Ethiopia’s transformation into a market-oriented seed sector

The Ethiopian seed sector is transforming into a more vibrant, pluralistic and market-oriented one. Ethiopian seed companies are increasing their seed production and quality, while Dutch breeding companies are entering the market with high-value vegetable seeds. This is part of a transition supported by the Wageningen Centre for Development Innovation (WCDI).

WCDI works with public and private partners in Ethiopia to develop a private seed sector. The Ethiopia Netherlands Seed Partnership (ENSP) improves the availability and quality of seed on this emerging market. Tens of thousands of farmers are now receiving training and demonstrations on how to improve their harvests.

Resilience, an agribusiness consultancy firm, focuses on supporting ten Ethiopian seed companies in the partnership. These companies have emerged in the past fifteen years, during the liberalisation of the agricultural economy. Until then, the Ethiopian government supplied almost all seeds to farmers through public seed enterprises. These parastatals did not properly match their production to the existing demand, which caused shortages of in-demand seeds, carryover of unwanted seeds, and variable quality. As a result, many Ethiopian farmers used part of their harvest to sow a year later and yields were often low. For example, the average potato yield is less than 10 tons per hectare in Ethiopia, compared to 21 tons per hectare worldwide.

About fifteen years ago, WUR and the Netherlands embassy in Addis Ababa advised the Ethiopian government to stimulate local seed business. This led to the Integrated Seed Sector Development (ISSD) project. Now that these local businesses are there, Resilience has been tasked with doubling seed the production of ten of them in four years.

Assessment

According to director Joep van den Broek, Resilience has created a checklist to assess the ten companies on sixteen aspects of a good seed company. This involves assessing whether the seed is produced and cleaned properly, and also involves monitoring management – are their accounting and marketing practices up to standard? Resilience also assesses whether relationship management with suppliers and buyers is properly organised and whether the companies have sufficient funds to pre-finance seed multiplication by farmers.

‘We measure all aspects of the companies against this benchmark’, says Van den Broek. ‘And then we look at each company to see how we can tackle their three or four weakest points.’ A common problem for all seed companies is their poor access to finance. That is why Resilience has developed a tailored financial product for Ethiopian banks to provide credit to the companies with ENSP as a partial guarantor.

The project has now been running for two years and seed production has increased by 30%, says Van den Broek. They still have two years to double seed production and Van den Broek thinks they will achieve this goal.

Basic seeds

The ten seed companies still receive basic seeds from the research institutes of the Ethiopian government. They then multiply these basic seeds on their farm or with farmers they work with. A new development is that the local seed companies are allowed to register varieties themselves and import breeder or basic seed from abroad. Three of the ten companies will soon import new varieties and test them in field trails. ‘This is a difficult process’, says Van den Broek, ‘because the public sector wants to maintain control over the import, testing and registration of new varieties.’

The Ethiopian seed companies supply seed for the most important traditional crops in Ethiopia. These are mainly grains such as wheat, barley and the local specialty teff, but also legumes and oilseeds, such as sesame seeds. The seed for these crops continues to be routed mainly through cooperatives in Ethiopia.

Vegetables

In addition, the cultivation of potatoes and vegetables is on the rise in Ethiopia. And for these crops, Dutch seed companies come into the picture, not least because the Ethiopian research institutes hardly develop varieties of vegetables. Seven Dutch seed companies participate in ENSP. Five companies supply vegetable seed, while two companies are working on potatoes.

Enza Zaden is one of the participants in ENSP. This breeding company from Enkhuizen supplies hybrid seeds in Ethiopia, mainly of tomatoes, peppers and onions. Hybrid seeds are high-yielding varieties that cannot reproduce effectively through pollination. For high yields, farmers must therefore buy new hybrid seed every year.

Yet Enza Zaden does more than just sell seeds. Just like the other companies, Enza teaches thousands of farmers in the ENSP project how to grow hybrid seeds. Farmers learn how and when to sow the vegetables and what crop management and soil management is needed to achieve a good harvest. Hybrid seeds are relatively expensive, says project leader Kingsley Ngwa Muyo of Enza Zaden; that is why farmers must do everything they can to ensure a good harvest. ‘We need a lot of development before farmers understand the potential of our seeds.’

The training courses are often provided by Ethiopian graduates with a paid internship at Enza Zaden. The farmers who successfully complete the training can become ‘lead farmers’, says Muyo. They are allowed to further trade the hybrid seeds among Ethiopian farmers.

Registration

For the time being, Enza Zaden has not opted to produce seed in Ethiopia. Nunhems, BASF’s vegetable breeding company, has decided to do so. Nunhems imports parental lines of vegetable varieties into Ethiopia, which are combined into hybrid seeds through controlled pollination on its advanced farm and exported back to the Netherlands. Nunhems also sells vegetable seeds on the Ethiopian market through a local distributor. This mainly concerns hybrid varieties of tomato, pepper, onion, carrot and watermelon. Nunhems wants to further expand this list; that is why additional registration trials are now underway in Ethiopia.

These adaptation trials should show whether the varieties to be registered are suitable for the Ethiopian climate and produce a good yield, says Nunhems Ethiopia director Ben Depraetere. Nunhems seeds can potentially yield three times as much as the seeds used by most Ethiopian farmers, but all growing conditions need to be optimal for this. To achieve this, Nunhems provides farmer field schools in cooperation with the local distributor and development organisation SNV.

Tests

On the advice of WUR, the Ethiopian Agricultural Authority now allows selected companies to carry out the tests themselves under their watchful eye, making the procedure faster and cheaper. This reform is appreciated and a step in the right direction, says Depraetere.

There are also two Dutch companies operating in Ethiopia that supply open-pollinated varieties. This is seed that can reproduce through pollination, so that farmers can save and use the seed over the course of several years. Bakker Brothers supplies older open-pollinated vegetable varieties while introducing new hybrids to the portfolio. EASI Seeds has similar plans. An interesting trait of EASI Seeds is that the company is rolling out a last-mile approach to farming communities working with young people in its distribution network. EASI Seeds trains the youth in becoming resellers and local vendors of quality seeds and other agri-inputs.

Vibrant

Since local and Dutch companies have different products and strategies, a vibrant seed sector is developing. And that is exactly the goal of ENSP, says Gareth Borman, project leader at WUR. We also see this with the two Dutch potato breeders that are active in Ethiopia on behalf of ENSP. HZPC is a large Dutch potato breeder that supplies seed potatoes in Ethiopia, while Solynta is a smaller biotechnology company specialised in hybrid true potato seed breeding. The two companies work with Ethiopian farmers, researchers and regulators on propagation techniques and the introduction of new technologies.

The Ethiopian seed market is still under development, but has a lot of growth potential for companies. There is an unsatisfied demand for locally produced seed of traditional food crops and the total import of vegetable seeds in Ethiopia has grown from practically zero to 12 million euros in just five years. However, growth is hampered by a shortage of foreign currency, says Borman. In Ethiopia, local distributors must pay for imports in foreign currency and therefore need to contact their bank. Ethiopia has a quota system on which the scarce euros and dollars are spent. Because Ethiopia suffers from weak export performance and the government spends a lot in foreign currency, there is a shortage of foreign currency in agri and horticulture.

Capacity strengthening

WCDI has always emphasised that the project should strengthen both companies and government capacities. The organisation advised the Ethiopian government to revise the Ethiopian Seed Law, says project manager Mohammed Hassena of ENSP in Addis Ababa. As a result, there are now three types of seed registration that are better suited for the different types of crops. Moreover, the partnership recommended the establishment of an independent Ethiopian Regulatory Authority, outside of the Ministry of Agriculture, that focuses on variety registration and plant variety protection. According to Mohammed, these legal reforms are the basis of a proper seed market.

Another example is that ENSP co-funded the development of laboratory capacity to screen seeds for harmful viruses in Ethiopia. The tomato and pepper seed that companies like Nunhems produce in Ethiopia must be virus-free before it is exported to the global market, says Depraetere. Until now, Nunhems had been sending seed samples to the Netherlands for virus control prior to export. Under the banner of ENSP, Ethiopian employees of the National Agricultural Biotechnology Research Center have now been trained to test for viruses. ENSP paid for the training and Nunhems supplied the equipment, so that Ethiopia can develop the capacity for this locally.

However, ENSP provides more examples of capacity building in Ethiopian society, says Mohammed. ‘We support two universities, in Haramaya and Bahir Dar, with curriculum development and MSc training in seed science. We want students at these universities to not only be trained in seed production, but also in business development and legal issues. Moreover, we promote student internships in seed companies in order to draw talented young people to the seed sector.’

Architect

Steadily, the seed sector is transforming into a more vibrant, pluralistic and market-oriented one. According to Van den Broek, WUR is the architect of this transition. ‘The Wageningen Centre for Development Innovation (WCDI) has a world-class team that has developed an integrated vision of the Ethiopian seed sector. This team not only provides a lot of technical knowledge, but also understands the societal bottlenecks and has, based on a thorough analysis, supported a transition plan to a market-driven seed sector. This team also provided a toolbox to shape that transition. And, very importantly: they are modest people. This modesty suits the proud Ethiopians, who do not like to be told what to do.’