See discussions, stats, and author profiles for this publication at: https://www.researchgate.net/publication/359578683 Soybean Value Chain Analysis in Ethiopia: A Qualitative Study Research Report Number: 134 Technical Report · March 2022 CITATIONS READS 0 50 7 authors, including: Rehima Mussema Samuel Diro Ethiopian Institute of Agricultural Research Ethiopian Institute of Agricultural Research 17 PUBLICATIONS   105 CITATIONS    25 PUBLICATIONS   40 CITATIONS    SEE PROFILE SEE PROFILE Beza Erko Dessalegn Teshale University of Pretoria 13 PUBLICATIONS   23 CITATIONS    8 PUBLICATIONS   9 CITATIONS    SEE PROFILE SEE PROFILE Some of the authors of this publication are also working on these related projects: Production Economics View project Modernizing Ethiopian Research Crop improvement View project All content following this page was uploaded by Samuel Diro on 30 March 2022. The user has requested enhancement of the downloaded file. Soybean Va lue Chain Analysis in E thiopia: A Qualitativ e Study Research Report Numbe r: 134 Rehima Mussema Samuel Diro Beza Erko Desalegn Teshale Regasa Dibaba Abush Tesfaye Lema Zemedu Soybean Value Chain Analysis in Ethiopia: A Qualitative Study © EIAR, October 2021 ኢኢኢኢ' 2014 Website: http://www.eiar.gov.et Tel: +251-11-6462633 Fax: +251-11-6461294 P.O.Box: 2003 Addis Ababa, Ethiopia ISBN: 9789994466825 Copy editing and design: Kibrom Birhane Table of Contents List of Tables.........................................................................................................................................I List of Figures .......................................................................................................................................I Acronyms and Abbreviations ............................................................................................................. II Foreword ........................................................................................................................................... IIII Executive Summary............................................................................................................................ V 1. Introduction ..................................................................................................................................... 1 1.1. Background ............................................................................................................................ 1 1.2. Problem Statement ................................................................................................................ 2 1.3. Objective ................................................................................................................................. 3 1.4. Significance of the Study ........................................................................................................ 3 1.5. Scope and Limitations ............................................................................................................ 4 2. Methodology ................................................................................................................................... 4 2.1. Study Areas............................................................................................................................. 4 2.2. Data Types and Sampling Technique ................................................................................... 6 2.3. Data Collection Methods ........................................................................................................ 6 2.4. Method of Data Analysis ........................................................................................................ 7 2.5. Conceptual Framework of Value Chain ................................................................................ 7 2.6. Value Chain Study Approaches ............................................................................................. 9 3. Results and Discussions .............................................................................................................. 10 3.1. Soybean Seed System ......................................................................................................... 10 3.1.1. Formal Soybean Seed System .................................................................................... 10 3.1.2. Informal Seed System .................................................................................................. 11 3.1.3. Seed Supply Mapping the Study Areas ....................................................................... 12 3.2. Soybean Grain Production in Ethiopia ................................................................................ 14 3.2.1. Soybean Production Trend in Ethiopia ........................................................................ 15 3.2.2. Soybean Production in the Study Areas ...................................................................... 17 3.3. Post-Harvest and Storage Practices ................................................................................... 24 3.4. Soybean Processing Companies......................................................................................... 24 3.4.1. BBZ Food Manufacturing S.C. ..................................................................................... 24 3.4.2. FAFA Foods .................................................................................................................. 27 3.4.3. East African Lion Brands .............................................................................................. 28 3.4.4. Alema Koudijs ............................................................................................................... 29 3.4.5. Guts Agro-Industry ........................................................................................................ 29 3.5. Soybean Marketing ............................................................................................................... 30 3.5.1. Characteristics of Local Soybean Marketing ............................................................... 30 3.5.2. Soybean Export............................................................................................................. 31 3.5.3. Soybean Marketing Channel ........................................................................................ 33 3.6. Value Chain Governance ..................................................................................................... 37 3.6.1. Actors along the Soybean Value Chain ....................................................................... 37 3.6.2. Supporters along the Soybean Value Chain ............................................................... 40 3.6.3. Enablers along the Soybean Value Chain................................................................... 44 3.6.4. Institutional Support Services ....................................................................................... 46 3.7. Soybean Consumption and Preference .............................................................................. 49 3.7.1. Farm Household Level Soybean Utilization ................................................................ 49 3.7.2. Soybean Utilization in Towns ....................................................................................... 50 3.8. Policy Environment for Soybean Trade ............................................................................... 51 3.9. Opportunities and Challenges.............................................................................................. 52 3.9.1. Opportunities in the Soybean Production and Marketing ........................................... 52 3.9.2. Challenges in the Soybean Value Chain ..................................................................... 53 4. Conclusion and Recommendation .............................................................................................. 55 5. References.................................................................................................................................... 60 List of Tables Table 1: Sample study areas ............................................................................................................. 5 Table 2: Sample chain actors and supporter organizations ............................................................. 6 Table 3: Soybean production in northwest Ethiopia in 2017/2018 cropping season.................... 18 Table 4: Major soybean producing areas of Assosa zone in 2017/18 cropping season .............. 19 Table 5: Soybean production and area coverage in southwest Ethiopia in 2017/18 ................... 21 Table 6: Cropping and marketing calendar of soybean on the study areas ................................. 23 Table 7: Processing capacity in 2017/18 ........................................................................................ 26 Table 8: ECX and BBZ company soybean quality attributes ......................................................... 26 Table 9: ECX’s soybean Transaction .............................................................................................. 52 List of Figures Figure 1: Map of the study areas (districts)....................................................................................... 5 Figure 2: A typical value chain for agricultural products .................................................................. 7 Figure 3: Soybean seed supply channel ......................................................................................... 12 Figure 4: soybean seed value chain map ....................................................................................... 14 Figure 5: Trends of soybean production in Ethiopia ....................................................................... 16 Figure 6: Soybean productivity in Ethiopia...................................................................................... 16 Figure 7: Soybean export trend in Ethiopia in metric tones ........................................................... 31 Figure 8: Export destinations of Ethiopian soybean (percent) ....................................................... 32 Figure 9: Soybean marketing channels before ECX ...................................................................... 34 Figure 10: Soybean value chain map .............................................................................................. 36 i Acronyms and Abbreviations ASARC: Assosa Agricultural Research Center ATA: Agricultural Transformation Agency BoA: Bureau of Agriculture CASCAPE: Capacity building for scaling up of evidence-based best practices in agricultural production in Ethiopia CBSM: Community Based Seed Multiplication CHAI: Clinton Health Access Initiative CTA: Technical Centre for Agricultural and Rural Cooperation CSA: Central Statistical Agency DA: Development Agent ECX: Ethiopian Commodity Exchange EFY: Ethiopian Fiscal Year ESE: Ethiopian Seed Enterprise ETB: Ethiopian Birr FAO: Food and Agricultural Organization FGD: Focus Group Discussion MoH: Ministry of Health IAR: Institute of Agricultural Research JARC: Jimma Agricultural Research Center KII: Key Informant Interview MoANRM: Ministry of Agriculture and Natural Resource Development MoT: Ministry of Trade MFI: Microfinance Institution NGO: Non-government Institutions PARC: Pawe Agricultural Research Center Qt: Quintals USDA: United States Department of Agriculture ii Foreword Soybean is one of the most important crops in Ethiopia. It contributes nearly 18% to the country’s total oilseed production and accounts for only 6% of the area planted to oilseeds. The area allocation for soybean, and its production, as well as productivity, are increasing under smallholder farmers in Ethiopia; production increased about 18-fold between 2007/2008 -2018/19, and the yield was 1 ton that increased to 2.3 tons per hectare in the same period. The soybean production is expected more than Niger seed production in 2020/21; estimated to increase by 14 and 2%, respectively, over 2019/2020. The crop is a multiple-purpose crop; an important source of protein and raw material for industries to produce food, feed, and oil. The USDA predicts that the production of soybean will increase in Ethiopia, partially due to requirements for the raw material in oil, livestock feed- soybean meal for poultry production. Ethiopia’s oilseed sector plays an important role in generating foreign exchange earnings. Oilseed crops are the third largest foreign exchange-earners, next to coffee and cut flowers. Sesame, soybean, and Niger seed contribute to nearly 17% of Ethiopia’s agricultural exports; the volume of soybean export increased more than double between 2013/14 and 2018/19. Moreover, the crop can fix nitrogen that improves soil fertility. Soybean has a long history in Ethiopia and its research started in the 1970s. About 26 varieties were released between 1981 and 2016; however, few of the varieties reached the producers. Soybean is also the most important oil crop worldwide. Demand for soybeans is projected to continue growing in the coming years, due to the consumption of meat and soy-based health products are on the rise, while population figures are scheduled to increase, and policy-makers are supportive of biodiesel as a fuel alternative. World soybean demand increased from 108.072 to 124.511 mill MT between 2018/19 and 2020/21. Soybean is increasingly becoming popular and serving as an alternative food and cash crop in the local and international markets have allowed getting the attention of the government and considered in the ECX market since December 18, 2018, in Ethiopia. Since January 2019 soybean, which is considered an industrial product, it is trading at ECX. Despite its position and potential, and recognition the crop faces several challenges related to production which include; shortage of improved seed, the limited number of technologies were used by farmers, limited extension service, weed, the occurrence of diseases, and pests. The shortage of quality grain supply, inefficient marketing system, and the high involvement of informal brokers/commission agents in local and international markets are the major marketing-related challenges. iii Ethiopian soybean is considered organic and GMO-free that fetches a better price in the international market; however, there is no laboratory certification service to verify the quality. Soybean is increasingly becoming popular and serving as an alternative food globally, however, soybean product consumption in Ethiopia was insignificant in urban areas due to the absence of awareness, and the unusual flavor and smell of soybean products. In rural areas, soybean consumption at the house level is almost nil due to the tedious nature of soybean food (milk, cheese) processing, limited skill, and knowledge on how to prepare food from soybean. Agricultural Economics Research identifies justifiable solutions to these challenges by studying the soybean value chain in production potential and marketing areas. Therefore, this research contains valuable socio-economic information related to production, marketing, and consumption, and forwarded recommendations in Ethiopia. This research output is to be used as an essential source of information for actors who are involved in the soybean value chain including farmers, and researchers. Ultimately, the use of information from this research will encourage smallholder as well as commercial farmers to boost soybean production and productivity in Ethiopia. Agricultural Economics Research made this research and produce its publication is timely because it will help a wide range of stakeholders who are engaged in soybean production, marketing, and industries what to produce oil and other soybean products. iv Executive Summary Soybean has a long history in Africa and was first introduced in Egypt in 1858 and first recorded in (SSA) during 190. The crop was introduced in Ethiopia in the 1950s and its research started in the 1970s. Soybean is an economically important leguminous crop in Ethiopia. It is considered a cash crop and its value is underlined by the crop's worth, in terms of foreign earning. Besides, it serves as a raw material for food and feed factories as well as the crop has an important source of protein for both humans and livestock. It has also a sustainable contribution to the improvement of soil fertility. More than 90% of the crop comes from Amhara, Oromia, and Benishangul Gumuz regions where the study was conducted. The finding from this research indicates that out of 26 improved soybean varieties available in the country only eight (Belesa 95, Pawe-1, clarck 63 K, Afgat, Keta, Korme, Ethio-Yugoslavia, and Didesa) are used by farmers. Different value chain actors (producers, assemblers, collectors, wholesalers, brokers/commission agents, exporters, retailers, ECX, research centers, MFI, NGOs, input suppliers, etc.) participated in the soybean value chain that contributes to the improvement of soybean production, productivity, and marketing. This can be justified by the increment of area allocation, production, and productivity of soybean over the past 15 years, and the ever-increasing demand for the crop in the local and export market. Nonetheless, the demand still exceeds the current production. Demand for soybean in the international market is also increased from 108.072 to 124.511 mill MT between 2018/19 and 2020/21. Its production, therefore, provides a promising opportunity for soybean smallholder farmers’. The study verified that it has potential for growth as demanded by food and feed agro- industries and the possibility of increasing consumption need as it provides high nutrition at a lower cost than the most common protein sources. Despite its contribution and opportunity, the study identified some challenges encountered by soybean value chain actors. Poor post-harvest management (PHM): Poor PHM practices that cause poor quality and increase the rejection rate of the supply in the local and international market. Limited access to technologies: From the available 26 soybean varieties, very few were reached to farmers and the majority of farmers did not use inorganic fertilizers and bio-fertilizers due to limited supply, lack of awareness, and weak distribution system. Marketing constraints: Before the intervention of ECX, brokers/commission agents used to manipulate the marketing system that led to a high fluctuation of v soybean prices and causes a price hike at the central market. Malfunctioning of commission agents creates a gap to take advantage of the quality of supply of cooperatives or unions there were a weak soybean supply chain and a limited number of buyers. Soybean price has high fluctuation mainly, due to its seasonal demand. Before ECX intervention farmers lacked market information on suppliers and buyers. Sometimes farmers were forced to store their grains at home for some time. The weak linkage among the value chain actors: Actors in the value chain do not have a strong platform to discuss and share information, ideas, and experiences about soybean. Low household consumption: Research centers and different NGOs have given training on soybean food processing, however, soybean product consumption in rural areas is almost nil due to lack of continuous training on soybean food processing. Its tiresome nature of the processing of milk and cheese at a household that is mainly done by women limits to use consumption at the household level. Therefore, farmers do not nutritionally secure from their soybean production. Similarly, in urban areas, consumers do not maintain nutrition security from soybean products (Sosi, milk, and oil) that are available in the market. The demand for the products is low and the consumption is limited due to a lack of information on the availability of soya products and the uncommon taste and smell of the oil. These lead to low demand for soybean oil (local and imported) while sunflower oil demand was high from the supermarkets. Therefore, supermarkets did not want to buy soybean oil in the wholesale market; however, supermarkets were forced to buy some additional amount of soybean oil to get sunflower oil. Lack of organic soybean certification: Is a problem for exporters as some international buyers require a certificate for an organic product. Weeds, diseases, and pests: These are critical issues for the producers that reduced production and productivity, however, the herbicide and pesticide supply is limited. Usually, farmers do not use these chemicals to control weeds, diseases, and pests because of the limited availability in the market. Seed system: The shortage of quality seeds of the improved varieties has been one of the major factors limiting soybean production and productivity. However, ESE and private seed enterprises complain about low demand for the seed that they produced. Thus, they produced mostly for rotation purposes. As a result, more than 70% of the seed produced in ESE was sold as grain. vi Other problems: Limited access to bio-fertilizer, especially, in Northwest Ethiopia, poor coverage of market infrastructure, such as bad road conditions create low interest of soybean traders to buy from a remote area; high transaction costs of soybean export, lack of access to credit and loanable fund for soybean trading were some of the soybean production and marketing bottlenecks raised by actors along the value chain. It might be wise (in this executive summary) to put the findings along the value chain: Input, output, market (input/output) and consumption. Then you can outline the challenges associated with enabling factors as well as issues cutting across the VC of soybean. Then it is easy to grasp the weight of the problem along the chain and which needs prior attention and so on. vii 1. Introduction 1.1. Background Soybean is considered the most important oil crop worldwide and is grown mainly for its protein and oil-rich seed. Soybean production in Africa, however, has largely lagged behind the increases made in the western hemisphere (Brianand and Andrew, 2019). It has a long history in Africa with its first production on the continent reported during 1858 in Egypt and the first recorded production in sub-Saharan Africa (SSA) in South Africa during 1903 (Shurtleff and Aoyagi, 2009). Soybean production began in Ethiopia in the 1950s and its research started in the 1970s (Mesfin and Abush, 2018; Addisu and Ermias, 2017). Soybean is a multipurpose crop both under small and large landholder families due to its increased demand for oil and food purposes. It is also suitable for cropping systems and sources of income. Soybean seeds are an important and economical source of protein in the diet of many developed and developing countries. It can be used for a variety of purposes including for the preparation of different kinds of soya bean food in the household, for processed soybean milk, and feed in Ethiopia. In addition, the poultry industry uses soybean for feed production. The crop residues are also rich in protein and are good feed for livestock or form a good basis for compost manure. Soybean grain often has a good market demand and it is a very important industry worldwide. Furthermore, it is a source of raw material for the processing industry and there is significant potential for soy-based consumer products such as soymilk, and soy-based protein and meat substitute products to increase market share in the Ethiopian market. The fact that the oil content of soybean is high (minimum content of oil 20% of the dry grain), makes it the leading oil crop, next to palm. The oil cake that is usually the residue of the oil crushing is a very nutritious feed supplement for livestock, poultry, fisheries, and swine farms. Soybeans have an exceptional nutritional and functional food profile that is very nutritious and contains on average 40% protein (N2-Africa, 2014). Erana (2020) compare soybean with other protein sources and verified that soybean ranks first among grain legumes with 918 gm. of protein for 1 dollar whereas chicken has 76 gm of protein for 1 dollar. Soya-based foods are considered to be nutritious and healthy based on their nutrient composition (UNCTAD, 2016). Soybeans are highly digestible and are comparable to animal protein in terms of protein quality (UNCTAD, 2016). Protein contents range from 14.3% to 38% (Messina, 1999). Soya foods are also a good source of mineral components such as magnesium, potassium, sodium, calcium, sulfur, and phosphorus. Mineral contents can vary 1 widely due to the type of soil and the growing conditions for the soybean (UNCTAD, 2016). Soybeans are quite high in fat (7.7% to 47%) compared with other beans and are considered comparable to that of animal protein (Messina, 1999). Soybean protein provides all the essential amino acids in the amounts needed for human health and animal nutrition. Because of its ability to fix nitrogen in the soil, soybean plays an important role in improving soil fertility. The crop is seen to be useful for the sustainability of the major cereal-based cropping systems in the world. The production of soybean holds great promise in improving agricultural systems in sub-Saharan Africa (Liana and Peter, 2019) and it counters the effects of depletion of plant nutrients in the soil resulting from continuous mono-cropping of cereals in Ethiopia. The introduction of a soybean crop to several countries has led to a shift in their cropping systems from a mono-crop to a soybean cereal (other crops) system. This cropping system change has resulted in enhanced cropping intensity that in turn resulted in increased unit area profitability (FAO, 2002). Recently, in 2018/19, soybean production sharply increased which is 18 times more than the 2007/08 production in Ethiopia (CSA, 2008, 2019); Ethiopian soybean has a great demand in the international market due to its GMO-free product. Ethiopian soybean has a competitive edge in certain supply chains that the GMO-free soybean commands a premium of up to 150 USD/ton (Lehr and Yared, 2018). 1.2. Problem statement Evidence indicates that area allocation for soybean and its production increased over the past 15 years. Production of soybean also has been increasing in recent years but has not yet met the ever-increasing demand for the product in the local and export market both quantitatively and qualitatively. Recently, soy-based industries and agro-industrial have emerged in Ethiopia. Oil is extracted for human consumption and industrial uses and defatted soy meal is converted into various protein-rich foods and feed products. Soybean protein concentrate, protein isolate, and textured protein have found their way into multifarious commercial food industries. Being a versatile crop with innumerable possibilities, soybean can support many agro-based industries including the recently emerging industrial parks. Even though increasing recognition of the benefits has in improving food security, nutrition, serve as a source of foreign earning and important as raw material for industry and creating more sustainable for the improvement of soil fertility food systems, there is, however, a piece of limited information on the current status, supply, production potential and challenges along the soybean value chain. Therefore, this study discovers information that may help to 2 contribute to the improvement of soybean value chains and support actors along the value chain. Most literatures and researches in the past have focused on soybean breeding, production, and some worked on marketing. Some studies focused and conducted on soybean value chain in a specific location at different times: (Kifle et al., 2018) at Chewaka district, (Addisu and Ermias, 2016) in Metekel Zone; (Diro and Mulugeta, 2015) in Jimma zone and (Samuel et al. 2018] in Ilu-Ababora zone. Some other value chain studies were mixed with other value chain studies such as pulses and oil crops (Van den Broek et al., 2014; Wijnands et al., 2011). In one or another way, these studies have different limitations which include a gap in study coverage and scale. Also as noted in different formal and informal studies, farmers raise the problem of demand for soybean grain what they produce; while on the other side, processors, and exporters complaining about the supply and quality of soybean. Soybean is a major cash crop that is mainly produced by smallholder farmers and to some extent by private farmers. However, the farmers do not have the expected benefit as of having potential because of production and market-related problems. Therefore, this study aims at the challenges, opportunities, prospects of soybean production and marketing. 1.3. Objective The main objective of the study was to analyze and characterize the soybean value chain in Ethiopia, while the specific objectives are: To develop value chain maps and identifies the major soybean value chain actors, roles and status. To identify constraints and opportunities of actors in the soybean value chain. To identify strategic intervention areas that help improve the performance of the value chain. 1.4. Significance of the study Soybean is an important crop for food, feed, and income generation. The findings of this study will have a high contribution in filling the knowledge gap regarding the soybean value chain in Ethiopia. The significance of the study is identifying strategies that are beneficial and improve soybean production and marketing bottlenecks. This in turn helps increase soybean production, adoption, income generation, through improving the chain constraints and strengthening the various chain actors and supporters that will help improve the supply of quality soybean for processing and export. The results are likely to be used by national and regional research centers, other organizations, and agencies, such as district, zonal and regional departments of rural developments, NGOs, and other 3 organizations working in the areas of rural household poverty reduction and food security. Over the long term, this research will inform subsequent and further studies. 1.5. Scope and limitations The study was confined to three soybean potential regions: Oromia, Amhara, and Benishangul Gumuz. Due to time and resource constraints, the study did not address the Gambela region and east Wollega zone where soybean has high potential. The study mainly emphasized a qualitative survey to identify soybean production and marketing systemic problems. Getting pertinent information from commission agents/brokers was a major challenge, however, the study tried to collect the information indirectly and by making triangulation. The study focused on 2017/2018 production season data and relied on the farmers’ ability to recall past information, which was also a challenge. Soybean production is concentrated in the specific zone of production areas. However, the study was unable to find an organized zonal level production data from CSA in 2017/18. 2. Methodology 2.1. Study areas The study was conducted in six zones from three major soybean-producing regions of the country: Jimma, Buno Bedele, and West Shoa zones from the Oromia region, Awi zone from Amhara region, and Metekel and Asosa zones from Benishangul Gumuz region (Table 1). 4 Table 1: Sample study areas No. Region Zone District 1 Oromia (South west) Jimma Tiro Afeta and Kersa Buno Bedele Bedele and Chewaka West Shoa Bako Tibe 2 Amhara (North west) Awi Jawe Metema Gonder 3 Benishangul Gumuz Metekel Dangur (West) Asosa Bambasi and Asosa 4 Central Ethiopia Addis Ababa and surrounding This study was conducted on a wider scale by referring 2017/2018 main production season, which touches some production and market potential zones and districts from Oromia, Amhara and Benishangul Gumuz regions. Moreover, commission agents, processors and traders are considered from Addis Ababa. The geographical location of the study areas is shown in Table 1. Market survey in Addis Ababa was primarily targeting Ehil Berenda (Mesalemiya) where different types and large volumes of grain take place. The data from different actors, agencies, ministries and enterprises were also collected from districts, district towns and Addis Ababa. Figure 1: Map of the study areas (districts) 5 2.1. Data types and sampling technique Both primary and secondary data were used for the study. The sampling frame for the study areas was purposely selected and considered based on the soybean production and marketing potentials in the country. Farmers used for focus group discussion (FGD) and key informant interviews (KIIs) were conducted with other actors in the survey. Actors in the soybean value chain were selected randomly in collaboration with Zone, Woreda, and Kebele experts in the selected study area. Actors in the survey included producer farmers, input suppliers, traders, cooperatives, processors, NGOs, government organizations, exporters, etc. from different locations (Table 2). The consumer survey was also conducted at Shoa Supermarket and a discussion was made with the manager of the supermarket. Table 2: Sample chain actors and supporter organizations Sample data source Jimma Buno West Metekel Asosa Awi Addis and Bedele Shoa surroundings Number of farmers’ FGD 2 2 1 1 7 1 Commercial farms 1 2 2 1 Traders/commission 9 7 6 3 4 agents Coops/unions 3 3 2 2 4 1 Supermarkets and 3 11 consumers Exporters 4 Processors 6 ECX 1 1 Mistry of trade 1 1 1 Ministry of Experts 2 2 1 1 1 1 2 agriculture Development 2 2 1 5 6 2 - agents Government seed 1 enterprises Private seed enterprises 1 NGOs 1 1 2 1 Input suppliers 1 1 Federal coop agency 1 ATA 1 Microfinance institutions 1 2 Source: survey result 2.2. Data collection methods Qualitative and quantitative primary data were collected using checklists from actors along the value chain through FGD and KII. Using desk review, secondary data were also collected from different sources to supplement the primary data. 6 The data collected for the study included farmers’ access to land, labor, inputs, credit, extension services, markets and technology/inputs, soybean production practices, technology use, harvesting and post-harvesting issues, and agricultural output transporting, marketing, processing, consumption and value addition issues. Soybean supply chains, market outlets, market share, and market chain, major constraints, and opportunities in soybean production and marketing information were also collected. A national soybean stakeholder platform meeting and different stakeholders along the soybean value chain were convened and discussed the major production, market, processing challenges, and directions. 2.3. Method of data analysis Qualitative and quantitative data collected from value chain actors through FGD and KII was summarized using descriptive statistics. The study used descriptive statistics and graphical tools for the secondary data collected for soybean production and marketing. Constraints and opportunities for soybean production and marketing/trade were also summarized along the value chain qualitatively. 2.4. Conceptual framework of value chain The value chain concept lays the idea of actors connected along a chain producing and bringing goods and services to end consumers through a complex and sequenced set of activities. Value chains include all of the vertically linked interdependent processes that generate value for the consumer, as well as, horizontal linkages to other value chains that provide intermediate goods and services. Value chains focus on value creation, typically, via innovation in products or processes as well as marketing and on the allocation of the incremental value. How value benefits are allocated and reallocated is the subject of much of the development support to value chains. A value chain is simply a useful way of identifying how the farmers producing and actors at different levels of the value chains are interacting in producing, buying, selling, facilitating, and processing soybean. These chains stretch from producers to consumers. As the product passes through several stages of the value chain, the value of the product increases (CTA, 2012). A typical value chain for agricultural products extends from input suppliers to consumers (Figure 2). 7 First Input Agricultural Wholesalers level Processors or Retailers Consumers supply production handling distributors Figure 2: A typical value chain for agricultural products Source: Gloy, 2005 8 According to Audet-Bélanger et al. (2013), three different levels can be recognized in a value chain. The first levels of activities are handled by value chain operators, which are the owners of the product at some stage in the chain. Operators include producers, collectors, processors, wholesalers, retailers, and consumers. The second level consists of service providers, which assist the operators in performing their tasks. Support functions that include input supply, financial services, quality assurance, extension, and research. The third level is the enabling environment that refers to the environment in which operators and service providers do business and service providers perform their functions, and include governance, legislative and regulative frameworks, and economic environment. It supports the operators in their activities with knowledge, inputs, finance, certification, research, and extension. Market-related infrastructure, policies, regulations, and business agreements are part of the enabling environment. 2.5. Value chain study approaches According to Kaplinsky and Morris (2001), the value chain study approach used depends on research questions and study objectives. Generally, four aspects of value-chain analysis have been applied in agriculture. I. Value chain mapping: a value-chain analysis systematically maps the actors participating in the production, distribution, processing, marketing, and consumption of a particular product (or products). This mapping assesses the characteristics of actors, profit and cost structures, and flows of goods throughout the chain, employment characteristics, and the destination and volumes of domestic and foreign sales. II. Identifying the distribution of benefits of actors in the chain: Through the analysis of margins and profits within the chain, one can determine who benefits from participation in the chain and which actors could benefit from increased support or organization. This is particularly important in the context of developing countries (and agriculture in particular), given concerns that the poor in particular are vulnerable to the process of globalization. III. Examining the role of upgrading within the chain: Upgrading can involve improvements in quality and product design that enable producers to gain higher value or through diversification in the product lines served. An analysis of the upgrading process includes an assessment of the profitability of actors within the chain as well as information on constraints that are currently present. 9 In addition, the structure of regulations, entry barriers, trade restrictions, and standards can further shape and influence the environment in which upgrading can take place. Possible forms of upgrading include process upgrading, product upgrading, and function upgrading. IV. Role of governance in the value-chain: Governance in a value-chain refers to the structure of relationships and coordination mechanisms that exist between actors in the value chain. By systematically understanding the linkages within a network, one can better prescribe policy recommendations, and further, understand their reverberations throughout the chain. The value chain approaches apply the different value chain study tools and steps, which parallels the approaches discussed above. Generally, six sets of tools are used: (i) the analysis starts with prioritizing a commodity for value chain development; (ii) mapping of the value chain; (iii) analysis of the value chain performance in terms of costs, prices, and margins; (iv) analysis of technology, knowledge and upgrading possibilities through assessment of gaps in technology and knowledge and existing or future opportunities; (v) value chain governance which is used to identify stakeholders influencing governance, rules and regulations and their enforcement and (vi) linkages among the stakeholder, referring to their relationships (Berg et al. , 2005). 3. Results and Discussions 3.1. Soybean seed system Seeds are the basic agricultural inputs. Particularly, quality seeds of any preferred varieties are the basis of improved agricultural productivity since it responds farmers need to increasing productivity and crop uses (Pelmer, 2005). Unavailability of quality seeds at the right place and time coupled with a poor promotion system are some of the key factors accounting for the limited use of improved soybean seeds which further contributes to low agricultural productivity in Ethiopia. 3.1.1. Formal soybean seed system The formal seed system is a system that involves the production of seeds using known sources of planting materials and undergoes inspection, validation, and certification process, and encompasses at least a breeding system that supplies initial planting material, licensed seed producers and regulatory system that certifies the produced soybean seed, and it is governed by strict regulations to maintain variety identity and purity as well as guarantee the physical, physiological, genetic and sanitary quality in Ethiopia. 10 The major actors in the formal soybean seed system include Ethiopian Seed Enterprise (ESE), cooperative/unions, and private seed companies that are playing a great role in soybean initial technology transfer to the end-users through quality seed distribution under the regulation of Ethiopian quality seed standards. The ESE mostly produced soybean seed based on the demand of farmers; particularly, commercial farmers and a small amount for NGOs are the main buyers. The Enterprise produced soybean mainly for rotation purposes. The ESE’s main source of basic seed for the multiplication of soybean was Pawe Agricultural Research Center (PARC). In 2017/18, ESE produced 197.2 tons of soybean seed on 324 hectares of land. However, about 70% of the seed was sold as grain through a formal tender process, because of lack of market demand for soybean seed. Unfortunately, during the year, the seed quality was poor due to poor germination/maturity of the crop. The rest (30%) was sold as a seed to farmers who brought a recommendation letter that verify he/she is a farmer- producing soybean, and sold to NGOs what to redistributed to farmers. The Enterprise used Nitrogen-Phosphorus and Sulfur (NPS) fertilizer for soybean seed production. Despite the fluctuation of quantity, seed production has been increasing for the last 10 years. The information from ESE is verified. Income from seed production was not attractive; for instance, the basic seed was Birr 1760 per quintal, and the certified seed was 1600 Birr per quintal in 2017/18; therefore, producing soybean seed was not attractive. The sales price is determined by the cost of production; however, the margin is not more than 10 Birr per quintal. 3.1.2. Informal seed system The informal soybean seed system under the Ethiopian context is defined as seed production and distribution along with the different actors where there is no legal certification in the process. These include retained soybean seed by farmers, farmer-to-farmer seed exchange, community-based seed multiplication and distribution, local seed business, NGO-based soybean seed multiplication and distribution, on-farm soybean seed multiplication by research centers and universities in the process of technology demonstration and pre-scaling out schemes. Therefore, currently, farmers in the study areas are believed to be depending upon the informal seeds system because of the absence of soybean seed companies that multiply, pass the steps of the certification process and transfer the initial soybean technology to the end-users. The study identified that the main sources of seeds for farmers were their own saved recycled seed, and some farmers accessed the seed from local/village markets or farmers to farmers' seed exchange. 11 The farmer to farmers’ seed exchange system was also the major seed source in many parts of soybean producing areas. This might be due to the weakness of the formal soybean seed system, i.e., the very weak existence of either the governmental or private seed companies in the study areas. Despite the availability of many soybean varieties in the country, the governmental or private seed enterprises have very low participation in the soybean seed system in the areas. The different research centers of the country that are found adjacent by major soybean producers’ area have been multiplying and distributing soybean seed and new soybean technology for all users in each season. Efforts have been made to provide high-yielding quality seed through research centers notably Pawe Agricultural Research Center (PARC), Jimma Agricultural Research Center (JARC), and Asosa Agricultural Research Center (AsARC). 3.1.3. Seed supply mapping the study areas The three research centers (JARC, PARC, and AsARC) tried to address soybean issues in the study areas. Figures 3 and 4 indicated that the research centers directly distribute seeds to farmers through technology promotion and pre- scaling-up programs. The research centers also reach farmers through groups of the community-based seed production system, Ethiopian seed enterprise, and Bureau of Agriculture. The Ethiopian Institute of Agricultural Research has taken an initiative through its research centers (Pawe, Asosa, and Jimma) for implementing the community-based seed production system in a cluster-based approach to satisfy the rapidly increasing demand for soybean seed. 12 Community based seed 1 Research centers multiplication Producers Community based seed Coops/ 2 Producer Research centers multiplication Unions Community based Agricultural Other 3 Research centers seed bureaus producers multiplication Seed enterprises Producers 4 Research centers Agricultural Other producers 5 Research centers Seed enterprises bureaus 6 Research centers Model farmers Other producers Figure 3: Soybean seed supply channel Source: Survey result, 2019 13 It was believed that CBSM and marketing enterprises could produce farmer- selected/preferred seeds, and thereby, strengthen and upgrade the current seed supply system at a time when the commercial seed system is not yet capable to meet the required amount of seed demand. Moreover, the community-based seed production system could be involved in multiplying seeds of locally tested and selected varieties based on farmers’ preferences, linking seed demand with seed production at the local level, and adopting appropriate seed quality standards relevant to smallholder farmers. Figure 4 showed that seed enterprises also became the source of soybean seed for commercial farmers as well as smallholder farmers. The study also verified that farmer-to-farmer soybean seed exchange was one of the major seed distribution systems of the producing areas. Community based seed Commercial multiplications farms Research Seed enterprises Coops/ Centers (private/Gov’t) Unions Smallholder farmers Smallholder Bureau of farmers agriculture Seed Seed Seed Seed provision production distribution utilization Support services Figure 4: soybean seed value chain map Source: Survey result, 2019 3.2. Soybean grain production in Ethiopia Ethiopia’s oilseed sector plays an important role in generating foreign exchange earnings for the country. Sesame, Niger seed, and soybeans are major export oilseeds that generated nearly $387.8 million for the country in 2018 (NBE, 2019). The Government-backed Integrated Agro-Industrial Parks has a growing demand for the seeds for cooking oil and livestock feed (USDA, 2018). Soybeans 14 contributed nearly 10% to the country’s total oilseed production and accounted for only 4% of the area planted to oilseeds. The major areas currently growing the soybean are Northwest, Western, and Southwest part of Ethiopia; notably, the main soybean-producing areas that production comes from Amhara (39%), Oromia (26%,) and Benishangul Gumuz (35%) in 2017/2018 (CSA, 2018). 3.2.1. Soybean production trend in Ethiopia Soybean contributes nearly 16% to the country’s total oil crop production and accounts for only 8% of oil crops area under smallholders in 2018/19 (CSA 2019). Trends showed (Figure 5) increasing trends of land allocated for soybean and its production. Especially since 2009 soybean land coverage is steeply growing. As indicated in CSA reports, most of this production growth was due to an increase in the area planted, moreover, improved technology, and practices contributed to production increase. Figure 5 indicated an increasing trend of soybean production under smallholders; it was estimated 8,401 metric tons in 2007/08 in Meher season; recently, 2018/19, soybean production is estimated at 149,455 metric tons; and the average production was grown by 73% in the previous year (CSA, 2019). Future production is expected to continue its upward climb and promising to respond to the rising demand. As qualitative research results indicated that processors faced a raw material shortage. This indicates soybean demand is expected to increase as demand in the international market, and industry demand for soy-based products (oil, Sossi, soymilk) increase. Soybean is used to make a variety of local foods as well as a corn-soy blend for emergency food assistance programs and as the livestock sector, particularly the poultry sector demands more soybean meal. 15 Area Allocation and Soybean Production Trend (2004/05-2018/19) 160 140 120 100 80 60 40 20 0 Figure 5: Trends of soybean production in Ethiopia Source: CSA, 2019 Soybean production and productivity are increasing from year to year (Figure 6). The productivity of soybean increased from 0.3 tons per hectare in 2004/05 to 2.3 tons per hectare in 2018/19 (CSA, 2019). This indicates that productivity increased may be due to the use of improved technologies and best practices adopted by smallholder farmers in addition to other factors that contribute to the productivity increment. Soybean yield trend (2004/05-2018/19) 25 20 15 10 5 0 Figure 6: Soybean productivity in Ethiopia Source: CSA, 2019 16 Quintal Thousands 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 3.2.2. Soybean production in the study areas Soybean production is concentrated in specific Zones and districts of Oromiya, Benishangul Gumuz, and Amhara regions of Ethiopia. The evidence indicated that the high potential for upgrading of commercial soybean production areas are Bedele, Chewaka, and Jimma zone (Wijnands et al, 2009). The recent evidence (Kumilachew and Mesfin, 2020) also verified that Chewaka districts in Buno Bedele Zone is one of the most suitable and prominent soybean production areas in Ethiopia. Processors and exporters also preferred soybean production that was sourced from different zones and districts based on their attributes like purity, size, and others. Therefore, the report is disaggregated by Zones and districts in the study areas. Status of soybean production in Northwest Ethiopia Based on the agricultural office of Metekel, and Awi-Jawi zones, the total soybean production of the study areas in Benishangul Gumuz region was 73,904 tons and in Jawi district in Amhara region was 73,341 tons in the 2017/18 production season (Table 3). Soybean is also produced by commercial farmers operating in the study areas. In the 2017/18 crop season, three investors produced 2,849.7 tons of soybean in Metekel and Awi zones of Benishangul and Amara regions, respectively. The figures imply that the corridor has a very high potential for soybean production, and is expected to continue as the largest supplier of soybean for processors and traders in the country. Farmers practiced one to three times plowing includes during herbicide spray (roundup) and sow the soybean seed following a single plow. Broadcasting is a common method of soybean sowing in these areas. According to CSA report, soybean production in 2016/17 was estimated at 18,717.36 tons in Metekel zone which accounted for 64% of soybean production in Benishangul Gumuz region [CSA, 2017]. Based on the agricultural office of Metekel, soybean production in Metekel zone was 73,904 ton in 2017/18, that is four times more than the previous year’s CSA estimate. This shows that soybean production in Ethiopia, in general, Metekel zone, in particular, was underestimated by the CSA. This can be justified by the estimated soybean production in Ethiopia was 86,468 tons in 2017/18 CSA report, and based on the data from Metekel zone (73,904 tosn); only Metekel zone accounted for 85% of Ethiopian soybean production in 2017/18. 17 Table 3: Soybean production in northwest Ethiopia in 2017/2018 cropping season No. District Area coverage (ha) Soybean Production Yield (tons Remark (tons) /ha) 1 Dangur 26,095 53,610.1 2.05 2 Bullen 758 1,721.2 2.27 3 Dibate 23 46.7 2.03 Benishangul 4 Mandura 2,027 5,059.25 2.50 Gumuz (BG) 5 Pawe 7,109.6 12,297.3 1.73 6 Guba 592.75 981.32 1.66 7 Wembera 99.0 188.1 1.90 Total-BG 36,704.35 73,903.97 2.01 8 Jawi 42,000 73,341.0 17.46 Amhara Total 78,704.35 147,244.97 18.71 Source: Metekel zone and Jawi Agricultural Office, 2019 A recent increase in price motivated farmers to expand their soybean production in Benishangul Gumuz region Ethiopia. Farmers are increasing their land allocation for soybean production because of the increasing demand for the crop. Farmers’ technology usages concerning soybean production, like the use of improved seeds, weeding practices, pesticide application, clearing, and managing the field have been also improving from time to time. This has raised the productivity of soybean to 2 tons /ha; however, it is less than the national average of 2.27 tons/ha in 2017/18 but the highest potential district is Mandura (2.5 ton/ha) and Bullen (2.27 ton/ha). Most farmers in these areas do not use inorganic fertilizers for the reason they believe that their land is fertile. Status of soybean production in Western Ethiopia Soybean was introduced into Benishangul Gumuz National Regional State during the massive resettlement program of the Derg regime in 1985. Since then farmers grow soybean at a small-scale level, as a sole crop, primarily, for its economic merits, such as income generation and home consumption. Assosa zone in the Benishangul-Gumuz region is also one of the potential soybean production areas of the country. The crop is grown in all zones of the region and serves as the mainstay of the farming households engaged in soybean production. Due to its important role in creating employment opportunities and contribution to household food and income security, different governmental authorities have prioritized the crop and supported farmers over the years by availing improved seeds and provide strong extension services for smallholder farmers, and ensuring increased production and productivity. Assosa Agricultural Research Center (AsARC) has been promoting the improved varieties of soybean (Belessa- 95, Wollo, and Gishama varieties) for the last eight years. 18 Table 4: Major soybean producing areas of Assosa zone in 2017/18 cropping season No. Districts Area in ha Production in (tons) Yield(tons) 1 Assosa 1,990.00 5174 2.6 2 Bambasi 1,425.00 2992.5 2.1 3 Homosha 31.00 63 2 4 Kamashi 0.87 1.74 2 5 Agalo Meti 51.55 91.6 1.8 6 Mao-Komo 126 195.3 1.6 Total 3,624.42 8,518.1 2.4 Source: Benishangul-Gumuz Region, Bureau of Agriculture and Natural Resource, 2019 As indicated in (Table 4) Assosa zone’s productivity was 2.4 tons/ha which was higher than the national average of 2.27 tons/ha in 2017/18 (CSA, 2018). Assosa district is the best in soybean productivity in the Benishangul Gumuz region that was 2.6 tons/ha (Table 4). Most farmers were smallholders cultivating a wide range of crops, predominantly, for household consumption and food security purposes in Assosa zone (Assosa and Bambasi district), and soybean is, especially, used for market purposes. Part of the farmers' land is also used for growing soybean that is later sold in the market to generate income for farmers. The data gathered from an in-depth interview with agricultural experts and focus group discussion of smallholder farmers revealed that the average farming land size allocated by farmers for soybean production was 0.27 ha with average productivity of 2.1 tons /hectare in Assosa area, and 1.29 ha with the productivity of 24.67 tons /hectare in Bambasi area. Despite the importance of the crop and efforts made to enhance its production and productivity, the yield of soybean on farmer’s fields have been low relative to its potential productivity of 40 Qt per hectare in research plots and on plots of some model farmers around Assosa zone. In Assosa zone of Benishangul-Gumuz area, soybean producing farmers plow their land two to three times before sowing, however, it mostly depends on the condition of the land, and the availability of draught power (oxen and donkey or sometimes hand tools), but commercial farmers use tractors for plowing. Most of the improved seeds in the area are provided by Assosa Agricultural Research Center (AsARC) through technology demonstrations and popularizations, in collaboration with regional, zonal, and district bureau of agriculture. Some of the varieties used by smallholder farmers include Belesa-95, Wollo, and Gishama. Out of these three varieties, Belesa-95, currently available on farmers' hands and dominantly cultivated in wide areas. The amount of seed rate used by farmers varied from area to area, and some farmers reported using the recommended seed rate. However, on average 19 smallholder farmers used seed rates ranging from 60 to 100kg/ha which deviates from the recommended seed rate of 60 to 80 kg/ha. The seed rate might vary depending on the size of the seed and the fertility status of the given farmland. During FGD, among smallholder farmers in Assosa and Bambasi districts, farmers acknowledged receiving seeds of improved varieties through scaling up activities. After training of selected farmer groups, farmers have given a minimum of 15 kg of improved source seeds of soybean per farm households by nearby research center/ AsARC. They sowed the seeds, harvested, and kept some soybeans as self-generated seeds for their own use. It was also revealed that the farmers do not have access to some inputs, like inoculant (rhizobium) and newly released soybean seeds from input suppliers such as seed enterprises since it is not available in the nearby market or supplier. They generate their own seeds once they got through pre-extension demonstration and scaling up programs. The key issue regarding the use of input, especially as it relates to smallholder soybean production, is the widespread use of farmers' retained seed (recycled seed), which significantly lowers the yield potential. Admittedly, improved soybean seeds can be recycled for about three seasons without losing vigor and potential yields but smallholder farmers continuously use local recycled seed. In general, there is an inadequate supply of improved soybean seeds and a lack of awareness on best crop management practices including planting improved seeds by sourcing good quality seeds. Furthermore, there is a lack of awareness and accessibility in the use of inoculum, to enhance biological nitrogen fixation. However, it was found that few model farmers used bio-fertilizers supplied by AsARC, as part of the technology popularization and demonstration efforts of the center. In Benishangul Gumuz, there was lack of timely supply of inputs, such as fertilizers. Shortage of improved seed varieties is common in Assosa zone, due to the unavailability of seeds producing agents; therefore, more than 95% of the farmers used owned saved seeds. It is also important to create awareness on optimum use of input and establish linkage with the respective input facilitators, such as financial institutions, unions, traders, and governmental institutions. Most farmers do not apply fertilizers as per the recommendation, which might be considered the primary cause for the declining production and productivity of soybean, including other crops. Status of soybean production in Southwest Ethiopia In the Southwest areas of Ethiopia (Jimma, Buno Bedele, and West Shoa zones), soybean production on smallholder farmers' fields was started in the 1970s. In Buno Bedele zone, particularly, in Chewaka district, the production of this crop 20 was to targeted to support displaced farmers from Arsi and Hararghe in the area diversify their cereal crops, mainly, sorghum, through a joint effort of Jimma Agricultural Research Center, and Ilubabor zone bureau of agriculture. Farmers, on average, have eight years of soybean production experience. Chewaka is the highest soybean producer of all the districts in Southwest Ethiopia; about 11 thousand farm households produced soybean, however, yield performance was the lowest of all districts, that was 1.1 tons /ha. The highest yield was 2 tons/ha that found in Bedele and Bako Tibe District; however, it is below the national average of 2.27 tons/ha in 2017/18. Table 5: Soybean production and area coverage in southwest Ethiopia in 2017/18 Zone District Soybean area Soybean Yield Number of farmers coverage in the production (ton) produce soybean in district (ha) (ton) the district Jimma Tiro Afeta 180 324 1.8 280 Kersa 326 546 1.7 755 Buno Bedele 320 640 2.0 520 Bedele Chewaka 4410 4800 1.1 10532 West (Bako Tibe 144 286 2.0 576 Shoa Source: Districts bureau of agriculture, 2019 Farmers in the study areas on average allocated 0.22 ha of land for soybean production. The farmers used 60 kg of seed per hectare on average for sowing, and most households sowed in rows. They plowed the land three times, that include planting. Very few households used inorganic and bio-fertilizer. None of the farmers used agrochemicals, such as herbicide and fungicide to control weeds and leaf rust disease, respectively. Famers recognized the benefit of the crop for soil fertility and observed its effect on maize or sorghum in increasing yield. Hence, farmers rotate the crop with maize or sorghum every three years. Farmers estimated that rotation with soybean enables them to save 25-50% UREA that needs to be applied for succeeding maize or sorghum crops. In Southwest Ethiopia, only one commercial farm, namely, ADSOGET PLC started producing soybean in 2018 for crop rotation. The farm used 3.5 tons of seed on 70 ha of land. The main sources of the seeds were private seed enterprises (80%) and the rest (20%) purchased from the open market. The farm harvested 70 tons of soybean and sold it to exporters. The farm is relatively mechanized, used a tractor and thresher for soybean production. However, weeding and harvesting were operated manually which incurred more human labor costs. The farm applied NPS/DAP and UREA to produce soybean. 21 However, the farm did not use chemicals and bio-fertilizers. According to the farm managers, the main problems of commercial soybean farms were labor (for weeding and harvesting) and inadequate availability of improved technologies (e.g., improved seed, and bio-fertilizer). Currently, in 2019, the farms appreciated the importance of the crop and increased the land allocated for soybean production because of the increase in local and international demand for soybean and market facilitation of the soybean market through ECX. Cropping and marketing calendar The cropping calendar of soybean mainly depends on agroecology and climate conditions. As can be seen in Table 6, there are cropping calendar differences in the different soybean production areas of the country (Southwest, West, and Northwest). The sowing date shows 15 days difference (from mid-June to early July) between Northwest and Southwest. Similarly, thinning and weeding activities show a difference between these study areas which is done between June and August. Harvesting time is similar for Southwestern and Northwestern parts of the country (from October to November), and threshing starts earlier in November and extends to December in the two parts of the country. Marketing was done immediately after threshing (December) up to mid of June. Soon after harvesting (in January), the price of soybean becomes very low. It was learned from the discussion that the price and demand of soybean were very low in the years before, however, since the 2016/17 price started to increase. The average grain price of soybean was Ethiopian Birr 8 at low, 12 at medium, and 16 per kg at high price time of the year in the year 2017/18. Usually the price reached its peak in April and May. 22 Table 6: Cropping and marketing calendar of soybean on the study areas Activities Region Sep. Oct. Nov. Dec. Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Land W ** ** C * & *** clearing SW NW 1st plowing W ** ** * & *** SW NW 2nd plowing C 3rd plowing ** & *** * Sowing C * Fertilizer application ** & *** ** Thinning * C weeding C C Harvesting C C *** Threshing ** C *** Marketing W SW NW Low price C C C Medium ** C *** High price C C ** & *** KEY: * - Northwest Ethiopia; ** - Southwest Ethiopia; *** - West Ethiopia, C- Common for all study areas 23 The soybean cropping calendar in the western parts of Ethiopia, particularly, in Assosa of Benishangul-Gumuz region, land clearing, and first plowing starts in May, and other activities like second and third phases plowing, soybean planting, and fertilizer application have been practiced in June. Hand weeding (100%) is common in the Benishangul-Gumuz region by conducting 2 to 3 times in July and August. Thinning is commonly conducted in July. The soybean crop gets matured for harvesting until December, and often, threshing is in January due to the extended rainy season in the area. The price of soybean is commonly low, during harvesting time between January-March every year. The price gets average around April, however, the price gets high when the sowing period approaches that is May. The major soybean grain-selling period was from mid- February to May. 3.3. Post-harvest and storage practices In all study areas, smallholder farmers harvested and transported soybean around their house and thresh it when well dried. The common practice of threshing was manual using a stick; it is hard and tedious work for farmers. They commonly stored the crop in a plastic sack (Madaberiya) for some months, mainly, expecting price increment; and few farmers keep it in the store because of the absence of buyers in the village market. Soybean can be stored for a long time without major storage weight loss that the crop does not damage by storage pests. In addition, if the soybean is stored under high moisture, there is a possibility to develop mold and might cause storage loss. In the study areas, traders and cooperatives/unions on average, they store for a month until they get a better price, and used plastic bags for the package. However, cooperatives or unions spend an average of two months collecting and sell their products at a better price. 3.4. Soybean processing companies There are some agro-industrial processors in the country that are processing different soybean products, particularly found in Addis Ababa and its surroundings including Debre Zeit. The study considered five processors: BBZ food manufacturing Share Company, FAFA food factory, East African Lion Brands private company, Guts Agro-Industry, and Alema Koudijs. 3.4.1. BBZ food manufacturing S.C. The company was established in 2012 and producing different soybean products using soybean grain only. Throughout the year, the company produces food (three types of Sossi, with a different flavor), oil, and feed. 24 Soybean product from BBZ Usually the company buys about 95% of soybean from Benishangul Gumuz (which has good grain size but is dusty) and Jawi (good and clean grain). The company bought 5,000 metric tons during 2017/18 (Table 7) with the maximum price of ETB 1,680 per quintal, however, the price fluctuation was between 1,340 and 1,680 ETB per quintal in the year. The company does not have a direct linkage and access to buy soybean from farmers, since farmers do not provide a receipt to record and settle in the financial transaction of the company which forced the company to buy from wholesalers through commission agents that can give a receipt. The company had been processing soybean below its capacity, for instance, it used only 50% of its production capacity in 2017/18 (Table 7). The major reasons were the low supply of soybean and less demand for processed soybean products. 25 Table 7: Processing capacity in 2017/18 No. Product Actual processing capacity Potential processing capacity (Mt) type (Mt) 1 Food 1760 3520 2 Feed 2640 5280 3 Oil 600 1200 Total 5000 10000 Source: BBZ, 2018 With the introduction of soybean in the ECX market, the company purchased 100% from ECX and satisfies the quality and quantity demand for processing. The workers in the BBZ verified that oil from the factory has more quality than other companies’ products. The company considers different attributes while purchasing soybean grain (Table 8). Until 2017/18 the company did not compromise any smell but tolerates 10 % impurity, moisture content, and lack of uniformity of grain size during purchase by using different assessment methods such as visual inspection, smelling, moisture meter, and sieve. After soybean is introduced on the ECX platform, the quality of soybean they purchase has improved even if the attributes of ECX and BBZ for quality are different (Table 8). The facilitation of the ECX soybean market provides a great opportunity for BBZ in terms of quality and sustainable supply of soybean. In addition, it enabled to use of the full processing capacity of the company. The price of soybean from ECX is 1450 birr per quintal for 1st grade and 1451 birr per quintal for 2nd grade in 2018/19. The price difference between the two grades is insignificant; but mostly the company purchases 2nd grade with 3% tolerable impurity for processing because the volume of supply of 1st-grade soybean does not meet the quantity of demand that the company wants to buy. However, the 2nd grade has enough supply in the ECX market and BBZ can buy whatever amount they needed. Table 8: ECX and BBZ company soybean quality attributes No. Attributes in BBZ’s Attributes ECX attributes for Grade (G) rank Tolerable Assessmen G1 G2 G3 G4 LG level t method 1 Smell 0% Smelling 2 impurity 10% Visual 1.5 3 4.5 6 8 inspection 3 Moisture 10% Moisture 13 13 13 13 13 content meter 4 Grain size and 10% Sieve - - - - - uniformity 5 Defects max % 4 6 8.5 11.5 15. by (weight) 5 Source: BBZ, 2019 and ECX, 2019 26 The company does not enter into any contractual agreements for buying soybean grain and selling the factory products. The company has different market outlets to sell its soybean products, Hilina, wholesalers, and retailers. Hilina Enriched Foods PLC was established to undertake the manufacturing and processing of a range of food products specifically designed to combat the various forms of malnutrition and other micronutrient deficiencies affecting children and other vulnerable groups in Ethiopia. Hilina introduced roasting and blending maize soybeans and haricots beans to produce RUTF, RUSF, and micronutrients. Hilina buys food fortifiers from BBZ. BBZ also sells defatted flour (feed) to other processors and livestock farms. The price of the food product is different for wholesalers and retailers. The company sets prices for its products, depending on the demand of its customers. In 2018/19, the company was able to source enough quantity of soybean for processing and able to purchase 33 million quintals (within 7 months) from ECX which is more than the amount (5,000 metric tons) bought in 2017/18 in the soybean market. Similarly, the demand for soy products is increasing; particularly oil demand is increasing due to the change in the market scenario. Even if the company did not make significant promotion for the products in 2019, the demand, particularly, for the oil keeps growing. This might be associated with the shift of consumers’ preference from palm oil to soybean oil. Due to the drastic increase in demand for their products, the company may not satisfy the demand even if it works at full capacity. 3.4.2. FAFA foods It is a joint venture company, which started processing soybean 19 years ago. The company uses 75% maize and 25% soybean for processing different food items. There are four processed food types (known as Cerifam): Mar, Vegetable, Fruit, and Normal, which might constitute 15-20% soybean. FAFA relief (produced and to be supplied to the disaster and risk management sector in Ethiopia) and commercial (available for sale to the market) contains 25% soybean. Dube and Famix consist of 7 and 25% soybean, respectively. The company also produces soymilk but had limited production until the end of 2018, because of the low demand for the product that using soybean milk is not common. Soymilk production will rise during the fasting period because people use more non- livestock products during this time. 27 The company did not have a linkage with farmers, and hence the company was able to buy from wholesalers and unions. Before soybean comes to ECX platform, 100% of soybean came through commission agents through telephone communication. Currently, processors are buying soybean through ECX. The Company used to buy soybean at a pre-determined price of the commission agents, until the end of 2018. However, the quality and location of supply are the most determinant factors for soybean prices. Quality attributes that are considered during the purchase are grain size, moisture content, protein content (more than 5%), and inert materials (less than 23%). Soybean from Jawi and Assosa are reported as top quality that the company prefers for processing. The quantity purchased and processed in 2017/18 was 650,000 quintals that is below its processing capacity of 975,000 quintals annually, which shows the company was operating below the capacity that was 33.3% less than the capacity. The average price of soybean was 1,666 ETB/quintal in December 2018. The output price is set by the demand and supply of the product. Most of the company’s products (50%) were supplied to the government for humanitarian support, followed by wholesalers (41%) and retailers (5%). 3.4.3. East African Lion Brands This processing industry is located in Debrezeit/Bishoftu and it is a private company, which used to be a partner with the South African Tiger brand. The company uses soybean for producing food named FAFA (nutrient food) for people on food aid. Their production is based on the request from the world food program, CRS, or the government, for food aid purposes. Soybean is used as a component in FAFA production at a ratio of 41 kg in a 200 kg mix, having 150 kg maize, and the remaining components include vitamins and minerals. The company’s supply chain department access soya through bidding out their demand. As their production, food product from soya is based on a request basis; the amount of soybean needed by the company varies from 0 to 10,000 quintals 28 per year. The capacity of their factory is about 250 quintals per day. They pay a very low price for soybean supplied with high impurity problems (up to 40% soil). Criteria for accepting soybean supplied by the trader include moisture (14% max), damaged grain (0.5% max), impurity (4.5% max), no pest, and no chemical/fumigation. 3.4.4. Alema Koudijs Alema Koudijs feed processing company is mainly known for animal feed production. The importance of soybean meal as a feed ingredient is due to its high protein content and nutritional value compared to other pulse crops. The company receives both whole seed soybean and de-fatted soya bean. They source de-fatted soybean from BBZ factory (Legetafo) and produce different types of feed. In addition to the oil cake, which is a by-product of the oil-crushing factory, the company purchases more than 7,000 tons of raw soybean annually. The company complained of a scarcity of soybean grain supply and fluctuating prices which is before the intervention of ECX. The price of soybean used to fluctuate between 700 and 800 Birr per quintal, but currently, because of exporters’ involvement (though banned recently) it rose to 1700 birr per quintal. The factory requires good quality seed having low moisture content lower than 11% and impurity (max 1%). 3.4.5. Guts agro-industry The company is a nutritional food processing company founded in 2005 by two Ethiopian entrepreneurs and has been fully in operation for the last 13 years. The processing company produces corn-soya blend (CSB) for children on emergency food aid upon request by the disaster and risk management sector of the Ethiopian government. The GUTS has produced several thousands of quintals of CSB food products for WFP orders. This has benefited local farmers with an annual procurement of nearly 100 metric tons of maize, soya beans, and chickpeas directly from cooperative unions. Soybean accounts for 20% of the blend. In addition, a small volume of CSB is produced for commercial purposes. The company also produces animal feed from the whole soya and defatted soya. The company is installing an animal feed machine to enable the production of powdered and pelletized feed products to recycle and use 15% of rejected raw materials. The processing company receives raw material from Chewaka union, farmers, and an oil factory in Dukum. The company receives about 1500 tons of soya every year. The major constraint for the guts company is price fluctuations, mainly arising from sudden permission of export, inconsistency in the availability of soya supply, which makes the planning of production difficult. The other constraint is the quality of soya grain, which often has high impurity and moisture content. The company reported their capacity-building effort in collaboration with NGOs to help farmers improve the quality of soybean through training. 29 3.5. Soybean marketing A well-functioning marketing system facilitates the market transaction and makes the market efficient, and encourages farmers to produce more because getting sustainable market opportunities at a fair price for their production. However, the soybean marketing system is inefficient because market actors (collectors, assemblers wholesalers, and brokers) do not link farmers with the final buyers makes farmers lose the benefit from the final share of the consumer. Farmers have limited market outlets, such as they supply to village collectors and assemblers in the district market, often, at a low price, and farmers unable to supply the regional market and terminal market (Addis Ababa). 3.5.1. Characteristics of local soybean marketing Soybean marketing has been underway since 2009 in the country, though the market for oil crops is isolated and short duration market at Mesalemiya market in Addis Ababa. Several brokers/commission agents are involved in soybean marketing that links the seller (wholesalers) from district markets with the buyers (processors and exporters) in the terminal market. They are often active in the morning from 9:00 to 11:00 am, and their income is determined based on the volume of soybean that they facilitated in the transaction. The number of brokers is increasing from year to year, it is estimated, that more than 200 brokers are involved in Mesalemiya oil crop open market. The soybean market is similar to the online market; both buyers and sellers are not seeing each other, because every transaction is facilitated by brokers through a phone conversation. Brokers do not have any capital to buy and sell soybean in the market, just they make their profit by taking the margin from sellers and buyers. Soybean collection and storing in the Mesalemia market is not common. No office to facilitate the transaction; rather they simply communicate with their customers through phone and facilitate the transaction in an open market. During buying and selling soybean, the location, from where the soybean is sourced and the quality of soybean are important determinants of soybean price setting. Commission agents take into account the source location of the soybean supply, moisture content, green seed, impurity, color, and grain size are important to determine the price of soybean during their market facilitation. Brokers prefer soybean from Qaura, Jawi, Assosa, Jimma, and Wollega in the respective order listed. They tolerate up to 15% maximum impurity. The main source of market information for commission agents in Mesalemia are commission agents in the district markets. Brokers mentioned they transact between 100-2,500 tons annually and earn 150- 200 ETB per ton from both the buyer and seller. The selling price is determined through negotiation between the commission agent and the buyers. The average price of soybean was 14,500 ETB/ton in 2018 at Mesalemiya market. However, 30 purchase price fluctuates between 10,500-16,000 ETB/ton within a season, the cheapest price being during the harvesting season. Brokers are complaining about the poor quality and low volume supply from the production areas, and low demand from the export market limits the transaction. 3.5.2. Soybean export A. Trends of soybean export The USDA reports noted that Ethiopian soybean export is highly fluctuating. However, it is highly growing since 2016 because of increased demand from India. Ethiopia has exported more than 78,000 metric tons of soybean in 2018/19 (Figure 7). In 2016/17, volume of export reduced due to higher local prices during this period. Volume of Export (2014-2019) 100,000 80,000 60,000 40,000 20,000 0 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 Figure 7: Soybean export trend in Ethiopia in metric tones Source: USDA, 2018 India is the top Ethiopian soybean export destination followed by Vietnam, China, and Canada. Pakistan, Singapore, and other European countries are also destinations of Ethiopian soybean (Figure 8). About 95% of the exports go to five countries viz., India, China, Vietnam, Canada, and Pakistan (USDA, 2018). Exports increased by more than 30,000 metric tons in 2017/18, because of increased demand from India; and a total of 26.35 million USD is earned from soybean export in the year; it has doubled from the amount that was earned in 2014/15, i.e., 13.3 million USD (USDA, 2016; 2018). On the other side, Ethiopia has been importing soybean oil from other countries. Imports of soybean oil have been rapidly increasing from 654 to 6,746 metric tons (MT) between 2012-2015, however, recently, the import decreased to 3,419 MT in 2017 probably due to increased import of palm oil, and vegetable fats oils. Palm oil accounts for more than 87% of oil import, and edible oil import has been 31 metric tones increasing in the last five years in Ethiopia, and the country spent 530.841 million USD for edible oil import in 2017 (USDA, 2016; 2018). 50 40 30 20 10 0 India Vietnam China Canada Pakistan Singapore Others Figure 8: Export destinations of Ethiopian soybean (percent) Source: USDA, 2018 This is a great opportunity for farmers and oil processors to exploit through increasing soybean production and enhancing oil-crushing capacity in the country. The different stakeholders along the value chain of the crop viz., agricultural research institutes, ministry of agriculture, ministry of industry, ministry of trade, private and state seed enterprises, processors (oil food and feed processors), exporters, marketing institutions, such as Ethiopian Commodity Exchange need to make concerted effort to tap this potential and bring economic growth in the country. B. Soybean export in the study areas According to the ministry of trade in Ethiopia, more than 150 soybean exporters were found in Ethiopia; and more than 80% of them engaged in other crops export in addition to soybean. Exporters buying 100% soybean grain from commission agents before the start of ECX soybean marketing system. However, recently, the export-marketing scenario has changed completely the market as 100% of exported soybean pass through ECX marketing platform. The study revealed that soybean export has been going on since 2010. The export was started because of the high local supply and global demand for soybean. The exporters send soybean to China, Vietnam, India, and other countries. The exporters also revealed that they work with regular commission agents in the importing countries. They send the sample via couriers, such as DHL, and receive acceptance or rejection of the product for sale. After negotiations on the price and the quality, they send the required amount to the buyers. The exporters also know 32 the time of low-price, that is January and February, medium price time in March and April, and the price attains its maximum between June and August. The most important quality parameters used by the exporters include source or locations of the grain (Jawi is the best source followed by Birr Sheleko, Assosa, and Wollega), uniformity in seed size, impurity, shininess, color (broken white is preferred) are considered during the transactions of soybean. The exporters use laboratory and visual inspection for quality evaluation. Once the quality checked and certified, the exporting process starts immediately. While searching for the right buyer, and finalizing the export process the exporters might store soybean for a maximum of a month. The exporters negotiate prices with a buyer in the importing country via telephone and email. The average buying price in 2018 was 16.20 ETB/kg, and it fluctuated between 8.20-18.20 ETB/kg. The price of Wollega soybean was less by 1.5% than that of Jawi’s. The exporters pay between 20-50 ETB per quintal (100 kg) as a commission to agents before ECX intervention. The average export volume of soybean grain per exporter varies between 900 and 21,500 tons annually. The quality of the grain has important implications in the negotiation of price with the importers, usually; the quality of the grain determines the price. The soybean export supply is increasing from time to time; however, the supply could not match the ever-increasing demand of the Asian markets due to its poor quality in terms of size and color. 3.5.3. Soybean marketing channel The marketing channel indicated the sequence of intermediaries through which all the soybean supply passes from the producers to the processors and exporters in the study areas. The actual marketing channel is more complex. About ten main marketing channels were identified based on the data collected from farmers, and district and terminal markets (Figure 9). The FGDs and KIIs revealed that the main soybean grain suppliers were smallholder farmers to some extent commercial farmers. The following are the main soybean marketing channels identified in the study. 33 1 Smallholder Commission Exporters/ Assemblers Wholesalers farmers agents Processors 2 Smallholder Coops/union Export farmers 3 Smallholder Commission Processors/ Rural collectors Wholesalers farmers agents Exporters 4 Smallholder Coops/unions Processors farmers 5 Smallholder Rural collectors Assemblers Wholesalers Processors/ farmers Exporter 6 Commercial farms Commission Processors/ agents Exporters 7 Smallholder farmers Rural consumer/farmers 8 Terminal market wholesaler/ Smallholder farmers Assemblers Wholesalers Retailers 9 Smallholder farmers Commission Wholesalers Exporters/Processors agents Smallholder Commission 10 Coops/unions farmers agents Export F Figure 9: Soybean marketing channels before ECX Source: Survey result, 2019 34 Soybean value chain map Soybean is considered as a cash crop and its value is judged by the crop's worth in terms of foreign earnings from the export and serves as a raw material for food and feed industries, and an important source of protein for both humans and livestock. The soybean value chains in the surveyed areas involve different actors including input suppliers, producers (smallholder and commercial farmers), traders (collectors at kebele level, and assemblers and wholesalers at district market), brokers, unions, cooperatives, processors (feed and food), ECX, exporters, supermarkets, and consumers. Based on their activities and scale of operation, each actor function and their inter-linkage are presented in the following value chain map. 35 Commission agents/brokers involve in the market Rural collectors Exporters Processors Consumers Commercia (feed and l farms food) Seed Wholesalers Fertilizer (bio fertilizer & inorganic) Wholesaler Agro-chemical Assemblers / Retailers Smallholder farmers Coops/unions Rural Export consumers Input supply Production Marketing/trade Processing Consumption Figure 10: Soybean value chain map Source: Survey result, 2019 36 3.6. Value chain governance Value chain governance refers to the relationships among the buyers, sellers, service providers, and regulatory institutions that operate within or influence the range of activities required to bring a product or service from inception to its end- use. Governance is about power and the ability to use control along the chain at any point in the chain, some firm (or organization or institution) sets and/or enforces parameters under which others in the chain operate. In effect, they govern the value chain, and most other chain actors subscribe to the rules set in the marketing process. Soybean is considered a cash crop; and its value is recognized by the crop worth, in terms of foreign earning, serves as a raw material for food and feed factories, and is an important source of protein for both human beings and livestock. Along soybean value chains in the study areas different actors and chain supporters involved, including input suppliers, producers (smallholder and commercial farmers), traders (collectors at kebele level, and assemblers and wholesalers at district market), brokers, unions, cooperatives, processors (feed and food), commission agents ECX, exporters, supermarkets, and consumers. 3.6.1. Actors along the soybean value chain The first levels of activities are handled by value chain operators, which are the owners of the product at some stage in the chain. Operators include producers, collectors, processors, wholesalers, retailers, and consumers. The study identified and reported the actors based on their activities and scale of operation, functions, and their inter-linkage, in the following way. Soybean producers: Soybeans are grown primarily for the market (cash crop) and used for a rotational crop while household consumption is secondary and insignificant. In Ethiopia, Soybean is produced by both smallholder farmers and few commercial farms. However, the production is dominated by small-scale soybean producer farmers. These smallholder soybean producers are characterized by limited use of improved technologies, and best crop management practices. Commercial farmers (like ADSOGET PLC) produce soybean for rotation with maize and other cereal crops, the result is similar to the finding of (Lehr and Yared, 2018) that usually commercial farmers produce the crop for rotation purposes. Smallholder farmers accounted for more than 50% of the national soybean production, the CSA 2018 data show that smallholder farmers produce about 864,679 quintals while commercial farmers produce 632,171 quintals in 2017/18 (CSA, 2018). Farmers sell their produce in villages and nearby towns within a traveling distance ranging between ten minutes to the nearest village and a maximum of four hours to a nearby town (Lehr and Yared, 2018). 37 About 93% of farmers sold the produced at the village market and a small proportion at the district market in Southwest study areas. In these study areas, the main buyers of soybean from smallholder farmers are traders (48%), cooperatives/unions (45%), and other farmers (7%) for seed or consumption. In most of the areas, there are no unions or cooperatives actively engaged in the soybean trade. The soybean market was highly unstable over the last decade. Collectors: Collectors are active mainly during the harvesting season buy soybean from smallholder farmers at the village market and transport to resale the collecting wholesalers or assemblers who purchases in the surplus market. They collect soybean from the farm gate market, and sometimes, they supply to wholesalers in surplus markets. Assemblers: Assemblers basing in district town and playing a great role in the soybean assembly market. They may collect soybean from farmers and collectors, and transfer it to wholesalers. They have also an opportunity to directly transfer to the central market through brokers/commission agents. Wholesalers: Wholesalers can be categories as regional and terminal markets mostly reside in big region towns (Jima, Bahir Dar, and Assosa) and Addis Ababa. They have a legal license and are engaged in large-scale soybean businesses. Regional wholesalers buy soybean from the collector/trader and stock until getting the required amount to truck and to resell to exporters and processors in the terminal/central markets, Addis Ababa, Debre zeit, etc. The wholesalers are dominant value chain actors who are assisted by the commission agents and play a facilitation role, and they dictate the flow of commodities and prices in regional markets. Wholesalers reside in Addis Ababa called themselves commission agents acting on behalf of processors and exporters in the Mesalemiya market. They buy soybean from assemblers and wholesalers who are based in surplus markets/regions but do not store the grain in Addis Ababa; just they sell a large amount of the grain to processors and exporters through commission agents. Terminal market traders are usually the price-maker for all actors in surplus markets. They have adequate information about the supply of soybean, and in which direction it flows along the marketing channels; they set purchasing and selling soybean prices. Brokers/commission agents: Brokers actively engaged in soybean marketing in regional and Addis Ababa markets. Commission agents who engaged in soybean markets divide themselves into small groups and big groups (wholesalers) in terms of the volume of they facilitate soybean transactions in Addis Ababa. 38 At Mesalemiya brokers operate their business at an open and separate space called ‘kibat ehil tera’ meaning oil crop marketplace. They are specialized in bringing soybean buyers and sellers together to negotiate the price and volume of transactions. The agents usually work for a commission on behalf of wholesalers, collectors, assemblers, exporters, and processors in surplus and deficit markets. They do not invest in the soybean business and they served as guarantors and facilitators for the buyers and sellers for the quantity, price, and quality of soybean exchanged. Without the physical presence of wholesalers, processors, and exporters in the market, brokers/commission agents facilitate soybean market transactions. They maximize their margin based on the number of quintals transacted. Even the commission agents do not know the wholesaler personally; they have informal linkage. Retailers: Retailers purchase soybean from farmers and sell small quantities to consumers in an open market space in the district markets. Only a few traders found in the Addis Ababa market are engaged in a retail business. Retailers sell soybean to consumers, for customers who need to blend soybean with other crops, such as maize, wheat, tef, and for customers who need feed. Exporters: Soybean exporters are those who trade soybean grain to other foreign countries. More than 150 exporters are engaged in soybean international marketing, because of the high local supply and global demand for soybean. Ethiopian soybean has demand in the international market due to its organic and GMO-free nature of the crop and it fetches a high price. However, exporters face the certifying process of organic and GMO-free products of the country because some importing countries need this certification. Processors: Processors are those who transform soybean grain into other final products, such, food, and feed. There are some agro-industrial processors in the country, particularly found around Addis Ababa, and Debre Zeit produces soybean food products and feed. The study considered five processors: BBZ Foods Manufacturing Share Company, FAFA food factory, East African Lion Brands private company, Guts Agro-Industry, and Alema Koudijs. Consumers: End-users of soybean products found mostly in the central market, and buy from supermarkets. Soybean products (oil, Sossi, and soymilk) are found in supermarkets and shops. The Ethiopian government focuses on domestic processing and expansion of oil processing plant and produce soybean oil, soymilk, feed, and other food items. Very insignificant proportions of soybean flour are also consumed blended with other cereal crop flour for its nutritious quality at the household level in rural areas. 39 3.6.2. Supporters along the soybean value chain The second level of chain actors and supporters of the soybean value chain consists of service providers, which assist the operators in performing their tasks. Support functions include input supply, financial services, quality assurance, extension, and research, which are the focus of this report. Input suppliers: Different input suppliers are different business units that work in supplying inputs to farmers. Smallholder farmers obtain different types of inputs from agro-input dealers, agrochemical suppliers, seed suppliers (farmers and cooperatives), regional bureau of agriculture, research centers, and NGOs. Large-scale soybean producers have access to directly buy inputs from large scale-input suppliers. Ethiopian Seed Enterprise started soybean seed production, in 2007, and has been supplying to the market, since 2010. For seed multiplication, the Enterprise uses 100% from research. Mostly, it uses Ethio- Yugoslavia variety that sources from PARC. There is still a very big gap between the seed demand and seed supply, resulting in limited access of farmers for improved seeds; consequently, low area coverage of the crop with improved varieties. The main sources of fertilizer and rhizobium were found to be cooperatives/unions and MoANRM/NGOs, respectively. Bio-fertilizer is produced by Menagesha Biotech PLC. MoANRM and NGOs collect the demand for Rhizobia, and then based on the demand they purchase and distribute to the farmers. For instance, in 2018, about 560 sachets of rhizobium were purchased and distributed to farmers by Jimma and Chewaka unions. The farmers used the rhizobium at the recommended rate i.e., four packets for a hectare of land. Regarding the use of chemicals, it was learned that no herbicide and/or fungicide was used in the areas for soybean production. The main reason reported for this was due to the limited supply of chemicals (herbicides and fungicides). Farmers in Dangur, Jawi, Assosa, and Bambasi used chemicals, such as round up, before sowing. The main sources of these chemicals were private traders. In Metekel and Awi zones, smallholder farmers do not use inorganic fertilizer (DAP/NPS, UREA) and bio-fertilizer (Rhizobium) for soybean production. However, most of the smallholder farmers in west Ethiopia uses bio-fertilizers; while only a few farmers used inorganic fertilizers (DAP/NPS and UREA) at the recommended rate (78.5 kg/ha NPS and 48 kg/ha UREA) for soybean production. They also inoculated seed with rhizobium during sowing. Credit access: Finance is the primary driver of any business activity, and business people or producers might need pre-finance to run their business without 40 any problem. Credit was facilitated for smallholder farmers at the district level, through primary cooperatives, and micro-finance institutions. Dangur micro-finance provides credit for smallholder farmers to pre-finance inputs, such as fertilizer, improved seeds, and might provide direct cash loans to the farming community. Fertilizer was distributed to smallholder farmers on a credit basis, during the cropping season, though the credit has not been specific to the soybean crop. Cooperatives have also been another financial service- providing institution in the survey districts. In Dangur, four primary multipurpose cooperatives were established and formed a union called Dangur Abay Union in 2012 with a startup capital of birr 180,000. The union supplied fertilizer, improved seeds, and was involved in buying and selling agricultural outputs. In addition, the services it provides credit in the form of cash to its rural saving and credit members. Cooperative and unions: Cooperative members collect soybean together as well as purchase other crops in the village, as a group and supply to the cooperative unions. They collect soybean from primary cooperative members in bulk, make value addition practices, such as clearing, sorting, and packaging and send it to the central market through commission agents and directly to processors and exporters. On top of purchasing soybean from farmers’ cooperatives, they also supply fertilizers and improved seeds. Besides, they provide cash credit to its rural saving and credit members. It was reported that Admas Union of Awi zone, Gibe Didesa, Anger Abaya, and Hunde Chewaka unions of East Wollega zone; Dabus Afa, Sole Debate, Basen, Hidase, Anzina, Dangur Abay, Miskua, Anger Soge, Dangur, and Mao Komo unions of Assosa, Metekel, Kemash, Dangur and Mao Komo zones unions and cooperatives have been engaged in the purchase of soybean. The major soybean storage facilities were either sealed or non-sealed warehouses based on the capital of the unions. Cooperative agencies have been the major source of price information for unions; while limited demand for soybean grain, poor access to market information, low price, poor quality of soybean grains, absence of grade, and standards have been the major marketing constraints. The agency reported a lack of linkage with MoANRM, marketing agencies, research institutes, financial institutions, Universities, seed enterprises, exporters, and commercial farmers since platforms that link these actors are missing. The agency also reported better linkage with processors and traders in exchanging information, regarding soybean production, market information, and soybean supply by unions. Microfinance institutions (MFI): Microfinance institutions have great contributions to agricultural growth in general, and soybean, in particular, since 41 they provide credit access to farmers to extend their farming activities. Micro- financial institutions (credit and saving associations) found in the survey areas have no linkage with soybean value chain actors, as smallholder producer farmers, in facilitating credit services, farm/crop risk insurance, and input market information. Dangur micro-finance provides credit for smallholder farmers to pre-finance inputs, such as fertilizer, improved seeds and directly provides cash to the farming community. Fertilizer was distributed to smallholder farmers on a credit basis, during the cropping season. However, the credit has not been specific to the soybean crop. Federal cooperative agency: The federal cooperative agency is a governmental organization working on cooperative societies in Ethiopia. The mission of the agency is to enable different types of cooperatives of rural and urban societies at different levels, through building their capacity and increasing their market share to solve their economic and social problems based on their will and resources, and governed by the rules and regulations for the benefit of its members. However, there is no special support (financial) for soybean production by the cooperative agency. Agricultural research: Soybean research started in 1970. Following its introduction, five soybean varieties were registered in 1974 at Hawassa, Jimma, Bako, and Pawe, under the Institute of Agricultural Research (Deresse, 2019). Recently JARC, PARC, and AsARC support soybean production by providing improved variety and better practices, and training to producers. Pawe Agricultural Research Center is the center of excellence for soybean. Assosa, Bako, Hawassa, Adet and Jimma agricultural research centers have extensive research activities on soybean. Besides, public universities such as Jimma, Assosa, Injibara, Gondar, and Wollega have programmers related to soybean research. Introduction of proven soybean technologies i.e., commercial varieties from international partners and hybridization of selected parental lines and emulation of their progenies to identify superior varieties have been the approaches followed by the breeding programs in identifying soybean improved varieties in the country. Research centers served as sources of foundation and pre-basic seeds to farmers and ESE. The different research centers in the country i.e., Pawe, Hawassa, Bako, Sirinka, and Jimma Research centers have so far released about 26 soybean varieties (Annex I) and demonstrated and promoted them in the pre- scaling up program. 42 These varieties are classified into three maturity classes and testing locations. The first is the early maturity class and testing location (Humera, Hawassa, Mankush, South Omo, and similar areas). Under this class, the released varieties include Hawassa-95, Williams, Crawford, Nova, Nyala, Cheri, Gozelle, and Hawassa- 04. The second is the medium maturity class and the testing locations include: Bako, Jimma, Assosa, Hawassa, Maitsebri, Dansha, Metu, and Debate and the released varieties for these areas includes Coker-240, Boshe, Jalele, Wello, Davis, Afgat, Gizo, Gishama and Clark-63k. The third is the late-maturing class and testing locations (Pawe, Asosa, Arbaminch, Didesa, and similar agro- ecologies). Varieties registered for this long growing season include Belessa-95, Wegayen, Ethio-Yugoslavia (TGX-1332644), keta, and Korme, Didesa, Pawe-1, Pawe-2, and Pawe-3. Ministry of Agriculture (MoA) and Bureaus of Agriculture (BoA): Soybean is the newly introduced crop for the country and requires capacity development for experts, development agents, and farmers. Ministry of Agriculture (MoA) provides extension services, market information and facilitates the distribution and supply of inputs for producers. However, soybean is not part of the extension package that no specific agronomic and marketing information service to provide to soybean producers. However, regional agricultural bureaus have a strong linkage with Jimma and Pawe research centers in generating innovation/technology, training, pre-extension demonstration, organizing stakeholders’ consultative meetings related to soybean. In high soybean production potential areas, the zonal and regional agricultural bureaus extension services provided have been good. Non-Governmental Organizations (NGOs): Some NGOs give funds and engage in scaling up on new soybean technologies and best soybean production practices, and capacity building programs. In Southwestern Ethiopia, there have been three major NGOs and International Development Projects working on soybean research and development which are N2 Africa in Jimma and Chewaka, Clinton Health Access Initiative (CHAI) in Chewaka, and CASCAPE project managed by Jimma University. They have been supporting smallholder farmers on capacity building such as training on production and food preparation practices; input supply (improved seed, fertilizer, and rhizobium), and demonstration and popularization of soybean production technologies. The CHAI mainly focused on soybean food preparation at home. These NGOs have a strong linkage with BoA, cooperatives/unions, seed enterprises, informal seed producers, and agro-dealers. The major problems NGOs encountered in soybean development services include an inadequate supply of good quality soybean seeds, lack of supply of chemicals for disease, and weed control. 43 3.6.3. Enablers along the Soybean value chain The third level of institutions in the value chain are enablers who support the value chain in creating an enabling environment that refers to the environment in which operators and service providers do business and service providers perform their functions, and which also includes governance, legislative and regulative frameworks, and economic environment. It supports the operators in their activities with knowledge, inputs, finance, certification, and extension. Market- related infrastructure, policies, regulations, and business agreements are part of the enabling environment. Agricultural Transformation Agency (ATA): ATA has been working in different regions on various commodities based on the priority and the demand for the commodities in the regions; however, soybean has not been in ATA’s priority crops. Ethiopia Commodity Exchange (ECX): The organization was not engaged in soybean marketing activity during the survey, and planned to start soybean marketing soon. The Criteria followed for a commodity to be included in ECX marketing include the commodity’s demand on national and international markets and its supply volume. Different factors hindered soybean to be included in the ECX’s marketing system mainly because the local market demand was very limited. However, both the local and global soybean business prospect is rapidly increasing. Hence, it was decided to include soybean into ECX’s marketing platform in December 2018 and was functional in January 2019. ECX started soybean transactions in Bure, followed by Pawe, Gondar, Saris (Addis Ababa), and Assosa from the nearest production potential areas. The total soybean traded by ECX between January to Mid-July, 2019 was 80,000 tons. About 95% of the traded soybean was supplied to exporters and the rest to the local food and feed processors. The price-setting strategy that daily price filter is the maximum percentage range, relative to the previous day's closing price, outside of which, offer and bid prices may not fall or increase. The ECX may change these limits from time to time, on a pre-announced basis of 5%. The ECX has begun trading two commodities soybeans and chickpeas on December 31, 2018. The ECX branch at Assosa started its operation of soybean marketing in 2019 with few suppliers to warehouses at Bambasi location. Within a few months, the ECX warehouses at Bambasi received close to 106.3 tons of soybeans. This is an indication that trading the crop via ECX should be a popular endeavor in the region. 44 Ministry of Trade (MoT): MoT has been facilitating trading activities in the country. More than 150 soybean traders and exporters registered under MoT. To be registered as an exporter, an individual is required to have initial working capital, sorting machine, certificate of trading efficiency, ownership of quality warehouse, and trading license. However, these requirements are not specific to soybean. Ministry of Trade facilitates farmers to directly supply soybean to the export market in collaboration with the agricultural and marketing offices of soybean-producing regions. Ministry of Trade provides market information, training, technical advice for exporters. Identifying potential buyers, facilitating the trade and transportation of the products, and communication between the exporters and buyers are also additional services that MoT provides for exporters. There is a trade regulation for oil crops, not specific for soybean, that any exporter should fulfill the requirements of quality, packaging, and labeling for the export. The inclusion of soybean in the ECX market channel since January 2019 provides the opportunity to have a precise record of the exported volume of soybean. The MoT has a strong linkage with ECX, MoANRM in exchanging production, marketing, and price information, and medium linkage with a few NGOs in providing training on pre and post-harvest product handling. The MoT has also a strong linkage with the exporters regarding the purchase of soybean grain, market information, facilitating contract agreements with the buyers (foreign buyers), and training about international trade in collaboration with the International Trade Center, and also communicates when credit default occurs. Trade and transport office: One of the institutional players in the soybean value chain is the zonal trade and transport office, the office found mostly in regions. The office provides a price list, certificate, or dispatch for traders, as the crop is in the ECX’s list. Besides, they support farmers in providing price and market information. In recording and documenting production and supply information, the agricultural offices often obtain the volume of production based on a postharvest forecast, while the trade and revenue offices obtain the figure from the traders paying taxes at the tax payment point ‘kela’ for each ton of grain supplied to the central market. Trade and transport offices at the district level had a complete list of traders working in every sector. The requirements in obtaining a grain trade license include the availability of adequate working capital, standard warehouse, capacity for sanitary certification, testing purity, moisture content, free of dust, and uniformity. Besides, trade skills or experience, trade volumes and trends are given consideration. The market demand and price of soybean is notably increasing since 2017/18. 45 The main mandate or responsibility of trade offices was facilitating the marketing system. They have been involved in awareness creation, training, market price information, and safeguarding trader’s rights. More particularly, they have been controlling illegal traders who are buying and collecting soybean informally. The office identified illegal marketplaces and established a task force composed of farmer representatives, trade office experts, agricultural and police officers, who are given the responsibility of controlling illegal trade. Imposing market regulations is fundamentally intended to help smallholder farmers benefit from the sale of their produce. The trade office receives a price list via SMS from cooperative promotion offices. At the same time, the trade office, usually, smoothens communications with buyer and seller, identify potential market and provide training on marketing related issues. It was also learned that soybean demand and price have been increasing. The presence of trade offices working on the crop, inclusive and participatory monitoring of illegal traders are considered as opportunities for soybean business. Inaccessibility of some of the rural markets because of poor road infrastructure, fewer market centers in the remote district, illegal traders, the poor performance of primary cooperatives/unions, and a limited number of processing industries have been among the major market constraints. The trade offices usually tried to tackle some of these challenges for the soybean business. 3.6.4. Institutional support services The role of institutional services in linking and strengthening the main value chain actors is crucial for the sustainability of the soybean business. Different institutional services have been engaged along the soybean value chain as will be discussed in more detail in the subsequent subtopics. Extension: Agricultural extension services are essential to support for the smallholder farmers and it has positive contributions in improving the production and productivity of farm households and thereby achieve food security. The extension services can be delivered through training, farmer field days, demonstration trials, manuals, banners, and media. The bureau of agriculture at various levels and the different federal and regional research centers have been the major agricultural service providers in the country. The Zonal and Woreda level agricultural offices and PARC have been the major agricultural service providers in the Northwestern parts of Ethiopia. It was learned from the focus group discussion that 45% of the group members have received training on soybean grain production, seed production, post-harvest handling, and other agronomic practices at least once. 46 Participants of the FGD have attended the field day events organized either by the BoA at the woreda level or Research Centers on soybean technology demonstrations and/or varietal selection. Mass media, either radio, TV, or newspaper are, unusually, the sources of information for smallholder farmers in the study areas. Besides, some training was given on soybean food preparation organized by PARC. Even though some of the group participants received training on soybean food preparation, they are not still used to preparing and consuming soybean meals at the household level. In Southwestern Ethiopia, the participants in FGD reported that the attention given to soybean extension had not been good, and as a result, extension services provided related to soybean by the formal extension system of the government had not been strong. However, NGOs (N2Africa, CHAI, and CASCAPE), research centers (JARC, PARC, AsARC, and BARC), Jimma University College of Agriculture and Veterinary Medicine (JUCAVM), and recently the bureau of agriculture started providing the extension services, such as training, demonstration, field days, media coverage and extension materials. Some training was provided on soybean grain and seed production, postharvest handling, and soybean food preparation. It was estimated that the extension services addressed less than 50 % of the soybean producers in the region. In Southwest Ethiopia, three major NGOs were working on soybean development services; N2 Africa in Jimma and Chewaka, Clinton Health Access Initiative (CHAI) in Chewaka, and CASCAPE project conducted by Jimma University. They worked to assist smallholder farmers on capacity building such as training on production and food preparation; inputs supply (improved seed, fertilizer, rhizobium), demonstrate and popularize soybean production technology. The CHAI mainly focused on soybean food preparation at home. These NGOs have a strong linkage with BoA, Cooperatives/Unions, seed enterprises, informal seed producers, and agro-dealers. However, they have no linkage with processors, exporters, and traders. The major problems NGOs encountered in soybean development services were poor quality seed supply, no supply of chemicals for leaf rust disease, and farmers’ resistance to technology uptake. Market information: Market has been the primary driver of crop production and crop technology adoption, and the absence of an adequate market has been the major constraint for soybean farmers. Since 2017/18, the demand for soybean has been improving. The price was determined through negotiations with traders considering the market price however, farmers in Southwest study areas are usually not informed about the price before they sell their produce. Farmers, usually, get price information from farmer traders and DAs, while smallholder farmers in the Southwest get information through traders. 47 Commonly, traders are not keen enough to tell the existing price to farmers. Interestingly, soybean has been considered as one of ECX crop and its warehousing are located in different stations ensuring their proximity to the smallholder farmers, which further motivates smallholder farmers who are producing soybean. As a result, ECX is the base for market information. Platform: Community-Based Seed Multiplication (CBSM) is a multi- disciplinary and multi-stakeholder task, which requires coordination across disciplines and the active involvement of stakeholders for its effectiveness. Several efforts had been made in ensuring the sustainability of the supply of good quality seeds of soybean for the smallholder farmers by the different stakeholders at various levels, including at the districts level to come up with such a viable scheme of CBSM. Farmers, agricultural exports, and development agents were trained on best seed multiplication practices, including agronomic practices for quality seed production, crop protection, and post-harvest handling, both specifically for soybean and other crops, in general. Moreover, seed production guidelines, manuals, and leaflets were distributed to the trainees. A team of researchers and district experts have been actively involved in periodic follow- up and inspection of each seed multiplication field to assure the desired quality and standards of the seed produced. Accordingly, some fields were rejected at different stages of the crop for failing to follow the standard quality seed production practices. The necessary data were collected and submitted to the concerned partners for the necessary actions. Seed samples were collected and sent to research centers for germination and purity test and those who fulfilled the desired standards were accepted as Certified-1 seeds. Soybean platform was established in Jimma and Buno Bedele zones three years ago. The platform consisted of a research center, Zone and district BoA, Cooperatives/Unions, Universities, NGOs, and model farmers. All platform members shared roles and responsibilities that ensure soybean production and productivity. The platform has been held twice a year i.e., one of which was in May that discusses the planning for the main season, and the second one was in October/November that discusses the challenges and constraints of the previous season and market facilitation for the produce. In addition, the platforms have been discussing major problems and opportunities about soybean inputs, production, marketing, and processing. The major strategy designed by the platform to solve a shortage of quality seed that was focused on community- based seed producers in the two zones i.e., Jimma and Ilubabor zones. Moreover, efforts have been made to strengthen the market linkage between farmers and cooperative/unions. 48 3.7. Soybean Consumption and Preference 3.7.1. Farm household level soybean utilization The study tried to assess farmers’/consumers’ use of soybean grain and its products for household consumption. Despite the high nutritional value and quality of the crop, the household consumption of soybean, and the use of soybean industrial products is near to nil. The study identified that households processed soybean products for home consumption is insignificant. Soybean can be prepared and utilize in the form of soymilk, cheese, bread, and porridge at the household level. To exploit the high nutritional value of soybean, different stakeholders, Bureau of agriculture BoA, research centers, NGOs, and others provided training for smallholder farmers, particularly, women, on soybean food preparation in different parts of the major soybean production areas of the country. As a result, more than 27 types of soybean recipes are prepared including cookies, bread, milk, and cheese. Most farmers, commonly, prepare soybean food by mixing soybean with other crops, such as teff, enset, and maize. Based on the skills acquired from the training, women demonstrate recipes and soybean products to farmers who participate in field days. However, in the rural areas, most of the farmers used soybean to prepare only Kolo, Shiro, and traditional bread (that mixed with wheat and maize), because these food types are simple to prepare and process. Milk and cheese preparation is tedious; for instance, it needs to soak the soybean grain for a day, grind using traditional milling stone, sieving, and boil. There are no simple hand tools or machines that simplify household soybean food processing especially to mill the soaked soybean for soymilk preparation. Moreover, urban households did not prepare soybean products at home; rather few used soybean industrial products. The study verified that farm households had a limited understanding of the benefit and nutritional value of soybean and lack of continuous training on how to prepare soybean food at home. One of the most important reasons for less utilization of the crop was a lack of knowledge on how to prepare food from soybean and utilize it at the household level. Some farmers once started to make ‘bread’ and ‘kolo’ (local name). But he stopped consuming it at home as a side dish or main dish due to its unwanted smell, it requires more time to prepare food from soybean, not easily palatable, and it always needs to be fresh food. Farmers in Southwest Ethiopia (West Shoa, Buno Bedele, Jimma zones) verified that about 73% of them produce soybean for the market, 17% for consumption, and 10% for seed. The marketed soybean in Southwest Ethiopia is more than the regional average; CSA report indicates that in Oromia region about 49% 36% 49 and 12% of soybean production were used for market, household consumption and seed respectively in 2017/18, (CSA 2018). The study verified that household consumption is insignificant in Amhara region, not more than 5% that farmers used soybean mixed with wheat and other cereals to prepare bread. Similarly, (CSA 2018) report indicated that on average 5.37% and 72.2% of the soybean was used for household consumption and market in Amhara region 2017/18. In Benishangul Gumuz region, about 69.41% and 16.49% of soybean production were used for market and household consumption, respectively in the same period (CSA 2018). In Metekel zone, soybean consumption is insignificant which is less than 1%, while supply to market was huge that accounted for 77% of the production in the zone, and the rest 19% for seed. Farmers commonly prefer selling to cooperatives because of the relatively better price they offer than the traders do. However, traders take advantage of paying cash directly and even give advance payment to the farmers, during summer, when the farmer is in dire need of cash for home expenses and other immediate needs, and the farmers get into a commitment to supply the soybean after harvest, usually at the price determined by the trader. 3.7.2. Soybean utilization in towns Ultimate users of soybean products found mostly in big towns and central markets, consumers buy soybean industrial products from supermarkets, not significant, though. During the discussion with key informants, they know the products of soybean, and some were used for consumption at home, such as soybean oil, Cerifam, tasty soya, and FAFA. However, sunflower oil has more demand than soybean oil. Supermarkets are compelled to take some soybean oil when they purchase sunflower oil from the wholesale market. This indicates that soybean oil market demand is less than other types of oil. The consumer survey in the supermarket result indicated that about 80% of consumers in the supermarket have been used or tested any one of soybean products (oil, milk, and Sossi, tasty soya). About 10% of consumers did not know, even the availability of soya products in the supermarkets; and the rest 10% responded they knew the availability of soybean products, but did not think to buy and consume them. In the supermarket, soymilk and Sossi were found, however, soybean oil was not found on the shelf in the supermarket, because of the low demand for the product. Soybean oil is cholesterol-free and good for health however more than 30% of respondents verified that the oil is not good, and it has an uncommon taste and smell. The oil is not soluble in the stew ‘wot’ (seen on the crest of wet). Due to the above reasons, all who tried to use soybean oil stopped using soybean oil. Meanwhile, after the ban on palm oil imports, the demand for soybean oil has increased suddenly. 50 More than 60% responded that ‘tasty soya’ and ‘Sossi’ are better acceptable soybean products. The price is fair and saves cooking time. However, some consumers denied consuming Sossi because of its high similarity with meat, as meat is not desired, particularly, during fasting time. Soymilk is also a good product, but the demand is good only during the fasting period. Soybean processors advertise soybean oil around Assosa. However, due to abundant availability and cheaper price, consumers relatively have better access to consume sunflower oil from Sudan. However, consumers in Assosa preferred soybean oil to sunflower oil, they reasoned out the adequacy of a small amount of the oil use gives a better taste for the food they prepared. 3.8. Policy environment for soybean trade Access to markets is a critical determinant of market performance. It relates directly to the characteristics of the trade policy, such as categories of traders, access to market information, times of harvesting and marketing/buying of soybean, etc. The study revealed important information on harvesting time to keep quality and marketing time to provide a fair price for farmers when looking at their respective determinants of export performance. In Awi zone, the office of trade and industry of Jawi district gave 420 soybean trade licenses for pulses and pulse categories, of whom 280, 70, and 70 of the traders were 1st, 2nd, and 3rd level traders, respectively. Traders obtained daily market information from Wollega and Burie market information centers through text messages and Jawi district from market experts. Traders’ market survey verified that no one stored the previous year’s soybean grain for next year's market, and no one was allowed to start buying the new soybean grain, until the end of November to keep the quality and stabilize the price of soybean. In 2018, traders started buying soybean grain on December 1, 2018, and loaded about 20 trucks with a loading capacity of 40 tons of soybean arrive at Addis Ababa Central market on December 18 and 19, 2018; that before the launching of the ECX, due to the traders feared ECX’s marketing policy like price reduction or providing a minimum price that leads to incur them in a loss. Survey result indicated that in 2019, about 84,062.65 tons of soybean was transacted by the ECX at Bure district and Addis Ababa central market, including Admas union that directly exported soybean to an international market. Ethiopia Commodity Exchange Authority launched soybean to enter into ECX market on December 18, 2018, by official letter-number ኢምገባደ /10/10.7/1 and approved by Ministry of Trade and Industry on 1st of January 2019 by official letter number 01-1-35/886. 51 Therefore, ECX has added soybeans as an additional exclusive trading crop on its electronic floor and since December 28, 2018, the product has been transported to the ECX warehouse, while as of December 31 the trading of soybeans outside of ECX has been officially stopped by the government. Table 9: ECX’s soybean Transaction Production and transaction 2019/20 (2011 EFY)soybean grain transaction station for ECX Year plan (ton) Accomplished (ton) Performance (%) Assosa 1,500 106.3 7.1 Bure 6,300 59,938.6 951.4 Ginde 5,000 6,258.3 125.2 Lekempt 200 7.8 NA Pawe 6,000 34,356.6 572.6 Addis Ababa (Saris branch) 3,000 45.4 1.5 Total 22,000 100,712.9 457.8 Source: ECX, 2019 The report (Table 9) indicated that after Ethiopia Commodity Exchange Authority launched the soybean market, ECX starts to transact soybean grain. In 2019/20 (2011 Ethiopian fiscal year/EFY/), ECX traded about 100,713 tons of soybean in a year and its performance indicated that 457.8% of ECX,’s soybean transaction plan for the year is achieved. 3.9. Opportunities and challenges The study identified different opportunities and challenges in soybean production, marketing, and processing which are summarized in the following table. 3.9.1. Opportunities in the soybean production and marketing The crop can grow in various agro-ecologies of Ethiopia, and pieces of evidence indicate that area coverage and soybean production increasing for more than 15 years indicates the crop has an opportunity to increase for the future too. The non- perishability or storability nature of the crop is another major advantage of the crop for the producers and traders. The crop is a multi-product crop used in the oil, food, and feed industries. Therefore, government, NGOs and other stakeholders give high attention because its huge potential to contribute to local food and feed industries by providing raw material. Its high demand in the international market that able to generate foreign currency. Moreover, its sustainable contribution for improvement of soil fertility and its high protein content contributes for nutritional security which is one of the sustainable development goals (SDGs) the country committed to achieving. 52 The crop has developed in the national pulse strategy. Recently, soybean is one of the significant pulses. The strategy identifies soybean as having high economic potential, though current production coverage is small (Lehr and Yared, 2018). The establishment of the soybean platform in Jimma and Buno Bedele zones and the establishment of CBSM in the study area contribute to reducing seed shortage in production potential areas. The industries processing soybean oil are demanding large volumes of soybean supply mainly for the concern of shortage of supply. Recently, the demand for soybean and its industrial products, especially oil is increasing, driven by the ban on palm oil. Increasing the establishment of new private agro-industries and robust expansion of government’s industrial parks are expected to derive the increase in the demand for soybean that promising farmers to produce more and supply soybean grain in sustainable ways. Soybean is included as one of the value chains at Bure Agro- Industrial Park (Lehr and Yared, 2018). Soybean comes into the Ethiopian Commodity Exchange (ECX) trading system, which may enable farmers to get market information and able to earn a better price than before. It also assures farmers a market opportunity and to focus on producing quality products for exporters and processors. Recently, the demand for soybean in the international market has increased. 3.9.2. Challenges in the soybean value chain The soybean farmers have faced different production, consumption, and marketing constraints. Some of the major challenges encountered by the value chain actors are the following. Poor quality supply: Poor quality (impurity or adulteration) grain supply to the market was reported as one of the major constraints. As a case in point, according to processor’s report, 90% of the soybean has been rejected due to poor quality. Furthermore, these processors made a special complaint about the supply from Wollega. Poor quality of soybean might be caused due to post-harvest management problems, especially dust, which is also a major cause for low prices. Relatively, soybean delivered from Gonder and Awi has been reported as good quality (10% rejection). Processors and exporters also raised an inadequate or low supply of soybean and the supply of soybean is also not consistent over the years. Limited use of technologies: Though over 26 soybean varieties have been released in the country, farmers have very limited access to improved varieties, because of the very weak seed and extension systems on soybean. 53 The majority of farmers do not use inorganic fertilizers and bio-fertilizers due to limited supply, lack of awareness, and weak distribution system. The dominance of the commission agents in the market before ECX: High interference and influence of the commission agents and brokers was reported in the central market along the value chain. This might have led to a high fluctuation of soybean price and the formation of a long market chain that might tend to cause a price hike in the central market. Malfunctioning of commission agents is also another problem in this regard i.e., sometimes commission agents register unions as a seller or supplier to take advantage of the quality of supply of cooperatives or unions. The weak linkage among actors: The study revealed a lack of direct linkage between the value chain players i.e., producers, processors, and exporters, due to interference of commission agents, and lack of market information exchange on demand, supply, and price information. In addition, platforms and/or soybean associations do not exist in most of the study areas that it might allow opportunities to share information, knowledge, skill exchange, discussion for searching ways and means of strengthening the value chain, identify critical value chain constraints and share roles and responsibilities in solving some of the critical value chain bottlenecks. Promotion: One of the primary interests of soybean research and development in developing countries, like Ethiopia should be to encourage household consumption of soybean to reduce the serious malnutrition problem among the poor rural and urban communities and help them benefit from the high nutritional value of soybean. However, the lack of skill and knowledge to prepare food from soybean at the household level restricted the wider use of soybean for household consumption. In addition, tedious processing preparing such as milk and cheese. Awareness about soybean products (oil, food, and feed) is very low, mainly due to insufficient promotion of soybean products for home consumption and uncommon and unpleasant odor in the soybean oil. Lack of organic soybean certification. This is also another soybean market constraint for exporters, as some international buyers require a certificate for an organic product. However, there is no system and laboratory in the country to certify the supply of organic soybean. Weeds, diseases, and pests: In the southwestern part of the country, weed infestation of soybean is very high; due to farmers in these areas do not use pre- emergence herbicides to control weeds, while weed infestation was not a critical issue in northwestern Ethiopia. Soybean is also affected by Asian soybean rust and it is usually a problem at the pod setting stage. 54 Brown spot and frogeye leaf spot diseases have been serious around Assosa and Pawe. Usually farmers do not use a fungicide to control the disease because of its price and its limited availability. Seed system: The shortage of quality seeds of the improved varieties was one of the major factors limiting soybean production and productivity. However, ESE and private seed enterprises complain about low demand for the seed they produced, and consequently, ESE more than 70% of the produced seed sold as grain. Part of the problem might be that these seed companies do not have an official presence and soybean seed supply and marketing system in the major soybean production areas of the country. Marketing constraints: There was a weak soybean supply chain and a limited number of soybean buyers, particularly, wholesalers are also constraints raised regarding warehouses, soybean marketing, especially in southwestern Ethiopia. Soybean price has been highly fluctuated mainly due to its seasonal demand. The price fluctuation might have been caused by market inefficiencies, where there was a lack of information on suppliers and buyers before ECX intervention. Due to a lack of market information and sometimes totally unavailability of buyers traders, farmers were forced to store their grains at home for over a year. Other problems: Limited access to bio-fertilizer, especially in Northwest Ethiopia, poor coverage of market infrastructure such as bad road conditions creates low interest of soybean traders to buy from a remote area, high transaction costs of soybean export, lack of access to credit and loanable fund for soybean trading were some of the soybean production and marketing bottlenecks raised by actors along the value chain. 4. Conclusion and Recommendation Soybean is considered the most important oil crop worldwide and it is grown mainly for its protein and oil-rich seed. Its seeds are an important and economical source of protein in the diet of many developed and developing countries. Soybean has a long history in Africa and was first introduced in Egypt in 1858 and first recorded in (SSA) during 1903. The crop was introduced in Ethiopia in the 1950s and its research started in the 1970s. It is a multipurpose crop that can be used for different kinds of soybean foods in households and it is important for feed. It is a source of raw material for food and feed factories and its contribution to soil fertility is high. The crop residues are rich in protein and good feed for livestock. Nearly 100% of the crop comes from Amhara, Oromia, and Benishangul Gumuz regions in 55 2017/18, however, the production and market potential areas are concentrated in specific zone and districts. The study was conducted in 2017/2018 Meher season (main production season), on a wider scale including many potential production and market zones of Oromia (Jimma, Buno Bedele, West Shoa zone), Amhara (Awi and Metema), and Benishangul Gumuz (Metekel and Asosa) regions. The marketing and processors study extends to terminal markets such as Addis Ababa and surrounding. The study areas were purposely selected and considered based on their production and marketing potentials. Qualitative and quantitative primary data were collected from actors along the value chain using checklists. FGD and KIIs were used to collect primary information and market data. Secondary data were also collected from different sources to supplement the primary data using desk review. Along the soybean value chain, though in its early stages of development, it is characterized by low area allocation, production and productivity, low product knowledge and consumption, various market development constraints, and market volatility. However, the current scenario changed that increase in area allocation, production, and productivity. The demand for soybean in the national and international market is increasing; therefore, soybean production is promising for smallholder farmers’ income generation and nutrition security provision. Because of the growth of agro-industry which is increasing acceptability for human consumption as it provides high-quality nutrition at a much lower cost than the livestock product sources. Despite its production and productivity increment, it does not meet the demand for the local and export markets in terms of quality and volume. Ethiopian soybean export is fluctuating; however, it is increasing since 2016. India is the top importer of Ethiopian soybean followed by China, Vietnam, Canada, and Pakistan which account for 95% of the export. On the other side, Ethiopia has been importing soybean oil from other countries. Due to its important role in income-generating contribution, serve as a raw material for industries, and nutrition security opportunities, different governmental authorities, and NGOs prioritized the crop and supported farmers over the years in the study areas. An increase in demand for soybean and introduction into the ECX trading platform motivated farmers to expand their soybean by an increase in area allocation for the crop and try to use the available technologies and related packages that help to increase the yield to up to 2.6 tons/ha which is more than the national average. 56 Asosa’s productivity was 2.4 tons/ha which was higher than the national average of 2.27 tons/ha in 2017/18 (CSA, 2018). At the district level, the highest yield was found in Asosa (2.6 tones/ha), followed by Mandura (2.5 tons/ha) and Bullen (2.27 tons/ha) districts in Benishangul Gumuz in 2017/18. The highest production comes from Jawi in Amhara region, followed by Dangur and Pawe districts in Benishangul Gumz in the same year. Chewaka is the highest production potential district from Oromia region, however, yield performance was the lowest (1.1) tons/ha of all study areas, however, Bako Tibe has the highest yield potential in the region. Famers recognized the benefit of the crop for soil fertility, and they observed its yield increment on maize or sorghum. Hence, farmers rotate the crop with maize or sorghum every three years that enable them to save 25-50% UREA that needs to be applied for succeeding maize or sorghum crops. Even though increasing recognition of the benefits has in contributing for the economy, food security, nutrition, serve as a source of raw material for industry and creating more sustainable improvement of soil fertility, there are different gaps and challenges identified in soybean production and marketing in the study areas. From the available technologies (improved varieties) and related packages, very few of them reached to farmers. From the available 26 improved soybean varieties (Annex I), only eight (Belesa 95, Pawe-1, clarck 63 K, Afgat, Keta, Korme, Ethio-Yugoslavia, and Didesa) of them are used by farmers. There is still a very big gap between the seed demand and seed supply, resulting in limited farmers to access to improved seeds varieties, consequently, low area coverage of the crop with improved varieties. Such a big gap might be narrowed by promoting the available technologies and related packages to farmers, enhancing engagement of formal seed enterprises in potential areas, and strengthening the involvement of progressive farmers, and commercial farmers in the seed business and strengthen linkage with small-scale farmers. No government organization multiplies soybean seed in the regions, and very few private seed producers are found to produce seed. Therefore, farmers use their own saved recycled seed. ESE produced soybean seed on demand-based and due to limited demand of seed. On the other way, farmers complain about seed shortages. This suggests promotion and strengthens the seed system to include soybean seed in the seed distribution system. Primary cooperatives or unions are not involved in the soybean seed supply system in the study areas. Research centers have provided improved seed to smallholder farmers through technology promotion and pre-scaling up the program and support farmers in community- based seed multiplication (CBSM). However, access to improved seed remains a challenge; therefore, it is important to strengthen the CBSM system in the study areas. 57 Getting buyers, lack of market information, and interference of middlemen (commission agents/brokers) were major challenges for farmers, processors, and exporters. Poor market linkage, lack of promotion, market infrastructure (such as bad road conditions), high transaction costs on export, price fluctuation, and lack of grading and standard were the major issues in soybean marketing. In some way, the challenge of processors and exporters is solved by the ECX marketing system, however, market and other information and market linkages should be developed or strengthen at the village, district, and zonal levels with soybean producers. There is a good initiation of establishing a platform, particularly in southwestern study areas, the experience should be scaled out and needed to strengthen the platform that helps to link different soybean stakeholders along with the value chain actors. Global buyers demand a high volume of soybean and need quality certification. Evidence indicates that Ethiopian soybean is considered organic and GMO-free that fetches a better price; however, there is no system and laboratory in the country to certify the supply of organic soybean. This suggests that responsible body should the quality and provide certification that enables to get a premium price. Despite the high nutritional value of the crop, it is possible to prepare and consume soybean products. Research centers and NGOs have been given different training to farm households, on soybean food preparation for home consumption, however, consumption was near to nil. Some foods (soymilk and cheese preparation) preparation from soybean are tedious; for instance, soymilk needs to soak the soybean grain for a day, grind using traditional milling stone, sieving, and boiling. These suggest promoting the nutritional benefits of the crop and giving continuous practical training on recipe preparation is important. Appropriate technology for community-based processing machines, simple hand tools, or machines or find a way to simplify home processing is crucial. Soybean product consumption in towns was insignificant due to the absence of awareness. There is a need to do wider promotion and awareness creation at the governmental level on the importance of consuming soybean meals and oil. Due to the uncommon flavor and smell of soybean oil, most consumers do not prefer like other oil (sunflower). Therefore, it is necessary to set the processing techniques that might neutralize the uncommon test and smell. The source of soybean, the place comes from, determines the price and preference of the crop for processing and exporting. The quality of the grain has important implications in the negotiation of the price for the local and international markets. 58 Exporters reported that supply is also increasing from time to time; however, the supply could not match the ever-increasing Asian market demand due to its poor quality in terms of size and color. Therefore, keeping the quality of the grain along the value chain important particularly farmers' training in pre-season (seed selection), in-season (crop management), and post-harvest management (threshing, sorting, and storage) is critical to focus on demand-based production. Standardized quality parameters should be identified and make available to all actors along the value chain. Provision of specialization for soybean from different zones and districts could be important to keep the quality of the grain. The study verified that even if research centers are collaborating and working with NGOs and regional agricultural bureaus such as providing training on production and food preparation, inputs supply (improved seed, fertilizer, rhizobium), and organizing demonstration field days, soybean is not part of the extension package and there is no specific agronomic and marketing information service to provide for soybean producers. Therefore, to sustain a soybean-based farming system, to achieve the high potential yield soybean should be part the of extension system and owned by regional bureaus of agriculture. The study found yield differences among the study areas, most of them below the national average. However, there is a high yield potential that is indicated 4 tons/ha in research plots and some model farmers around the Asosa zone. Currently, Ethiopia is importing sunflower oil from abroad. On the other hand, the country is exporting a huge amount of soybean grain. By doing comparative advantage, if it is profitable producing oil at home, the domestic industries should be encouraged rather than exporting grain. Especially unions should be encouraged in value addition through a provision of credit and avail soybean-processing machines (food, feed and oil) on soybean production potential areas. The current food processing companies concentrated on specific areas. Moreover, policymakers should encourage soybean factories to be established in production potential areas of the country. 59 5. References Addisu Getahun and Ermias Tefera. 2016. Soybean Value Chain Assessment Study in Northwestern Ethiopia, Metekel Zone. 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List of soybean variety released in Ethiopia Variety Name Year of release Maturity Productivity Rain fall in Altitude Temp( co ) Maintaining center Groups Qu/ha (mm) (masl) BELESSA-95(PR-149) YR:2003 L 17-30Qu/ha >1000mm 520-1900 20-32 HWARC/SARI WEGAYEN(TGX-1989-29F) YR: 2010 M 18-36Qu/ha 700-1000mm 520-1600 20-32 co PARC/EIAR KATA(PR-145-2) YR:2011 M 14-32Qu/ha 700-1000mm 520-1600 20-32 co BARC/OARI KORME(AGS-129-2) YR:2011 M 12-38Qu/ha 700-1000mm 520-1600 20-32 co BARC/OARI GIZO(TGX-1885-33F) YR: 2010 M 20.06ku/ha 700-1000mm 520-1600 20-32 co PARC/EIAR GISHAMA(PR-134(26) YR: 2010 M 17.96ku/ha 700-1000mm 520-1600 20-32 co PARC/EIAR AFGAT(TGX-1892-10F) YR: 2007 M 14.8ku/ha 700-1000mm 520-1600 20-32 co HWARC/SARI DHIDESSAA(PR-149-81-EP-7-2) YR: 2008 M 20-33ku/ha 700-1000mm 520-1600 20-32 co BARC/OARI BOSHE(IAC-13-I) YR: 2008 M 16-30ku/ha 700-1000mm 520-1600 20-32 co BARC/OARI JALALE(AGS-217) YR: 2003 E 22ku/ha 460-700mm 520-800 20-32 co BARC/OARI AWASA-04(AGS-7-1) YR: 2012 E 26.3ku/ha 460-700mm 520-800 20-32 co HWARC/SARI NYALA YR:2014 E 18.1ku/ha 460-700mm 520-800 20-32 co HWRC/SARI GAZALLE YR: 2015 E 20.06ku/ha 460-700mm 520-800 20-32 co HWARC/SARI NOVA YR: 2012 E 22.5Qu/ha 460-700mm 520-800 20-32 co HWARC/SARI CHERI(IPB-81-EP7) YR: 2003 E 22Qu/ha 460-700mm 520-1800 20-32 co BARC/OARI PAWE-03(TGX-1987-62F) YR: 2016 L 23.5Qu/ha >1000mm 520-1900 20-32 co PARC/EIAR WELLO (TGX-1895—33F) YR: 2012 M 19-32Qu/ha 700-1000mm 520-1600 20-32 co SARC/ARARI ETHIYOGOZLOVIA YR: 2007 L 17-35Qu/ha >1000mm 520-1900 20-32 co BARC/OARI DAVIS YR: 1981/82 M 25-30Qu/ha 460-700mm 520-1600 20-32 co HWARC/SARI CLARK-63-K YR:1981/82 L 25-31Qu/ha >1000mm 520-1900 20-32 co HWARC/SARI PAWE -01(PARC-2013-2) YR:2015 L 24.4Qu/ha >1000mm 520-1900 20-32 co PARC/EIAR PAWE- 02(PARC-2013-3) YR:2015 L 25.5Qu/ha >1000mm 520-1900 20-32 co PARC/EIAR COKER-240 YR:1981/82 L 25-30Qu/ha >1000mm 520-1900 20-32 co HWARC/SARI CRAWFORD YR:1982 M 25-30Qu/ha 460-700mm 520-1600 20-32 co HWARC/SARI AWASSA-95(G2261) YR: 2005 E 18-26Qu/ha 460-700mm 520-800 20-32 co HWARC/SARI WILLIAMS YR: 2012 E 19-32Qu/ha 460-700mm 520-800 20-32 co HWARC/SARI Source: Pawe Agricultural Research Center 63 Annex II Summary of soybean processing companies in 2017/18 Company Types of Soybean Annual Actual use Source of grain Attributes for Buyers of Challenges for the name processed mix (%) Production (MT) grain purchase soybean company products capacity (MT) product BBZ foods three types of 100 10000 5000 Through brokers Smell, impurity, Wholesalers, low supply and manufacturing Sossi with a from Benishangul moisture content, retailers, feed quality, and less S.C. different flavor, oil, Gumuz and Jawi Grain size and processors, demand for and input for feed uniformity, and Hilina Enriched soybean products defects Foods PLC. FAFA foods Cerifam (with 7-25 97,500 65,000 From Jawe and grain size, moisture government Quality, limited different flavor, Assosa through content, protein (50%) for linkage with Dube, Famix commission content (more than humanitarian farmers, soymilk agents 5%), and inert support, wholesalers, materials wholesalers retailers, and other (41%) and processers, and law retailers demand of soymilk East African FAFA 21 9125 (25 MT based on Moisture, damaged WFP, CRS or Lion Brands per day) request grain, impurity, no government, for (varies 0 to pest, and no food aid 1000) chemical/fumigation purposes Alema Koudijs Animal feed 7,000 soybean grain moisture content Livestock farm Limited supply and feed from traders and and impurity price fluctuation processing de-fatted soybean company from BBZ factory Guts Agro- Corn-soya blend 20 1,500 Grain from impurity and disaster and risk Price fluctuation, Industry (CSB), and animal Chewaka union, moisture content management and quality (high feed and farmers, and food aid-WFP impurity and oil factory in moisture content), Dukum and inconsistency of soybean supply Source: the respective enterprises 64 Annex III Summary of Opportunities and Challenges along the value chain Value chain level Opportunities Challenges Input supply Limited access to bio-fertilizer Production The crop can grow in various agro- Limited use of technologies ecologies of Ethiopia Seed distribution system The crop is a multi-product crop used in Occurrences of weeds, the oil, food and feed industries diseases, and pests Non-perishability or storability nature of the crop Availability of technologies Marketing High demand in local and in Poor market linkage international market Poor quality supply The dominance of the commission agents in the market before ECX Lack of promotion Lack of organic soybean certification High Price fluctuation market infrastructure, such as bad road condition Lack of gardening and standard high transaction costs of soybean export Processing High demand due to establishment of Poor quality supply new agro-industries, Consumption high protein content contributes for Average local consumption is nutritional security very small not more than 10% Limited awareness about soybean product and consumption Enabling (policy ECX opens local window for soybean env’t) Service providers Availability of soybean technology and The weak linkage among value and institutional extension support chain actors supports Establishment of the soybean platform Lack of continuous training on soybean food processing to farm households 65 View publication stats