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Malt Barley Value Chain in Arsi and West Arsi Highlands of Ethiopia

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Malt Barley Value Chain in Arsi and West Arsi Highlands of Ethiopia Academy of Social Science Journals Received 10 Dec 2020 | Accepted 15 Dec 2020 | Published Online 29 Dec 2020 DOI: https://doi.org/DOI 10.15520/assj.v5i12.2612 ASSJ 05 (12), 1779−1793 (2020) ISSN : 2456-2394 RESEARCH ARTICLE Malt Barley Value Chain in Arsi and West Arsi highlands of Ethiopia Bedada Begna1 , Mesay Yami2 1 Kulumsa Agricultural Research Abstract Center, Ethiopian Institute of Agricultural Research (EIAR) The study was undertaken in four districts of Arsi and West Arsi zones where malt barley is highly produced. Different participatory 2Ethiopian Institute of Agricultural rural appraisal approaches were employed to conduct the study. The Research (EIAR), National findings indicated that land allotted for malt barley production has been Fishery and Aquatic Life Research increased in the study areas since 2010, scarcity was noticed due to Center (NAFALRC) constraints related to quality and existence of malt barley competing outlets. Malt barley marketing is complex and dynamic where various actors are involved in its marketing. The marketing route changes over time depending on the demands at the terminal markets. Assela Malt Factory (AMF) plays a great role in determining malt barley price while producers are price takers. Among five major malt barley marketing channels only three of them are supplying to the factory. AMF accessed to 90% of malt barley from the channel via traders and the direct supply by farmers via cooperatives was not more than 10%. The channel via cooperatives which is strategic for both producers and the factory was serving below anticipated due to the financial constraints and management skill gaps of the cooperatives. Although a variety of constraints were existing at each identified nodes in the value chain, the major problems attributing to shortage of malt barley production within the country are inability to produce good quality malt barley because of poor field management, traders’ grain blending practice, weak linkage among farmers, cooperatives, AMF and absence of contract among farmers. Hence, improving input supply to enhance productivity and strengthening linkages among farmers, farmers’ cooperatives/unions and AMF are the major focus areas that call for policy interventions in the future. Keywords: Cooperatives, Malt barley, Marketing route, Traders 1 INTRODUCTION for beer, which is growing significantly. Beer production increased from 1 million hectoliters to n Ethiopia, the market potential for malt bar- roughly 4 million hectoliters from 2003 to 2010 Iley is directly correlated to the market demand (Access Capital, 2010). The increase in beer pro- ASSJ 05 (12), 1779−1793 MANUSCRIPT CENTRAL 1779 MALT BARLEY VALUE CHAIN IN ARSI AND WEST ARSI HIGHLANDS OF ETHIOPIA duction is through demand-driven by increased beer and reliable malt barley supply and forced some- consumption due to increased urbanization, popu- times to import it whereby its impact is directly lation growth, and rising incomes. However; beer connected with national economy when the factory production increase is noticed, the country’s per and brewers import malt barley and malt respec- capita beer consumption still lags well behind other tively from abroad with high hard currency. The African countries. The market for malt barley is production of required quality malt barley benefits estimated to grow at an annual growth rate of 15% our smallholder producers by creating sustainable to 20% in the next five years, and the beer market markets. On the other hand, processing it within our and demand for malt barley is projected to reach country improves value addition and agri-business 110,000 to 130,000 metric tons in 2016 from 58,000 which bridges agricultural products to industry by metric tons in 2011 (Ethiopia-Barley-Business-Case supporting the national motto “Agriculture leads In- presentation (2012). dustrial Development” which is currently adapted Malt barley is used to produce malt, the key input for in the Growth and Transformation Plans (GTP I & brewing beer. About 90% of the total raw material II) (2010/11-2019/20). Different agricultural experts cost for beer production is malt and the material stressed that the malt barley produced only in Arsi used for malt production in Ethiopia is malt barley and West Arsi highlands is big enough to satisfy (Tadesse, 2012). Malt barley, at the present time, AMF’s malt barley demand if properly produced and is considered as one of the cash crops produced in channeled to the factory. the highlands and its demand by malt factory has To overview and examine the issue of malt barley increased due to its increased capacity of malt barley scarcity in satisfying the created domestic malt de- processing and the expansion of breweries and beer mand, systematic investigation of the malt barley consumption levels in the country. production and marketing systems is indispensable. In contrary to the growing demand, however, differ- Hence, identification of the root causes of malt barley ent studies state that the presence of favorable agro- shortage for the factory and understanding the place ecologies for production of malt barley that could where the problems attributing to the scarcity of the meet domestic malt demand. Ethiopia has a shortage crop is vital. Accordingly, the study employed a of malt barley to meet the demand of the local value chain concept to identify the constraints and breweries (Mohammed and Getachew, 2003).Given opportunities for increasing the production (supply) the limitations of domestic malt supply, most of and productivity of malt barley at each node along the demand for malt is met through imports, which the value chain, and suggest suitable value chain account for 69% of the total annual requirement up-grading strategies to improve malt barley supply (ORDA, 2008a). In 2011, similarly, breweries in chains. Ethiopia imported 60% of the malt primarily from international producers (Ethiopia-Barley-Business- Case presentation, 2012). 2 METHODOLOGY Assela Malt Factory (AMF), the only malt factory in the country, recently undertook expansion and 2.1 Descripon of the study areas increased malt production capacity from 25,000MT The survey was conducted in south eastern highlands to 36,000MT to meet some of the growing malt of Arsi and West Arsi zones in March and April, demand of the brewers in the country. To manufac- 2013. Arsi zone is divided into 24 rural administra- ture the intended malt, the factory lacks continuous tive districts. Arsi and West Arsi zones are charac- Supplementary information The online version of terized by crop livestock mixed farming in which this article (https://doi.org/xx.xxx/xxx.xx) contains both crop production and livestock rearing practiced supplementary material, which is available to autho- simultaneously side by side. The major food crops rized users. produced in the Arsi and West Arsi zones are cereals, pulses, oil seeds, vegetables and others. Among cere- ASSJ 05 (12), 1779−1793 (2020) MANUSCRIPT CENTRAL 1780 MESAY YAMI MANUSCRIPT CENTRAL als barley and wheat are the pre-dominant and among 2.3 Data collecon and data sources pulses faba bean and field pea are grown widely. Potato is also the dominant crop grown widely in The study relies on both primary and secondary data. The primary data were collected through a combina- West Arsi highlands. It also plays important role for tion of different participatory rapid appraisal (PRA) malt barley production and productivity while using tools. PRA is the most advisable method for conduct- it in crop rotation in the belg season. ing quick value chain analysis (VCA) study. It is a According to the information from Arsi zone Bureau method that offers a quick, reliable and cost-effective of Agriculture, malt barley is produced in 16 districts means for understanding and identifying the main of the zone. Among which 10 (Digalutijo, Lemu- marketing actors, channels, geographical locations bibilo, Honkolowabe, Munessa,Shirka, Tiyo, Guna, and volume of the product flow from the inception Chole, Lode hetosa and Hetosa) are the potential of the product to the final consumption and disposal. malt barley producing districts. Similarly, West Arsi Moreover, it helps to identify the major constraints zone is composed of 12 administrative districts. Out and opportunities at each core functions of the value chain. The secondary data collection or review pro- of the districts in the zone 10 of them are pro- cess undertook both before and after completion of ducing malt barley whereby seven districts (Kofale, the survey. Secondary data were obtained through Qore, Shashamane, Arsinagele, Kokkosa, Doddola offices, libraries, websites and review of literature. and Wando) are potential producers of malt barley. The key data collection tools used for malt barley The study was undertaken in four districts of Arsi and VCA are briefly described below. West Arsi zones where malt barley is potentially pro- Desk review: Prior to conducting the field survey, duced. These districts were Lemubilbilo, and Chole desk reviews were made to know previous work from Arsi administrative zone and similarly, Kofale on malt barley production and marketing studies and Shashamane were selected for the survey from in Ethiopia and elsewhere as well as to know the West-Arsi zone. existing information gap. Moreover, secondary data were collected from re- 2.2 Sampling technique ports of different organizations including govern- ment institutions such as agricultural offices (zonal The study areas were selected purposively based on and district), and AMF. To supplement the infor- their production potential and capacity in supplying mation gathered through PRA, relevant quantitative malt barley to AMF. AMF obtains the majority of data such as time series malt barley supply (produc- malt barley from farmers in Arsi and West Arsi high- tion), productivity, allocation of cultivated land area, lands. In order to conduct the informal interviews and demand of malt factory and breweries, and farm gate prices from selected districts as well as consumer field visits, potential four districts in malt barley pro- prices were collected and described.
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