkey, Greece, and Switzerland. It is also known
that many trading companies purchase sesame seeds and resell to buyers all over the world.
When the trading houses doubt the quality, they first transport the seeds to their country, clean
them and often sort them by colour to maintain the quality before resell. In this respect, the
inclusion of sesame in the trading list of Ethiopia Commodity Exchange (ECX) platform would
promote quality based price setting which can benefit all the stakeholders or exchange actors.
The nature, export destination and trends in the international market of Ethiopian sesame indicate
that the demand for sesame is increasing and as long as acceptable quality is maintained,
adequate market is available throughout the world. Therefore, the focus has to be on the supply
side of the product.
6.2 The importance of sesame in Ethiopian economy and its prospects
Agricultural products have always remained the major exports of Ethiopia. In the year 2006, out
of the total export earning of the country, oil crops had a share of 20.81% while the share of
sesame for the same year was 19.7%. This places sesame as the second foreign exchange earning
crop in Ethiopia following coffee. In the last two years also, its sales revenue has shown an
increasing trend. Until recently, hides and skins were the best-performing commodities next to
coffee in Ethiopian exports. This trend was changed mainly as a result of the rise in the export
quantity and value of oilseeds, especially sesame in the last five years. As can be observed from
annex 7, the contribution of agriculture to the total export earning of the country in 2007/08 was
USD 1.31Billion and its share of total was 88.28% for the same period. Oilseeds had contributed
USD 219.56 Million (16.8%) of total agricultural export earning in 2007/08, (12.45% of total
export revenue) while the share of coffee was 524.74 Million USD (35.43%). According to the
data obtained from MoARD, the total export of sesame in 2006/7 was 238,307 tones which is 6
times larger than the 2000/01 export amount (49287.6 tones). On the other hand, the economic
importance of sesame is so high that its share of oilseeds exports value was 84.3 % in 2007/08
followed by Niger seed (15%). (See annex 6). Hence promotion of better quality sesame
production will be of vital importance to get out of the age old mono crop culture which
persisted in Ethiopia.
6.3 Price volatility
According to the CSA monthly producer and retailer price data, sesame seed price had increased
from a producers and retailers price of 384 and 568 Birr/quintal, respectively, in January 2006 to
478 and 678 Birr/quintal in January 2007.(For details see annex 7). A fluctuating pattern is
observed on this growing price trend. The intensity of this fluctuation is measured by standard
deviation and coefficient of variations. 39
Table 6.1 Average local retail and producers price of sesame

Parameters Price
Retailer Producer
Average price 665.0 452.1

Standard deviation 91.2 51.7

Coefficient of variation 13.7 11.4

Source: parameters estimated from CSA price data 2005 – 2007

At national level, the producers price vary on average by about Birr 134 per quintal and the
retailers price also vary by about Birr 362 per quintal exhibiting very high variation. The overall
variation on the producers and retailers price as measured by the coefficient of variation (CV)
indicate that retailers price is highly volatile than that of the producers price probably due to the
speculative nature of retailers and their of better access to market information which may enable
them to adjust selling prices in accordance with the prevailing conditions of demand and supply
(see table 5.3 above). The growing demand in the world market for sesame and the available
capacity to expand sesame production could contribute more to the economic growth of Ethiopia.
Another untapped investment opportunity for Ethiopian sesame seed is adding value through
hulling. Sesame seed hulling is aimed at producing raw materials for the bakery industry. Hulled
seeds and bleached hulled seeds have a higher market value than untreated seeds. The value
added of hulled sesame seed compared to untreated seeds is USD180-200/ton (Winands and
Biersteker, 2007). According to the information obtained from Federal Ministry of Trade and
Industry, hulling facilities are very recent investments in Ethiopia. The potential of exporting
sesame seed under the organic farming label can be seen as a prospect by many stakeholders in
Ethiopia. However, there are only a few exporters of certified organic sesame seed. Given the
stiff competition in the global market, obtaining higher prices at several markets is indeed
challenging. In this regard, the Ethiopian Pulses, Oilseeds and Spices Processors and Exporters
Association (EPOSPEA) in which most of the major Ethiopian oilseed exporters are members, is
worth mentioning. This association is working to improve its market information systems of oil
seeds and networking of local enterprises with foreign importers. The association also organizes
workshops to share knowledge within the supply chain in order to better anticipate on critical
market issues.

6.4 The performance of sesame supply and sales in the ECX market
As mentioned earlier, sesame is included in the ECX trading list. However, sesame trading has
started operation only recently (May 2009). Since the start of the trading up to the compilation of
this report, sesame was traded 3 times in the exchange platform. The type of sesame traded was
HS1 and the total volume sold was 1000 quintals. The price ranges between Br. 1400-Br. 1500
per quintal. In this operation, a total of 18 traders had participated, of which seven traders were
involved in either buying or selling of sesame. The total value of sesame transacted in those days
was Br. 1.46 Million. Both the amount traded and the number of participants involved was low,
but it can be regarded merely as a good start. 41
In the discussions held with the head of the Ethiopian Pulses Oilseeds and Spices Processors and
Exporters Association (EPOSPEA) and in an interview with members of the exchange during the
crop assessment study, they were asked why the participation of the registered traders was so
low. In their response, they disclosed that the major bottleneck for the participation of the traders
in sesame and other cereals trading was the tax levy of VAT set by the Revenue and customs
Authority which is to be paid immediately after a transaction is performed in the ECX platform.
Though the amount paid in VAT during transaction is expected to be repaid to the exporter, the
long time taking process of refund had created inconvenience on the traders who compete with
other non VAT traders in the parallel (over the counter) market. Moreover, the 15% VAT
payment during transaction is said to be creating a huge tied up working capital which could
have been used for expanding the trading activity. Therefore, both the opportunity cost of capital
as well as the direct cost in the form of interest expense to the banks might have restricted the
traders to involve in the ECX platform up to expectation. The interviewed members of the
business community had also suggested the introduction of voucher payment system (just like
the case of coffee) as a way out of the problem. Cognizant of this problem, the Ethiopian
Commodity Exchange Authority has recently taken prompt actions to fine tune the entry barriers
to ECX trading system. However it is recommended that a thorough study need to be conducted
to find out the real problems hindering traders to participate in the ECX trading system.

Major challenges in sesame production and marketing

7.1 Problems related to sesame production
7.1.1 Erratic and inadequate rainfall and Incidence of crop pests and diseases
As motioned earlier, the productivity of the crop is highly dependent on the amount and
distribution of rainfall. Problems related to rainfall intensity and incidence of crop pests and
diseases are affecting production and productivity.
7.1.2 Lack of input supply and extension services
Though efforts were made to improve sesame seed varieties through agricultural research,
inability to provide market demanded improved and appropriate varieties is still an outstanding
problem. Sesame productivity is low due to low level of extension service. Harvesting requires a
high demand of labour force. In the major producing areas, there is a shortage of daily labourers
during peak periods due to different health hazards. Illegal trading of farm oxen has also resulted
in shortage of plough animals. A high cost of fuel and machinery spare parts for commercial
farms is said to be an obstacle especially in Humera, Abderafi and Delello areas. Credit facilities
are lacking because of the absence of financial institutions in the high potential areas. Absence of
modern warehouses in the nearby areas has resulted in mishandling of output. Producers are
unable to build their own storage devices due to tenure insecurity. This in turn resulted in the
absence of soil and water conservation measures and planting permanent crops.
7.2 Major constraints in sesame marketing
From the nature of the value chain and the discussions held with the Ethiopian Pulses, Oil seeds
and Spices Processors and Exporters Association (EPOSPEA) it was learned that sesame market
in Ethiopia has the following major challenges.
 The low productivity as a result of erratic rain fall has reduced the supply of sesame and
quality of the seed.
 Inadequate market infrastructure such as ware houses and road net works raised transport
costs and the competitive edge of the commodity.

 Extended supply (value) chain reduced the profit margin of producers and thereby
hindered their incentive to produce more.
 Delay in the provision of credit for working capital has resulted in inability of
cooperative unions to purchase sesame when prices are declining. Some of the
interviewed members have also mentioned the shortage of capital as a major constraint to
involve in the ECX market.

 Uninformed or misinformed decision on stock levels resulted a wrong speculation of

price exposed farmers and wholesales to price risks. In a recent field trip assessment held
in Amhara region, it was learned that cooperative unions and private traders of sesame
purchased the product immediately after the harvest season at a high price based on last
year’s price, but the price was reduced thereafter. This has resulted in holding back of the
produce and their capital was tied up.

 Smallholder producers remained in a low bargaining position due to the absence of

market information on the current status of local and international price of sesame.

 Oil crushing and filtration process needs efficient technology and quality of work at this
point of activity seems unhealthy. There is no packing of the edible oil with standard
packing materials except collecting with big metal tankers. There is no technology that
helps to check standard and quality.
 At processors levels companies complain about high levels of competition with oil
coming into the country through imports and food aid. Even the existing installed
processing capacity is underutilized due to sustainable quality supply. At traders’ levels,
 the seasonal purchasing capacity appears to be a major constraint due to the absence of
credit facilities.

 The Ethiopian Pulses, Oil Seed, and Spices Processors Exporters Association describes
the present problems as follows:
 Low awareness level of producers and traders as well as lack of market network has
restricted the level of participation of actors in the exchange market.

 Quality problem, market fluctuation and holding back of produce during the good market
season, introduction of VAT, lack of trade ethics (adulteration) restrained sustainable
supply.

 Price dictation by the brokers in sesame and holding back of produce by regional
enterprises during peak season could not enable benefit from very good sesame price on
international market (about 930 USD/tone) in the year 2007.
With the increasing importance of sesame seed as a major contributor to foreign exchange
earnings, it will be of vital importance to curb the aforementioned problems at all levels.