| Abstract: | The main objective of the study is to explore the roles of smallholder farmers in the import substitution and industrialization of Ethiopia. The assessment of the current status of the malt barley chain, key players in the chain, supports provided and supports required in the future, competitiveness of the Ethiopian malt barley and key bottlenecks and challenges of the malt barley.
Sample survey was conducted with 150 smallholders located in the three zones – Bale, Arsi and West Arsi using purposive sampling. Focus group discussions and key informant interviews were also held with Breweries, Maltsters, Bureau of agriculture, ATA/OACC, private organizations, MFIs and NGOs who are active in supporting the malt barley value chain in the study area. Hence, both quantitative and qualitative data was collected. Quantitative data was scrutinized, summarized, verified, edited and analyzed using latest Statistical Package for Social Science ((IBM SPSS Statistics Version 23).
The study disclosed that the new varieties introduced by HEINEKEN in collaboration with ATA and EIAR have revolutionized the malt barley sector in terms of enhancing productivity and quality of malt barley and enchanting the income of farmers. The study found out that the mean productivity per hectare for all malt barley varieties in the three zones is 39 quintals as opposed to 18.7 quintals per hectare in 2013 which is 109% increase. In 2016 purchase season AMF fully got its raw material supply locally and Gondar malt factory secured 30% of its supply. The study estimates that in the 2017 collection season, the expected production for the market is beyond the capacity of the local malting companies and hence need an urgent solution from the government to attract new Maltsters. The local malting capacity covers only 35% of the total national malt consumption during this study and the remaining 65% is import. Local malt barley is 15% more expensive than imported malt barley and local malt is 11% expensive than imported malt.
The study found out that almost 99% of the local malt barley is sourced from smallholders and still there is huge potential to use smallholder farmers to realize self-sufficiency and
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even think of export after some years (Most probably 2021). The productivity and quality of barley sourced from smallholders is by far greater than that of the large farms that are engaged in malt barley production.
Malt barley became one of the key commercial commodities for farmers of the study area and the percentage malt barley sold to the market is increasing from year to year. In 201/16 marketing season, more than 87% of the malt barley produced by farmers was sold to Breweries and Maltsters. It was also found out that the new varieties (90%) are purely used for market instead of consuming it at home. Farmers put in place their own mechanisms of balancing producing for market and for consumption and they confirmed that producing malt barley for the industry do not affect their food security efforts.
Compared to the current situation, farmers are looking for the enhanced role of farmers’ organization, private organizations and financial institutions in the malt barley value chain and the role of NGOs and government offices should be moderate. Improved seed, finance, pesticides/herbicides, extension support and market linkage are identified as key supports required to realize the self sufficiency of the country. Currently, the role of formal financial institutions in the malt barley is meager – only 4% of the respondents indicated that their source of credit is from formal financial institutions (MFIs). It was found out that irrespective of the contract they have about 58% of the respondents store their barley for more than 2 months. The reasons forwarded are it is saving mechanisms (sell when cash is needed), speculating/waiting for better price, wait the planting season to sell as seed with higher price and keep for food security/consumption until make sure that the next season looks ok. Hence, the companies pushing for strict delivery time hardly work in the study area. Contract enforcement is hardly available especially with individual farmers.
To build sustainable and competitive malt barley value chain, focus should be given to smallholders, enhance their production and productivity, modernize the marketing system and government need to incentivize breweries that are developing local barley chain and using local barley. Currently there is a competitive disadvantage for the breweries that are involved in local barley. |
