As the recently privatised beer industry in Ethiopia is uncorking bottled up demand, there is high demand for quality malt barley supply. While Ethiopia is agro-ecologically perfectly suit for its production, 60% of the demand is met by imports, negatively tipping the country’s trade balance. Banking on this market opportunity Gondar Malting Factory (GMF) established its own malting plant right next to the Dashen Beer Factory, to become operational in June 2013.
In order to establish a good relationship with surrounding farmers and to stimulate the production of malt barley, a relatively new crop to this area, GMF has been working with cooperative unions over the past 3 years to buy their supply. They have bought up 3,700, 4,000, and 10,000 over the past consecutive years. In particular last marketing season was an interesting one as the GMF has put tremendous effort following up the contract and getting the malt barley into the factory.
Early June 2012 as the first raindrops hit the soil, farmers started sowing their fields. Unfortunately the promised 3853 quintal malt barley seeds for Tsehay union are only distributed to farmer’s end of June and on credit basis leading some of the farmers to ‘just eat the seeds’. The malt barley production is calculated by the bureau of agriculture by simply multiplying the seeds distributed by the potential yield per hectare informing GMF 58,000 (102,000 for region) quintal can be expected; enough to meet next year’s demand. In reality the number turns out to be much lower due to not all farmers having planted the seeds provided and shortage of rain fall.
In anticipation of the barley harvest being supplied to the factory, GMF entered into a contract late October with Tsehay Union. Three regions (Debark, Wogera and Dabat) are selected as focus districts. Together with the unions GMF signed a contract early November. The contract neatly details the price structure and delivery arrangements. The price is determined by the market price +15%. In addition the price of competing crops like wheat are taken into account.
To see how this malt barley contract impacts the life of ordinary farmers around Gondar we visit a farmer of Anba Georgis cooperative, while a truck of malt barley is being loaded. Enate Yasew runs a 2Ha family farm in Anba Georgis district. She is 60 years old and has 10 children. Last year she received 3 quintal of seed from her cooperative and planted around 1.5 hectare with malt barley resulting in a 21 quintal yield. 3 quintal she returned in kind to the union and 10 quintal she sold for 920 Qt/kg with 8 quintal still waiting to be sold as she is cleaning it.
“I used to be a subsistence farmer but now I prefer to deliver for the market instead of consuming it. Even my son who studies at Gondar University one time told me over the phone not to consume but sell all malt barley to the market. Before we were short of market, now delivering to cooperatives works well for us. We still keep very small quantity for drinking beer though. We have been growing malt barley for 3 years now, we used to get 530 birr/qt, then 800 birr/qt and this years price of 920 birr/qt has been a very good one. If I would had grown wheat or any other crop it only earns me 800 birr/qt so now I get a 120 birr additional profit per quintal. The only downside is that the price of teff have gone through the roof and now is at 1200 qt for white one.”
She proudly shows her recently purchased bag of teff, the family’s staple food source. Enate’s dream is to become an investor. “I want to be the Sheik Al Mundi (Ethiopia’s largest commercial investor) of this area but I never want to leave this place. With the malt barley income I constructed a building in town, which is now rented out by Commercial Bank of Ethiopia earning me a decent off-farm income.” She recalls that in Haile Selassie’s time she finished grade; an achievement at that time. As the country went through lenses of time, now her children are even attending university venturing into livestock and tourism. A brighter tomorrow is rising.
While grain has been brought in and farmers received a good price for their crop, the delivery has been ‘not encouraging’ in the words of the operational supply manager at GMF, Derese Beza. Derese recalls “I have worked for 3 years and seen change, it is positive change but the pace of change is too slow and we really need to go down farmer level for us to secure our supply.” For 2013 GMF needed 80,000 quintal of which approximately only 20,000 has been locally supplied. The rest has been imported, paid in hard needed foreign currency.
Gondar Malt Factory is committed to work through cooperatives instead of traders who often mix the quality and not pay a fair price to the farmer. For 2014 the demand will go up to 120,000 quintal of raw material. For Ethiopia not to loose out on this market opportunity unions need to step up their game and stimulate producers to plant and market malt barley. The most critical constraint will be timely availability of seeds.
Looking ahead for the coming season, much has been improved. Seed will be provided April, farmers have been selected, training will be provided in May resulting into agreement between farmer and coop. The training will run from 30 April- 30 May for cooperative managers and DAs. 5277 Ha will be planted (North Gondar 3511, South Gondar 1285, East Gojam 392, North Wollo 85) expected to result in around 70.000 qt ready to be supplied to GMF. However, there are still many things to improve and reap the true benefits of this immense market opportunity that the Gondar Malting Plant provides to surrounding farmers.
