Trade Sector Report Final

7/30/2019 Trade Sector Report Final

1/93


2/93

Amhara National Regional State (ANRS)

TABLE OF CONTENTS

1.EXECUTIVE SUMMARY..........................................................................................................................i

2.BACKGROUND..........................................................................................................................................1

3.PROFILE AND SIZE OF THE AMHARA REGIONAL MARKET.....................................................4

3.1 General Market Characteristics and Features.....................................................................................4

3.2 Agricultural Products Marketing in the Region...................................................................................8

3.3Agricultural Product Market Structure................................................................................................11

3.4 Market Trends of Agricultural Products............................................................................................15

3.5 Manufactured Products Market in the Region...................................................................................19

3.6Trade Discipline in the Region.............................................................................................................25

4.EXPORT PROSPECTS AND POTENTIAL IN AMHARA REGION................................................27

4.1General.................................................................................................................................................27

4.2Export of Major Agricultural and Manufactured Products.................................................................29

5PROSPECTS AND POTENTIAL FOR GROWTH...............................................................................58

5.1Policy Implication for the Development and Integration of Trade......................................................58

5.2Export...................................................................................................................................................61

5.3Import...................................................................................................................................................64

5.4Project Ideas for Investment.................................................................................................................65

6PRICE TRENDS AND VARIATION.......................................................................................................70

6.1Prices of Major Agricultural Products.................................................................................................70

6.2Manufactured Food Products...............................................................................................................75

6.3Building Materials................................................................................................................................75

6.4Textiles..................................................................................................................................................76

7ENTREPRENEURSHIP DEVELOPMENT............................................................................................76

7.1ENTREPRENEURSHIP DEVELOPMENT IN AMHARA REGION....................................................77

7.2Entrepreneurship Development Paradigm...........................................................................................79

7.3Business Development Service (BDS) Needs in Amhara Region.........................................................81

8RECOMMENDATIONS...........................................................................................................................85

LIST OF TABLES

Table 1: Zonal Distribution of the Amhara Population by sex, 2004........................................................4

Table 2: Regional Comparison of Average Per Capita Expenditure........................................................5

Table 3: Licensed Trade Operators in Amhara Region..............................................................................7

Development Studies Associates (DSA) & Shawel Consult International (SCI) a


3/93


Table 4: Zonal Distribution of Trade Operators in Amhara Region, 2000/05.........................................8

Table 5: Estimated crop production and marketable supply from Amhara Region, 2001/02

(Quintal)...........................................................................................................................................................9

Table 6: Estimated Market Supply of Major Crops from Amhara Region, 1988 - 1997 (EC) ...........18

Table 7: Number of Industrial Establishments in Amhara Region.........................................................20

Table 8: Gross Value of Production and Value Added by Industrial Group in Amhara Region,

2001/02 (000 Birr)........................................................................................................................................21

Table 9: Import by Broad Commodity Group, 1997 - 2002, Country Level (000 Birr).......................23

Table 10: Estimated Import Share of Amhara Region, 1997 - 2002, (000 Birr)...................................23

Table 11: Ethiopia's Export by Selected Commodities, 1999 - 2004 ......................................................28

Table 12: Ethiopia's Export of Coffee by Country of Destination, 1999 - 2004......................................30

Table 13: Ethiopia's Export of Hides and Skins, 1999 2004..................................................................32

Table 14: Ethiopia's Export of Hides & Skins by Country of Destination, 1999 - 2004 ........ ..33

Table 15: Ethiopia's Export of Fruits, 2000 2004...................................................................................35

Table 16: Export of Fruits by Country of Destination, 2000 2004........................................................37

Table 17: Ethiopias Export of Vegetables, 2000 2004...........................................................................38

Table 18: Export of Vegetables by Country of Destination, 1999 - 2004................................................39

Table 19: Ethiopia's Export of Pulses, 2000 - 2004....................................................................................41

Table 20: Ethiopian Export of Pulses by Country of Destination, 2000 - 2004......................................42

Table 21: Ethiopia's Export of Spices, 2000 2004...................................................................................43

Table 22: Ethiopia's Export of Spices by Country of Destination, 2000 - 2004......................................44

Table 23: Ethiopia's Export of Oilseeds, 1999 - 2004................................................................................45

Table 24: Ethiopia's Export of Oilseeds by Country of Destination, 2000 2004..................................46

Table 25: Ethiopias Export of Cereals, 2000 2004................................................................................47

Table 26: Ethiopias Export of Cereals by Country of Destination, 2000 2004...................................48

Table 27: Ethiopia's Export of Live Animals.............................................................................................48

Table 28: Ethiopia's Export of Meat and Meat Products, 2000 - 2004....................................................50

Table 29: Ethiopia's Export of Honey and Beeswax by Country of Destination, 2000 2004.............51

Table 30: Tanzanias Exports of Beeswax by Main Destination Countries, 2003..................................52

Development Studies Associates (DSA) & Shawel Consult International (SCI) b


4/93


Table 31: Cte DIvoires Exports of Beeswax by Main Destination Countries, 2003...........................53

Table 32: Ethiopia's Export of Natural Gum by Country of destination, 2000 - 2004..........................54

Table 33: Ethiopia's Export of Cotton by Country of destination, 2000 - 2004......................................55

Table 34: Ethiopia's Export of Textiles by Country of Destination, 2000 - 2004...................................56

Table 35: Ethiopia's Export of Flowers by Country of Destination, 1999 - 2004...................................57

Table 36: Estimated Export of Amhara Region by Selected Commodities, 1998 - 2004.......................62

Table 37: Export Forecast for Amhara Region , 2005 2009..................................................................63

Table 38: Medium - Term Import Forecast for Amhara Region.............................................................64

Table 39: Average Prices of Major Agricultural Products in Amhara Region, 1991 - 1994.................70

Table 40: Farm Gate and Retail Prices of Agricultural Products..........................................................73

Table 41: Average Retail Prices of Manufactured Food Commodities in Amhara Region, 1991 1994

(Birr/kg).........................................................................................................................................................75

Table 42: Average Prices of Building Materials in Amhara Region, 1991 - 1994..................................75

Table 43: Average Prices of Textiles in Amhara Region, 1991 - 1994....................................................76

LIST OF FIGURES

Figure 1: Household Distribution by Income Group in Amhara Region .................................................6

Figure 2: Percent Distribution of Trade Operators in Amhara Region by Sector...................................7

Figure 3: Percent Distribution of Production and Market Supply..........................................................11

Figure 4: Agricultural products trade distribution channels in Amhara Region .................................12

Figure 5: Market Trends of Major Crops in Amhara Region ................................................................16

Figure 6: Market Structure for Manufactured Products in Amhara Region.........................................25

Figure 7: Export value of Coffee and Oilseeds .........................................................................................28

Figure 8: Volume of Export of Coffee and Oilseeds .................................................................................29

Figure 9: Percent Share of Live Animals Importing Countries, 2004.....................................................49

Figure 10: Price Seasonality of Major Crops.............................................................................................71

Development Studies Associates (DSA) & Shawel Consult International (SCI) c


5/93


1. EXECUTIVE SUMMARY

- Amhara Region is the second largest market in the country, with a population of

18.6 million. It consists of trade operators, functioning at different levels and

handling different product and service lines. Trade operators in the Region are

growing in number every year, witnessing a growth in market size. The market is

believed to grow at a rate equivalent to the growth rate that the trade operators in

the Region attained. They grew at an average annual growth rate of 10.6%.

- The Region supplies both agricultural and manufactured products to the domestic

and export market, the former comprising the bulk of the market supply. The

quantity supplied to the market depends on volume of agricultural production and

capacity utilization of operational manufacturing establishments.

- The Amhara Region market appears to be self sufficient in the supply of most

agricultural products produced within the Region, except some crops which are

not commercially grown there.

- The share of the Region in the total production of fruits and other permanent

crops was found to be negligible, despite its potential and suitability for the

development of these crops.

- Four sales levels are identified in the agricultural market structure of the Region.

Agricultural products reach the end consumer in the Region or elsewhere in the

country through these four levels, with some other intermediaries acting as

facilitators in the process.

- The Regions market supply trends of most crops in the cereal category appeared

to be stationery or static, while the market supply of oilseeds and pulses exhibited

an increasing trend, with an average annual growth rate of 8% and 7%

respectively in the last ten years.

- The Region is believed to consume imported commodities worth on the average

about Birr 2.6 billion during the period 1997 2002. Consumer goods of durable

Development Studies Associates (DSA) & Shawel Consult International (SCI) i


6/93


and non-durable types accounted for the largest share, followed by semi-finished

goods and industrial & transport capital goods in that order of importance.

- The contribution of the Region to the export earning of the country mainly from

export of hides and skins, oilseeds, pulses, spices, live animals and natural gumsis believed to be substantially high.

- The bulk of the export from the Region as is the case from the rest of the country

comprised primary agricultural products. The expected export earnings from

agricultural products are characterized with severe fluctuation from year to year

due to falling world agricultural commodity prices.

- The Regions export in the next five years is expected to grow from an estimated

current value of Birr 729.5 million to Birr 1,044.8 million by the year 2009 in the

case of highest estimate, while in the medium estimate it is expected to range

from a current value of Birr 493.7 million to Birr 996.7 over the same medium

term forecast period.

- The import share of the Region in the next five years is expected to fall between a

current share of Birr 5.8 billion and Birr 6.5 billion by the year 2009.

Development Studies Associates (DSA) & Shawel Consult International (SCI) ii


7/93


2. BACKGROUND

Amhara National Regional State (ANRS) is one of the regional states of Ethiopia and is

located in the north-western part of the country. It lies between latitude 9 13 45N and

longitude 36 40 30E, with an estimated total area of 170,152 km2. The Afar Regional

State borders it from the east, while Benishangul, Oromia and Tigray regions of the

country border it from south-west, south and north, respectively and the Sudan from the

west.

Its altitude ranges from 600 meters above sea level at Metema, North Gonder, to 4520

meters above sea level at Ras Dashen, North Gonder, which is also Ethiopias highest

point. The wide range of altitude is a major factor in determining the temperature range

of the region. Generally, lowland areas (below 1500 meters above sea level) experience

hot temperatures, while highland areas (above 1500 meters above sea level) experience

relatively cooler temperatures. For instance, in the hot to warm sub moist agro-ecological

zone, where the altitude ranges from 600 to 1400 meters above sea level, the mean annual

temperature is estimated to range from 21C to27C while in the cold to very cold moist

zone, where the altitude ranges from 2800 to 4200 meters above sea level, the mean

annual temperature varies between 7.5C and 16

C.

The region, with an estimated population of 18.6 million, is the second largest and

represents about 25% of the total population of the country. It has diverse agro-ecological

zones which are suitable for production of different varieties of seasonal and permanent

agricultural crops and for raising different species of livestock. According to the Central

Statistical Authoritys agricultural sample enumeration reports of the year 2001/02, the

region represents about 30%, 46%, and 40% of the countrys total production of cereals,

pulses and oilseeds, respectively. It also stands second in terms of livestock population,representing on the average 28% of the countrys total livestock size. A good proportion

of the countrys export commodities mainly agricultural and to some extent semi-

processed or manufactured products originate from this region as well. A recent study of

the Bureau of Agriculture of the Amahara Region under the title Agricultural Marketing

System Study quoted a source that about 45%, 21%, 53%, 9% and 15% of the countrys

Development Studies Associates (DSA) & Shawel Consult International (SCI) 1


8/93


export of pulses, oilseeds, live animals, incense and spices, respectively, were

contributions from the Amhara Region. In general the economic contribution of the

Region in terms of the size of exploitable natural resource remains to be immense.

The Investment Bureau of the Region, having committed itself to streamline theeconomic development of the Region, requested the services of multidisciplinary

consultants to conduct a survey on the resource potential of the region with an overall

objective of identifying opportunities for investment and enhancing the participation of

private capital in the Regions economy. In view of this objective the Development

Studies Associates, commissioned to undertake the resource potential survey, conducted

a market situation analysis to identify market opportunities, within and outside the

Region, which would enhance the investment portfolio of the Region and market

constraints that are expected to have a retarding impact on the economic development of

the Region.

The situation analysis was conducted using both desk and field research methods. The

quantitative data utilized and reflected in this report all originated from existing data

sources of secondary nature. Data on volume of production of agricultural products were

compiled and analyzed to establish the trends of marketable volume to be supplied to

local markets within the Region, to markets in the rest of the country and to international

markets. The size of the population of the Region with other macro indicators was also

compiled to establish the import requirement of the Region. Secondary data on export

were also organized and analyzed to identify the export share of the Region and its

potential for growth. The major sources for the secondary data used in this report include

the Central Statistical Authority and the Ethiopian Customs Administration Authority.

Other relevant sources were also accessed for supplementary information.

The use of primary data in this report is limited. The consultant engaged in the

preparation of this report spent nearly a week in Bahir Dar to hold a discussion with key

individuals in the trade sector and to compile trade-related information from the different

offices in the Region. Accordingly the consultant visited some offices comprising both

government and private institutions such as Agriculture and Trade and Industry Bureaus,

Guder Agro Industry, Women Entrepreneur Association of the Amhara Region,



9/93


Cooperative Operation Promotion office, Bahir Dar Chamber of Commerce, Amhara

Saving and Credit Institution, Bahir Dar Textile Factory, Fish Marketing Enterprise,

Bahir Dar Edible Oil Factory, Agricultural Research Institute etc. Discussions on market

constraints and prospects were held with experts drawn from each office visited and their

views and comments are incorporated in this report.



10/93


3. PROFILE AND SIZE OF THE AMHARA REGIONAL MARKET

3.1 General Market Characteristics and Features

a) Population

Population size and composition is a major factor that contributes to development of a

market. A market can be broadly divided into consumer and industrial markets. Both

markets are highly influenced by population size and composition. Amhara Region thus

stands as the second largest market in the country in terms of population size. The

population of the Region in 2004 was estimated to be around 18 million, representing

about 26% of the total population of the country. The Region is administratively

structured into 11 administrative zones with a population distribution as presented in

Table 1.

Table 1: Zonal Distribution of the Amhara Population by sex, 2004

Zone Male Female Total

North Gondar Zone 1,391,791 1,359,966 2,751,757

South Gondar Zone 1,170,388 1,134,835 2,305,223

North Wello Zone 821,845 823,285 1,645,130

South Wello Zone 1,372,544 1,418,824 2,791,368

North Shewa Zone 1,025,211 1,023,457 2,048,668

East Gojjam Zone 1,102,165 1,124,712 2,226,877

West Gojjam Zone 1,158,690 1,158,245 2,316,935

Wag Hemra Zone 178,839 178,487 357,326

Agew Hawi Zone 466,247 474,063 940,310

Oromia Zone 303,325 303,297 606,622

Bahir Dar Special Zone 78,955 73,832 152,787

Total 9,070,000 9,073,003 18,143,003

Country Level 35,618,000 35,448,000

71,066,000

% share 25.5 25.6 25.5

Source: Statistical Abstract, Central Statistical Authority, 2003

The Amhara Regional market is expected to expand as its population increases. Over the

next five years, 2005 up to 2010, the population is expected to grow at a yearly average



11/93


growth rate of 2.57% (CSA, 1994) bringing market expansion in terms of units of

consumers. However, the volume of transaction in the Region may grow at a much faster

rate than the population growth, depending on prevailing market prices of commodities

and purchasing power of the consumer.

b) Income

The importance of a market is further explained by the size of the income of the

population that it serves. The purchasing power of the population depends on the real

disposable per capita income of the population. The economy of the Amhara Region like

that of all the other Regions in the rest of the country predominately depends on

agriculture. Disposable income generated from agriculture in a developing economy like

ours cannot be strong by itself to initiate market development. However, as income grows

steadily and its sources become more diversified, dependence on exchange of goods and

services become imminently strong leading to market diversification and growth.

The per capita income in Amhara Region which was noted to be the lowest in 1995/96

has shown better improvement in 1999/2000 compared to incomes in other Regions of

the country. It increased from Birr 1032 in 1995/96 to Birr 1252 in 1999/00,

corresponding to a 21% rise, while a significant drop prevailed in many of the other

Regions of the country (for comparison see Table 2).

Table 2: Regional Comparison of Average Per Capita Expenditure1

Region1995/96Survey

1999/2000Survey % change

Tigray 1,281 1,198 -6.48

Afar 1,588 1,154 -27.33

Amhara 1,032 1,251 21.22

Oromia 1,361 1,298 -4.63

Somali 2,008 1,442 -28.19

Benishangul 1,127 1,176 4.35

SNNPR 1,115 1,151 3.23

Gambella 1,774 1,209 -31.85Harari 2,472 1,763 -28.68

Addis Ababa 1,774 1,976 11.39

Dire Dawa 1,697 1,451 -14.50Source: The 1995/96 and 1999/200 Household Income, Consumption and Expenditure Survey,

Central Statistical Authority.

1 Per capita expenditure is used as a proxy estimate for per capita income.



12/93


The proportion of households below an income of Birr 1,999 was estimated to be about

16% in 1995/96, while in 1999/2000 the proportion dropped to 12% as a result of some

households moving to the next high income group. The majority of the households in the

Region fall in an income group of Birr 2000 6,599 during the two periods, 74% and

71% respectively. However, in 1999/2000 quite a good proportion of households joined

the next income group which is Birr above 6,600. Refer to Figure 1 for further

understanding the pattern of the movement.

The per capita income rise observed in the Region may have brought either some change

in the structure of the market or contributed to market expansion in the Region. In any

case a market is believed to flourish as long as the per capita income of the population

being served in that market exhibits a positive change over time.

Figure 1: Household Distribution by Income Group in Amhara Region

0

2

4

6

8

10

12

14

16

18

20

200

00

Income Interval in Birr

%ofHouseholds

1999/2000 Survey

1995/96 Survey

c) Size and Types of Trade Operators

There are five levels of trade operations in the Region (see Table 3). The Region

currently has a total of 48,003 licensed trade operators, excluding handicraft and cottage

establishments which are estimated to be around 262,800 in number. Retail trade

operation is noted to be the dominant in the existing trade regime and significant numbers



13/93


of new entrants are joining this sector every year, except in 2000/01 where a decline was

noted. In general over the past few years, with the exception of 2003/04 for which

information was not available from the source, the number of new entrants almost in all

sectors exceeded that of trade operators withdrawing or failing to renew license, showing

a positive net increase every year. For instance, the total number of retail trade operators

jumped from 18,325 in 2002/03 to 28,825 in 2004/05, corresponding to nearly 58%

increase. Similar growth pattern was noted in the remaining sectors as well. A summary

of the composition of the Regions trade regime is presented in Figure 2.

Table 3: Licensed Trade Operators in Amhara Region2

Type of License 1999/2000 2000/01 2001/02 2002/03 2003/04 2004/05

Wholesale Trade 2008 1641 1380 1779 NA 2572

Retail Trade 16894 15605 15823 18325 NA 28825Service Trade 7319 5972 6720 7842 NA 8969

Industry 2650 4282 4132 4273 NA 7472

Agriculture 41 49 42 87 NA 165

Grand Total 28912 27549 28097 32306 NA 48003

Source: Bureau of Trade and Industry, Amhara Regional State

Figure 2: Percent Distribution of Trade Operators in Amhara Region by Sector

Wholesale

Trade

8%

Retail Trade

59%

Service Trade

18%

Industry

15%

Agriculture

0%

2 An individual or a trade entity may have one or more licenses within a sector or in different sectors. Thenumber of license shown above may not correspond to the actual number of trade operators.



14/93


Zonal distribution of trade operators along with the size of the population that they are

serving are presented in Table 4. North Shoa Zone, the fifth largest in population size, has

the largest number of trade operators, while South Wollo, ranking first in population size,

follows by a quarter less. That means population size is not the only factor that influences

the size of a market. A market appears to be large when it accommodates relatively a

large number of trade operators. A market becomes additionally attractive to trade

operators if it serves as an outlet to other markets outside the region. This could be one of

the reasons for North Shoa, which is in close proximity to Addis Ababa, to entertain

relatively a large number of trade operators.

Table 4: Zonal Distribution of Trade Operators in Amhara Region, 2000/05

Estimated

Amhara Regional Population Wholesale Retail Service

Zones Size Trade Trade Trade Industry Agriculture Total

East Gojjam 2,289,265 214 3,205 1,058 1,300 5 5,782

West Gojjam 2,396,155 20 2,180 281 279 0 2,760

North Gondar 2,812,129 1,565 2,820 1,190 417 39 6,031

South Gondar 2,381,357 229 1,844 683 582 3 3,341

North Wollo 1,696,845 78 2,697 695 341 6 3,817

South Wollo 2,859,412 187 5,606 1,538 1,141 3 8,475

North Shoa 2,101,561 173 6,803 1,996 2,344 5 11,321

Hawi 965,457 56 2,055 428 534 2 3,075

Oromia 623,301 3 545 253 175 78 1,054

Wag Hemra 371,078 20 194 73 99 0 386

Bahir dar 129,439 27 876 774 260 24 1,961

Total 18,625,999 2,572 28,825 8,969 7,472 165 48,003

Source: Bureau of Trade & Industry, Amhara Region

3.2 Agricultural Products Marketing in the Region

The Region supplies agricultural products both to the domestic and export markets. The

domestic market refers both to the markets within the Region and others found in the rest

of the country. The agricultural products marketed from the Region comprised cereals,

pulses, oilseeds, spices, fruits, vegetables, livestock and livestock products, fresh water

fishes, honey and beeswax etc. The quantity marketed depends on volume of production.

However, much of the agricultural land holdings in the Region as in the rest of the

country are under small private peasant holdings, which produce in most instances for

subsistence. In spite of this prevailing condition the bulk of the market supply originates

from these small holdings. A large majority of the farmers in the country lead their



15/93


livelihood on the basis of a thrift household management. That means what the farmer

supplies to the market is not what one calls marketable surplus, but it is an amount that he

keeps aside from what he is supposed to consume until next harvest period in order to

meet his other needs.

The Central Statistical Authority, in its agricultural sample survey conducted in 2001/02,

has established the volume in percentage of total production that a farmer supplies to the

market after every harvesting season for every region in the country. In Amhara Region,

according to the above estimate, 13% of cereals produced are marketed, while for pulses,

oilseeds, vegetables, fruits, spices3 and other permanent crops the percent marketed stand

at 18.7%, 49.4%, 20.6%, 62.7%, 18.7% and 39.7% respectively. Detailed breakdown of

these estimates by crop types are provided in Table 5. Amharas largest supply

contribution to the domestic markets comes from its cereals and vegetables production.

For instance in 2001/02 the market supply of cereals and vegetables from Amhara Region

alone were estimated at 3,163 thousand and 1,037 thousand quintals respectively. The

Region also depends much for household consumption on these two agricultural product

groups. The farmer appears to consider oilseeds and fruits as cash crops to be destined for

the market as nearly 50% of the production of the former and 63% of the latter are

marketed. The former is usually a raw material for edible oil manufacturing plants and

the latter being easily perishable will have to be sold out immediately. The farmer,

therefore, very well knows that he would derive more benefit by selling than using them

for home consumption.

Table 5: Estimated crop production and marketable supply from Amhara Region, 2001/02 (Quintal)

3 The figure for spice only refers to the reported two cases. Figures for commercially important spices arenot provided from the source.



16/93


Production estimates

Type of Crop National Amhara RegionAmhara's %

share % marketedVolume

marketed

CEREALS 91,599,718 27,814,312 30.4 13.0 3,613,079

Teff 16,573,329 7,093,620 42.8 20.6 1,463,414

Barley 9,867,355 3,360,659 34.1 6.9 233,230

Wheat 14,837,367 3,641,102 24.5 11.8 429,286

Maize 30,862,098 6,527,109 21.1 9.8 636,393

Sorghum 15,826,273 5,259,659 33.2 12.5 656,931

Finger millet 3,091,170 1,682,932 54.4 14.3 239,986

Oats 387,125 116,823 30.2 6.2 7,278

Rice 155,001 132,408 85.4 20.2 26,733

PULSES 10,869,537 5,015,817 45.7 18.7 935,951

Horse beans 4,514,252 2,111,647 46.8 11.4 240,305

Field peas 1,548,667 685,498 44.3 14.2 97,341

Haricot beans 1,521,661 178,479 11.7 23.7 42,317

Chick peas 1,856,272 1,089,787 58.7 18.4 199,976

Lentils 416,201 288,588 69.3 37.9 109,259

Vetch 936,000 600,380 64.1 21.3 127,881

Soya beans 16,717 2,068 12.4 39.4 815

Gibto 59,768 59,370 99.3 19.3 11,470OILSEEDS 2,244,713 915,074 40.0 49.4 451,681

Neug 848,023 451,308 53.2 63.3 285,723

Linseed 526,167 106,794 20.3 22.0 23,516

Groundnuts 141,776 0.0 78.4 0

Safflower 46,181 37,860 82.0 26.9 10,181

Sesame seed 406,472 136,728 33.6 50.9 69,567

Rapeseed 169,540 122,621 72.3 54.2 66,448

Fenugreek 106,554 59,763 56.1 59.2 35,362

VEGETABLES 21,338,101 5,045,865 23.6 20.6 1,037,704

Lettuce 13,869

Head cabbage 72,079 9,173 12.7 62.7 5,754

Ethiopian cabbage 2,121,866 34,893 1.6 5.3 1,835

Tomatoes 347,277 0.0 73.1

Swiss chard 11,897 2,583 21.7 22.8 589

Beetroot 55,406 7,469 13.5 55.8 4,169

Carrot 76,882 14,140 18.4 67.9 9,594

Onion 2,572,053 1,229,512 47.8 45.4 557,707

Potatoes 9,402,088 3,393,534 36.1 11.3 384,148

Garlic 794,211 337,303 42.5 20.3 68,607

Sweet potatoes 3,896,124 17,258 0.4 30.7 5,300

Taro/Godere 1,974,349

SPICES 1,196,790 275,452 23.0 18.7 51,518

Green peppers 417,165 79,483 19.1 13.4 10,659

Red Peppers 779,625 195,969 25.1 20.9 40,860

FRUITS 2,038,462 18,353 0.9 62.7 11,502

Avocado 147,160 * 100.0

Bananas 1,245,616 4,290 0.3 68.2 2,924Guavas 19,400 2,271 11.7 43.7 992

Lemons 12,021 795 6.6 72.3 574

Mangoes 212,750 25 0.0 48.6 12

Oranges 154,625 8,016 5.2 73.6 5,899

Papayas 246,890 2,956 1.2 37.2 1,101

OTHER CROPS 3,719,462 86,763 2.3 39.7 34,454Chat 809,497 9,674 1.2 75.7 7,323

Coffee 1,665,791 12,772 0.8 36.6 4,669



17/93


Production estimates

Type of Crop National Amhara RegionAmhara's %

share % marketedVolume

marketed

Hops 253,384 54,740 21.6 29.4 16,115

Sugar cane 990,790 9,577 1.0 66.3 6,346

Source: Statistical report on Area and Production of Crops, Central statistical Authority, 2003

The share of the Region in the nations production of fruits and other permanent crops as

noted above appears dismally small in spite of its high potential and suitability for the

development of these crops. A summary of the contribution the other regions and

Amhara Region made to the national production of major agricultural crops and market

supply from the latter are presented in Figure 3.

Figure 3: Percent Distribution of Production and Market Supply

0

10

20

30

40

50

60

70

80

90100

Cereals Pulses Oilseeds Vegetables Fruits Other Crops

Production other Regions Production Amhara Market Supply Amhara

3.3 Agricultural Product Market Structure

Agricultural products from the Region pass from the producer to the consumer through

four sales levels in general. However, there are intermediaries involved in facilitating the

passage of agricultural products to the final consumer at various points within the system.



18/93


A detailed diagram, though indicative, showing all the actors involved in the distribution

of agricultural products in the Region is presented in Figure 4.

Figure 4: Agricultural products trade distribution channels in Amhara Region

Development Studies Associates (DSA) & Shawel Consult International (SCI)

Producers

Wholesaler

Farmers' co-operative

organizations

Assemblers or village

collectors

Retailers (incl. supermarkets,

open-air markets)

Consumer

Processors

Production level

Wholesale level

Retail level

Consumer level

Export market

Exporter

12


19/93


Production Level

Agricultural production in the Region as in the rest of the country is largely dominated by

private small holdings. Supply is also supplemented by small-scale producers and

commercial farmers, especially in the production of cash crops. At this level the producerdecides how much to keep for own consumption, for seed and for other personal use. The

remaining balance is released to the market through any one of the channels indicated

above. In places where the producer has easy access to market places, transaction with

retailers and consumers is conducted without other intermediaries being involved in the

process.

Assemblers/Village Collectors level

A recent study on Agricultural Marketing System conducted by the Bureau of Agriculture

in Amhara Region identified three levels of assemblers/village collectors. The study

pointed out that the major ones doing the assembly service were farmer traders

particularly in remote rural markets. The second type includes assemblers that deploy

their own capital on a full-time basis to buy grains and other agricultural products from

the producer and resell them to wholesalers, processors, exporters and local retailers. The

third type is simply an agent for wholesalers, processors and exporters. He assembles

agricultural products on their behalf.

Farmers Cooperative Organizations Level

The Amhara Cooperative Promotion Bureau assumed a prominent role in building up the

capacity of small holding farmers and others engaged in the Region's other economic

regime. The Bureau provides technical assistance to farmers who are willing to work

under the umbrella of a cooperative society and register them as legally established

cooperative organizations. There are at present a total of 1056 cooperative organizations

in the Region. A majority of them (about 884) are multi-purpose agricultural cooperative

organizations. Others are specialized ones who are mainly engaged in irrigation, dairy,

fishery, natural gum and incense, apiculture etc. developments. These cooperative

organizations assemble the produce, which is destined to market, of their members in a

commercial volume and sell them to wholesalers, processors and exporters. Cooperative



20/93


organizations would enable members to strengthen their bargaining position in the market

and supply the market with reasonable commercial volume instead of small quantities as

is the case at individual farmer level.

Wholesale level

Wholesaling is the act of selling in bulk to the next level in the distribution channel.

There are as indicated earlier a total of 2,572 trade operators in the Region engaged in

wholesaling activities, though not all of them are in the business of agricultural products

wholesaling. There are grain, coffee, cotton, live animals, hides and skin etc. wholesalers

operating in the Region. Their function is not only buying agricultural products

originating from the Region; they are also engaged in distributing products of the same

from other regions of the country to retailers in the Region. For instance coffeewholesalers supply coffee grown in other regions of the country to retailers in Amhara

Region as commercial growing of coffee in the Region is not well developed yet.

Retail Level

The retail level is the last point in the system where goods are channeled to the final

consumer. It comprised as indicated earlier large numbers of operators compared to the

level preceding it, that is the wholesale level. The number of retailers usually depends on

the size of the consumer market and degree of market competition.

Processors

Industrial establishments such as flour mills, oil mills, ginneries, textile factories,

tanneries, beverage factories, spice extractors etc. are the major buyers of agricultural

products from the Region. They are either located within the Region or elsewhere in the

country. The agricultural products these processors buy are raw materials such as hides

and skins, cereals, oilseeds, cotton, pepper etc. They keep large stock depending on their

financial position and capacity utilization rate of their plants. The processors thus either

deploy their agents to producers' sites to assemble the raw material they need for their

industry or make purchase arrangements direct with independent assemblers and/or

cooperative organizations.



21/93


Exporters

Amhara Region is the major source for the country's export of primary agricultural

products such as pulses, oilseeds, spices and natural gum. Exporters who are mainly

located in Addis Ababa buy these agricultural commodities from independent assemblers,cooperative organizations and medium and large scale agricultural producers. Some

exporters invested in the agricultural sector in the Region to produce what they export.

3.4 Market Trends of Agricultural Products

The volume of agricultural products supplied to the domestic and export markets to some

extent depends on the size of the market and production. Time series data available at

regional level from the Central Statistical Authority's (CSA) Agricultural Sample Surveywere used to identify market trends of agricultural products destined for sale. However,

data on market supply at regional level are scarce for all the years considered in the trend

analysis except one estimate for 2001/02. That part of production estimated to be released

to market in the agricultural sample enumeration results of CSA for the year 2001/02 was

applied to derive the market supply for the rest of the years under review. Therefore

reference is made to the percent distribution of marketable portion of the production over

specific crops given in Table 5 above to estimate the market supply for each year under

review in the trend analysis.

The market trends for the major crop groups, namely, cereals, pulses and oilseeds are

illustrated in Figure 5. Production and market supply estimates for other crops such as

spices, vegetables, fruits and other permanent crops were incomplete in most cases and

are thus omitted from the analysis.



22/93


Figure 5: Market Trends of Major Crops in Amhara Region

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997

Years in EC

Marketsupply('000Quintal)

Cereals

Pulses

Oilseeds

The market trends of cereals, which were marketed from the Region both to the domestic

and export markets, appeared nearly stationery or constant over the last ten years. The

quantity released to market ranged from 3,499.3 thousand quintals in 1988 (EC) to

4,050.5 thousand quintals in 1997 (EC), corresponding to an average annual growth rate

of only 0.2%. Although in terms of absolute value cereal supply appeared to representthe lion's share of all marketed agricultural products, the change from year to year

remained to be insignificant. This applies to specific crops within the cereal crops

category, with the exception of wheat which exhibited quite a good increment over each

subsequent year. This could be attributed to the wheat variety that the Amhara Bureau of

Agriculture introduced to comply with the type of wheat flour mills of the Region and

elsewhere in the country need as raw materials. For detail see Table 6.

There is a clear increasing trend observed in the market supply of both pulses and

oilseeds. The former increased from 539,833 quintals in 1988 to 999,687 quintals in the

current year, with an average annual growth rate of 7%. The latter on the other hand grew

at an average annual growth rate of 8%, reaching from a supply of 400,830 quintals in

1988 to 806,819 quintals in 1997.



23/93


A straight trend line that adequately explains the movement over the period under review

can be fitted to these sets of data representing the two groups of crops. Accordingly the

trend line fitted for the movement of pulses over the period 1988 - 1997 is explained by

the following linear equation:

yp = 459.53 + 48.8t, where yp represents market supply of pulses and t time.

The regression line explains about 85% of the variation, implying the equation to be the

best fit with a correlation coefficient of 0.92. Similarly a linear trend line for oilseeds

turned to have the following linear regression equation:

yo = 315 + 37.01t, where yo represents oilseeds market supply and t time.



24/93


Table 6: Estimated Market Supply of Major Crops from Amhara Region, 1988 - 1997 (EC)

Quintal

Crop Type 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997

CEREALS 3,499,293 3,868,367 2,596,384 3,417,416 3,254,704 3,785,692 3,693,251 3,720,227 3,710,536 4,050,534

Teff 1,465,601 1,595,516 1,093,918 1,522,657 1,508,952 1,593,880 1,463,414 1,524,452 1,509,413 1,678,563

Barley 244,140 213,492 199,466 140,518 141,285 196,780 233,230 202,967 254,773 276,882

Wheat 279,594 249,211 250,885 290,727 385,750 382,081 429,286 404,758 488,778 671,319

Maize 560,634 521,874 381,444 515,259 513,358 636,608 636,393 634,527 457,062 484,752

Sorghum 709,290 1,001,848 448,435 632,230 462,060 712,918 656,931 684,925 754,333 707,625Finger millet 228,134 271,090 203,870 310,894 236,421 255,180 239,986 247,583 221,859 184,587

Oats 10,677 4,541 3,028 5,130 6,020 8,226 7,278 7,649 5,225 6,425

Rice 1,224 10,796 15,338 858 20 26,733 13,367 19,095 40,380

PULSES 539,833 566,024 537,063 579,801 814,284 777,486 829,365 800,553 834,974 999,687

Horse beans 145,284 136,954 99,912 134,245 217,429 215,786 240,305 228,046 245,167 308,317

Field peas 77,732 50,396 39,861 51,072 68,906 90,248 97,341 93,028 121,578 137,635

Haricot beans 29,590 34,382 20,466 78,151 116,276 68,695 42,317 55,506 91,408 72,924

Chick peas 123,262 150,809 163,724 158,871 166,346 154,351 199,976 176,650 161,050 181,290

Lentils 91,693 68,833 73,108 68,352 123,155 141,559 109,259 123,817 97,864 139,886

Vetch 72,271 124,650 139,992 89,111 122,173 106,847 127,881 117,364 108,608 147,653

Soya beans 815 407 3,671

Gibto 11,470 5,735 9,299 8,311

OILSEEDS 400,830 476,277 351,614 443,651 466,483 567,245 473,443 520,344 678,970 806,819

Neug 294,341 323,881 246,732 317,348 336,784 440,099 285,723 362,911 366,600 460,701

Linseed 37,822 38,423 20,749 14,819 15,355 19,085 23,516 21,300 24,763 30,657Ground nuts 2,658 71 29,686 14,878 29,098 9,328

Sunflower 2,928 5,765 9,075 15,903 36,766 26,334 11,860 16,931

Sesame seed 53,668 33,494 27,241 37,178 35,733 38,358 62,390 50,374 72,370 145,184

Rapeseed 56,385 25,854 40,507 25,854 12,927 132,324 113,354

Fenugreek 15,000 24,094 53,963 40,029 29,029 27,875 35,362 31,618 41,954 30,665

Source: Various issues of Area and Crop Production Surveys, Central Statistical Authority and Consultant's calculation.



25/93


Here again the fitted regression line explained about 68% of the variation, with a

correlation coefficient of about 0.83. Although both equations adequately explain the

variation observed in the market supply of these crops over the period under

consideration, they are seldom used for a long-term forecast. Because factors within the

market environment do not remain stationery over a long period of time or do not

continue influencing market in the same manner and magnitude as in the past.

3.5 Manufactured Products Market in the Region

In Amhara National Regional State there are about 267,700 manufacturing

establishments ranging from cottage/handicraft to large scale, the majority being

cottage/handicraft. The establishments cater manufactured products using indigenous andmodern manufacturing technologies both for the domestic and export markets. The

distribution of these establishments by major industrial groups is presented in Table 7.

There are no manufacturing establishments belonging to the industrial groups such as

manufacturing of wearing apparel, chemical and chemical products and rubber and

plastic products in the medium and large scale category operating in the Region. About

27% of the total cottage/handicraft, 24% of small scale manufacturing and only 8% of the

total medium and large scale manufacturing establishments are located in the Region,

while in terms of population size the Region stands in second position, representing 25%

of the total population of the country with its large untapped resource potential. Despite

this comparative advantage, the Region appears to depend, for its basic need of

manufactured products, on supply coming from other regions of the country and to a

large extent on import as is the case for the rest of the country.

The major products produced by the existing large and medium manufacturing

establishments of the Region include meat, flour, edible oil, biscuits & bread, beer,

mineral water, textiles, and semi processed hides and skins. Information on the annual

production volume of these products or the Region's share of these products in the total

production of the country is not readily available.



26/93


Table 7: Number of Industrial Establishments in Amhara Region

a) Cottage/Handicraft Manufacturing Establishments, 2001/02

National Amhara Percent

Industrial Group Total Region Share

Manufacture of food products and beverages 524,172 121,804 23.2

Manufacture of tobacco products 967 89 9.2

Manufacture of textiles 221,847 82,572 37.2

Manufacture of wearing apparel, dressing and dyeing of fur 24,137 9,619 39.9

Tanning and dressing of leather, manufacturing of luggage, handbags saddlery etc. 12,025 5,792 48.2

Manufacture of wood and of products of wood and cork 60,461 10,441 17.3

Publishing, printing and reproduction of recorded media 197 0.0

Manufacture of chemicals and chemical products 1,117 183 16.4

Manufacture of other non-metallic mineral products 92,402 23,935 25.9

Manufacture of fabricated metal products, except machinery & equipment 20,788 6,007 28.9

Manufacture of furniture 16,562 2,388 14.4

Grand Total 974,675 262,830 27.0

b) Small Scale Manufacturing Establishments, 2001/02



Manufacture of food products except grain mill services 693 169 24.4

Grain mill services 15,354 3,961 25.8

Manufacture of textiles 23 2 8.7

Manufacture of wearing apparel, dressing and dyeing of fur 962 117 12.2

Manufacture of wood and of products of wood and cork 167 19 11.4

Publishing, printing and reproduction of recorded media 228 84 36.8

Manufacture of other non-metallic mineral products 106 18 17.0

Manufacture of fabricated metal products, except machinery & equipment 1,306 165 12.6

Manufacture of machinery & equipment 30 1 3.3

Manufacture of furniture 1,099 252 22.9Grand Total 19,994 4,788 23.9

c) Large and Medium Scale Manufacturing Establishments, 2002/03



Manufacture of food products & beverages 288 27 9.4

Manufacture of Textiles 38 5 13.2

Tanning and dressing of leather, manufacture of footwear, luggage & handbags 56 6 10.7

Manufacturing of wood and of products of wood & cork 17 1 5.9

Manufacture of paper, paper products and printing 73 2 2.7

Manufacture of other non-metallic material products 115 14 12.2

Manufacture of basic iron and steel 10 1 10.0

Manufacture of fabricated metal product, except machinery & equipment 73 5 6.9

Manufacture of furniture 158 17 10.8

Grand Total 9654 78 8.1

Source: Cottage/Handicraft, Small and Medium & Large Scale Manufacturing Survey, CSA.

However, the contribution of the industrial establishments in terms of gross value of

production and value added could be easily ascertained from the annual survey reports of

4 Figure includes establishments existing in other regions of the country but not in Amhara Region.



27/93


the Central Statistical Authority. The reports include detailed breakdown by industrial

group for the cottage/handicraft and small scale manufacturing establishments, while for

the large and medium ones gross value of production and value added are presented in

aggregate. These are summarized in Table 8. The share of Amhara Region in total gross

value of production and value added of the country comprising all categories of

manufacturing industries stood at only 9% and 8% respectively. However, its share in

individual category, in particular in the case of cottage/handicraft and small scale

manufacturing industries, has been much higher, each commanding a share of 22% and

34% in gross value of production respectively. Its position in terms of value added in

those categories of industries has been also better than the aggregate.

Table 8: Gross Value of Production and Value Added by Industrial Group in Amhara Region, 2001/02 (000Birr)

a) Cottage/Handicraft Manufacturing Industries

Industrial Group

Gross Value of Production Value Added

National Amhara%

Share National Amhara%

Shar

Manufacture of food products and beverages 1,303,824 264,064 20.25 357,494 67,276 18.8

Manufacture of tobacco products 1,554 27 1.74 606 14 2.3

Manufacture of textiles 387,301 101,335 26.16 154,771 41,158 26.5

Manufacture of wearing apparel, dressing and dyeing of fur 99,142 29,020 29.27 49,635 14,659 29.5

Tanning and dressing of leather 27,374 12,884 47.07 11,470 5,625 49.0

Manufacture of wood and of products of wood and cork 43,603 4,453 10.21 23,569 2,366 10.0

Publishing, printing and reproduction of recorded media 1,329 - - 966 - -

Manufacture of chemicals and chemical products 4,751 1,112 23.41 2,273 275 12.

Manufacture of other non-metallic mineral products 65,679 10,417 15.86 46,121 7,459 16.Manufacture of fabricated metal products, except machinery &equipment 58,382 20,949 35.88 27,499 11,147 40.5

Manufacture of furniture 113,190 8,824 7.80 60,550 3,694 6.

Total 2,106,129 453,085 21.51 734,954 153,673 20.9



28/93


Table 8 continued.

b) Small Scale Manufacturing Industries

Industrial Group

Gross Value of Production Value Added

National Amhara%

Share National Amhara%

Shar

Manufacture of food products except grain mill services 73,499 25,324 34.45 21,400 3,372 15.7

Grain mill service 486,710 187,543 38.53 262,559 37,314 14.2

Manufacture of textiles 2,273 97 4.27 1,079 45 4.

Manufactuire of wearing apparel, dressing and dyeing of fur 16,620 1,460 8.78 8,791 898 10.2

Manufacture of luggage, handbags and footwear 363 - - 140 - -

Manufacture of wood and of products of wood and cork 4,953 796 16.07 2,203 197 8.9

Manufacture of paper and paper products 1302 - - 1,057 - -

Publishing, printing and reproduction of recorded media 12,912 1,876 14.53 5,976 648 10.8

Manufacture of chemicals and chemical products 522 - - 268 - -

Manufacture of other non-mettalic mineral products 9,482 2912 30.71 3,943 702 17.8Manufacture of fabricated metal products, except machinery &equipment 53,826 8,935 16.60 31,223 2,220 7.

Manufacture of machinery and equipment 924 27 2.92 461 6 1.3Manufacture of parts and accessories for motor vehicles andtheir engines 213 - - 118 - -Manufacture of furniture 45,661 9,738 21.33 19,749 3,943 19.9

Total 709,260 238,708 33.66 358,967 49,345 13.7

c) Large & Medium Manufacturing Industries, (2003/04)10,871,75

8 566,870 5.212,838,62

9 118,632 4.1

Grand Total13,687,14

71,258,66

3 9.23,932,55

0 321,650 8.1

It appears difficult to establish how much of these are consumed within the Region and

how much is distributed to the rest of the country or exported or how much the region

acquired from the rest of the country or import. The only documents one can comfortably

look for to derive statistics of the above types are those issued annually by the Central

Statistical Authority and/or Ethiopian Customs Authority. However, these documents

usually provide statistics at country level. It requires developing certain but realistic

assumptions to provide a breakdown at Regional level.

Thus the value of import given at country level in Table 9 has been disaggregated to

establish the share of the Region using the following parameters and assumptions:

- The ratio of the Region's agricultural production to total production of the country

for agricultural capital goods imports.

- The ratio of the Region's gross production value of manufacturing establishments

of all categories to total gross production value of the country for industrial

capital goods and raw material imports.



29/93


- The ratio of the Region's population size to total population size of the country for

transport related capital goods, durable and non-durable consumer goods, fuel,

semi-finished and miscellaneous goods import.

Table 9: Import by Broad Commodity Group, 1997 - 2002, Country Level (000 Birr)

Commodity 1997 1998 1999 2000 2001 2002Six Yearsaverage

%Share

Capital Goods (Agricultural) 79,938 91,047 84,605 98,713 59,040 53,944 77,881 0.66

Capital Goods (Industrial) 2,010,719 2,254,126 2,734,284 2,610,460 2,801,660 2,845,051 2,542,717 21.63

Capital Goods (Transport) 1,174,305 730,589 1,367,352 1,303,217 1,315,897 1,197,774 1,181,522 10.05

Consumer Goods (Durable) 815,509 963,003 1,242,319 1,224,525 1,453,925 1,411,698 1,185,163 10.08

Consumer Goods (Non-durable) 978,932 1,680,539 2,297,921 2,331,581 3,858,749 3,241,196 2,398,153 20.40

Fuel 764,562 2,561,564 1,228,974 2,535,164 2,683,810 1,694,453 1,911,421 16.26

Raw Material 165,982 180,897 198,159 190,946 255,852 198,835 198,445 1.69

Semi-finished Goods 1,449,088 1,830,747 1,709,181 2,127,909 2,534,770 2,325,969 1,996,277 16.98

Miscellaneous 51,543 92,829 208,944 303,042 380,080 559,623 266,010 2.26

Total 7,490,579 10,385,340

11,071,74

0

12,725,55

7

15,343,78

4 13,528,543

11,757,59

0 100.00

Source: Export Promotion Department, MoTI & consultants calculation.

Thus the import share of the Region is assumed to be proportional to these ratios. The

above ratios are established based on the values of the indicators estimated for the year

2001/02. Accordingly the first ratio turned out to be 0.30, the second one being 0.13 and

third one 0.25. Thus the import share of the Region is derived using these ratios and the

country's import bill for the indicated commodities and the result is presented in Table

10.

Imported commodities worth on the average about Birr 2.6 billion were believed to be

consumed in Amhara Region annually over the period considered under the above set of

assumptions. Similarly non-durable consumer goods held a share of about 23%, followed

by semi-finished consumer goods. Fuel consumption appeared to be highly exaggerated.

The ratio applied for fuel does not seem appropriate for obvious reason. It should have

taken into account factors such as number of vehicles on the road, concentration of fuel

driven machine and intensity of transport operations across the Region. A proxy estimate

using these indicators was not possible due to lack of reliable information on the

indicators.

Table 10: Estimated Import Share of Amhara Region, 1997 - 2002, (000 Birr)



30/93


Commodity 1997 1998 1999 2000 2001 2002Six Yearsaverage % Share

Capital Goods (Agricultural) 23,981 27,314 25,382 29,614 17,712 16,183 23,364 0.89

Capital Goods (Industrial) 261,393 293,036 355,457 339,360 364,216 369,857 330,553 12.64

Capital Goods (Transport) 293,576 182,647 341,838 325,804 328,974 299,443 295,381 11.30

Consumer Goods (Durable) 203,877 240,751 310,580 306,131 363,481 352,924 296,291 11.33

Consumer Goods (Non-durable) 244,733 420,135 574,480 582,895 964,687 810,299 599,538 22.93

Fuel 191,141 640,391 307,243 633,791 670,953 423,613 477,855 18.28

Raw Material 21,578 23,517 25,761 24,823 33,261 25,848 25,798 0.99

Semi-finished Goods 362,272 457,687 427,295 531,977 633,692 581,492 499,069 19.09

Miscellaneous 12,886 23,207 52,236 75,761 95,020 139,906 66,503 2.54

Total 1,615,437

2,308,68

5

2,420,27

2 2,850,156

3,471,99

6 3,019,567

2,614,35

2 100.00

The type of manufactured products produced in the Region and in the rest of the country

usually determines the market structure being operational at regional and country level.

Most of the products that the domestic industries produce belong to the category of

convenient and shopping goods. These groups of products are usually channeled to the

final consumer through a system that reduces the search time of the consumer.

Accordingly manufacturers tend to position their products to majority of consumers

through the most accessible way available in the system. The existing distribution

practice of a manufacturer in the Region as well as in the rest of the country consisted of

selling his products through a wholesaler and/or through retail outlets that he opens at

convenient locations to retailers and/or final consumers. In the case of exportable

products, the export activity is handled by one of the departments of the manufacturer

and/or the activity is handled through a subcontracting arrangement with prominent

exporters. In summary the schematic diagram presented in Figure 6 adequately depicts

the market structure for manufactured products in the Region.



31/93


Figure 6: Market Structure for Manufactured Products in Amhara Region

3.6 Trade Discipline in the Region

Several factors are expected to contribute to market stagnation. Supply shortages of

marketable commodities and services or demand shortfalls of the same are believed to be

the major factors that cause market instability. These two factors bring structural changes

in the existing marketing channel and clear and observable changes in other marketing

mix, mainly in the prices of commodities and services offered in the market. They also

invite illegal trade and malpractices to mushroom, thus bringing disruption in the existing

fair trade scenarios of the market. In general individual trade operators and/or producers

who are knowingly orchestrating or being engaged in unfair trade practices such as

deliberately adulterating commodities with foreign matters, messing up with weighing

scales etc. contribute to emergence of unfair trade scenarios. Their motive is to earn as

much profit as possible at the risk of final consumers.

According to the micro and small enterprise agency of the Region, commodities like teff,

lentils, sesame seeds, rape seeds, fenugreek etc. have high probability of being

adulterated with foreign matters. Samples of the foreign matters are displayed at the

office of the agency. They appear to have the same grain size and colour as the crop

being adulterated. It is hardly difficult for a consumer to differentiate them and

Development Studies Associates (DSA) & Shawel Consult International (SCI)

Manufacturer

Wholesaler

Retailer

Consumer

Manufacturer's

Sales Outlet Exporter

Export Market

25


32/93


afterwards to separate them from the genuine commodity. The Agency reported that there

were instances where up to 25% of the contents of a quintal comprised foreign matters.

There was also a case when a consignment destined to Addis Ababa was returned after it

was identified as having foreign matters. This is indeed a serious problem for the Region.

Once this kind of malpractice is sustained, unnoticed, the Region may eventually lose

potential markets for its products and it certainly becomes very difficult to regain them

afterwards.

The problem was reported to exist in the North Western part of the Region, which is

potentially rich for oilseeds production. Producers and traders operating in this part of the

Region and those individuals who assist in the adulteration process need to be

transformed first through education before taking any legal action. The extension workers

of the Bureau of Agriculture are the proper people to bring this issue to the attention of

the producers and traders.



33/93


4. EXPORT PROSPECTS AND POTENTIAL IN AMHARA REGION

4.1 General

The country's export to the world market mainly comprised primary agricultural

products. The average export earning of the country over the past six years stood at Birr

4,229 million, of which about 72% has been accounted to earnings from export of

agricultural products, excluding hides and skins, which are exported in semi processed or

finished form. Coffee in general is the major export commodity of the country. The

second most important export commodity of the country is hides and skins, while chat

took a third position being followed by oilseeds. The contribution of the Region to the

export earning of the country from export of commodities such as hides and skins,oilseeds, pulses, spices, live animals and natural gum is believed to be relatively large as

the Region has a good comparative resource advantage with respect to these

commodities. The aggregate export value of these products in 2004 reached about Birr

2,115 million, representing about 40% of total export revenue. Details are presented in

Table 11.

The share of export of manufactured products in the total export earning of the countryappears to be quite small. It basically comprised semi-processed products, the major one

being hides and skins. The Region has also some shares in the export of manufactured

products. Products such as hides and skins, meat and meat products and textiles are

among the major export of the Region, though difficult to provide an estimate.

Earnings from agricultural exports have been noted to fluctuate from year to year, mainly

due to falling agricultural commodity prices. This has been noted in several cases and

occasions to be a common problem of all exporting countries that depend on primary

agricultural products as their major source of foreign exchange earning. As an illustration

see and compare Figure 7 and 8. Although the country's export volume of coffee and

oilseeds showed continuous sharp rise during the last six years, with the exception of few



34/93


instances, the corresponding export value did not increase by as much. This is simply a

reflection of unstable agricultural commodity prices.

Table 11: Ethiopia's Export by Selected Commodities, 1999 - 2004

('000 Birr)

Commodity 1999 2000 2001 2002 2003 2004Six YearsAverage % Share

Coffee 2,131,8042,098,12

31,226,51

8 1,375,9671,578,63

9 2,109,744 1,753,466 41.46

Hides and Skins 241,068 390,575 630,786 525,390 486,414 589,997 477,372 11.29

Oil Seeds 249,154 235,778 317,220 335,762 522,307 736,621 399,474 9.45

Pulses 115,594 84,388 189,599 311,713 174,531 305,656 196,913 4.66

Chat 518,072 566,525 458,230 364,057 624,200 53,400 430,747 10.19

Spices 20,775 26,740 39,000 36,040 52,658 73,194 41,401 0.98

Fruits 9,797 8,806 12,135 22,708 13,998 20,758 14,700 0.35

Vegetables 21,541 17,379 36,984 45,224 40,885 72,255 39,045 0.92

Flowers 897 3,132 1,227 167 406 3,925 1,626 0.04

Live Animals 8,968 10,958 4,335 4,752 9,399 31,527 11,657 0.28

Cereals 18,142 28,339 10,185 122,626 98,867 103,463 63,604 1.50Animal fodder 1,858 1,561 4,527 5,345 2,578 2,384 3,042 0.07

Bees wax 7,249 7,352 4,750 5,360 8,052 8,366 6,855 0.16

Beverages 792 1,182 1,539 1,732 3,004 3,445 1,949 0.05

Cotton 39,001 47,407 54,813 44,114 113,338 83,576 63,708 1.51

Gold 21,872 227,275 294,556 325,140 118,522 686,004 278,895 6.59

Hop 596 2,735 2,374 1,787 2,302 1,674 1,911 0.05

Meat & meat products 30,770 19,419 12,972 14,638 54,977 62,348 32,521 0.77

Molasses 1,034 1,618 4,915 4,478 1 9,769 3,636 0.09

Natural Gum 18,416 24,223 23,910 30,052 35,618 34,754 27,829 0.66

Sugar 2,737 84,633 7,882 227,331 133,983 0 76,094 1.80

Tantalum 53,299 32,164 85,794 41,886 26,229 2,794 40,361 0.95

Tea 433 1,219 714 4,190 17,796 17,368 6,953 0.16Textile, Clothing & Apparel 17,601 21,647 35,137 38,620 63,322 70,594 41,153 0.97

Others 21,509 15,745 176,557 30,558 776,349 263,839 214,093 5.06

Grand Total 3,552,980

3,958,92

3

3,636,66

0 3,919,638

4,958,37

3 5,347,456 4,229,005 100.00

Source: Ethiopian Customs Authority & Consultants calculation.

Figure 7: Export value of Coffee and Oilseeds

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

1999 2000 2001 2002 2003 2004

Year

Valueinmillion Coffee Export

Oilseeds Export



35/93


Figure 8: Volume of Export of Coffee and Oilseeds

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

180,000

1999 2000 2001 2002 2003 2004Year

Volumeintons

Coffee Export

Oilseeds Export

4.2 Export of Major Agricultural and Manufactured Products

4.2.1 Coffee Export

Agricultural products exports represented the lion's share of the country's foreign

exchange earning as noted above, coffee being the major export commodity. Of the total

export of the country about 41% has been accounted to earnings from coffee export.

Export of coffee has been increasing during the past four years. Earning from export of

coffee increased from Birr 1,222.9 million in 2001 to 2,103.8 million in 2004,

corresponding to an average annual growth rate of 19.8%. A sharp rise was noted in

volume terms; it increased from 84,644 tons to 156,416 tons during same period, with an

average annual growth rate of 22.7%. Ethiopia exports coffee to several countries in the

world, including to countries in Africa, the Middle East, Asia, EU and USA. Germany,

which is the largest market in EU member countries, has been the major importer of

Ethiopian coffee. For instance, Germany's import of Ethiopian coffee ranged from Birr

385.1 million to Birr 616.9 million during the period 2002 and 2004 respectively. The

highest export to Germany was attained in 2002, reaching a level of Birr 738.2 million.

The next major buyers of Ethiopian coffee include Japan, Saudi Arabia, Belgium, USA

and Italy in that order of importance. For details see Table 12.



36/93


The share of the Region in coffee export appears to be negligible. The production of

coffee at a commercial scale in Amhara Region has been noted to be comparatively small

and will take sometime to be able to inject gainful impact on the economy of the Region.

According to the Bureau of Agriculture, land suitable for coffee growing has been

estimated at about 1.6 million hectares, of which only about 1% has been cultivated so

far. The estimated production in 2001/02 did not exceed 1% of the total production of the

country. Although no reliable source was available that indicates the contribution of the

Region to coffee export earning of the country, one could easily deduce from the

Region's estimated production and land utilized for coffee production how small it would

be. However, there is much potential for coffee development in the Region.

Table 12: Ethiopia's Export of Coffee by Country of Destination, 1999 - 2004

(tons & '000 Birr)

1999 2000 2001

Importing Country Quantity Value Quantity Value Quantity Value

Australia 468 8,582 449 7,529 479 6,491

Belgium 5,950 105,255 7,146 115,099 2,919 37,613

Bulgaria 18 280 18 247 36 519

Canada 1,241 25,613 810 14,638 832 12,758

China 15 187 18 279 18 164

Denmark 468 7,771 468 7,422 37 354

Djibouti 0 2 0 0 9,416 129,263

Egypt 72 1,177 108 1,900 72 855

Finland 547 13,327 190 4,121 126 2,165

France 8,527 154,507 7,326 111,542 7,023 89,364

Germany 30,485 605,460 41,119 738,180 10,533 155,238

Great Britain 744 12,693 740 12,757 665 9,841

Greece 339 5,143 378 5,673 647 10,305

Israel 1,098 16,056 594 8,889 630 5,977

Italy 5,066 116,755 5,108 111,379 3,386 56,228

Japan 24,577 443,210 26,377 445,242 22,221 282,310

Jordan 540 8,526 468 8,302 324 3,545

Korea, Republic of 201 3,794 221 3,761 212 2,621

Netherlands 1,044 16,470 3,292 46,102 248 3,865

Norway 54 1,455 126 2,593 144 2,779

Poland 1,710 26,168 1,120 17,893 306 3,394

Romania 0 0 198 2,694 234 2,508

Russia Federation 18 286 54 742 54 560

Saudi Arabia 17,617 381,272 14,619 286,794 17,527 293,292

South Africa 108 2,082 144 2,303 90 1,093

Spain 516 8,913 1,260 14,228 252 3,195

Swaziland 0 0 0 0 546 9,281

Sweden 684 13,398 414 8,619 252 4,814



37/93


Switzerland 432 9,097 198 3,267 686 10,582

Taiwan province of china 230 3,574 287 4,317 154 1,828

United Arab Emirates 486 8,192 41 600 323 4,123

United States 4,790 111,996 4,507 91,832 3,632 66,022

Yemen 432 10,823 345 7,625 515 8,559

Others 18 281 36 579 104 1,359

Total 108,493 2,122,346 118,178 2,087,149 84,644 1,222,864

Table 12 (contd.)

2002 2003 2004


Australia 515 5,857 836 9,097 665 8,802

Belgium 6,936 72,022 8,457 85,219 11,017 141,291

Bulgaria 50 523 36 490 54 1,118

Canada 926 11,184 1,112 13,459 1,416 18,450

China 72 800 89 865 161 1,901

Denmark 199 1,990 397 3,681 144 2,080

Djibouti 53 672 284 2,782 289 6,775

Egypt 271 2,389 125 1,404 145 2,293

Finland 486 7,509 234 3,178 252 3,483

France 8,423 84,447 6,991 67,652 7,133 87,926

Germany 32,551 385,104 40,034 454,609 47,429 616,913

Great Britain 953 10,681 1,149 15,274 2,369 36,597

Greece 468 5,712 371 3,658 317 3,692

Israel 1,026 9,110 794 6,961 456 6,235

Italy 6,438 97,119 6,324 92,538 7,088 112,281

Japan 30,815 295,321 31,392 335,007 37,336 473,989

Jordan 378 3,514 162 1,414 144 1,791

Korea, Republic of 230 2,426 460 4,651 375 4,618

Netherlands 736 8,146 1,963 17,756 730 10,949

Norawy 270 4,103 846 12,220 527 7,841

Poland 216 2,061 1,530 13,566 414 4,306

Romania 252 2,018 234 1,917 54 1,458

Russia Federation 180 1,571 288 2,694 1,080 12,618

Saudi Arabia 17,894 233,660 18,561 236,554 20,262 294,315

South Africa 135 1,190 81 769 93 1,024

Spain 396 4,297 481 4,836 504 6,812

Swaziland 90 1,383 90 802 90 979

Sweden 306 5,458 1,337 16,230 2,523 32,701

Switzerland 2,442 29,555 3,058 31,060 3,221 41,272

Taiwan province of china 174 1,594 277 2,709 290 3,472

United Arab Emirates 758 7,182 662 7,600 852 9,873

United States 3,749 63,307 5,390 86,901 7,046 119,991

Yemen 654 8,034 651 8,069 409 6,628

Others 462 6,029 1,536 18,056 1,533 19,326

Total 119,504 1,375,967 136,231 1,563,677 156,416 2,103,800




38/93


4.2.2 Hides and Skins

The second largest export of the country is hides and skins. It is exported in the majority

of cases after being processed to a certain stage. It includes pickled sheep and goat skins,

wet blue and crust hides and skins, and a small quantity of finished leather. The country

exported hides and skins worth on the average Birr 477.4 million during the past six years

(see Table 13), of which export of sheep skins took a share of about 58%, while goat

skins commanding 39%. Amhara Region is the second largest in terms of livestock size

in the country, accounting 25%, 35% and 29% of the cattle, sheep and goat population of

the country respectively. It is expected that the Region would contribute by as much to

the foreign exchange earning of the country from export of hides and skin.

Table 13: Ethiopia's Export of Hides and Skins, 1999 2004

(Kg and Birr)

1999 2000 2001 2002

Type of Hides & Skins Quantity Value Quantity Value Quantity Value Quantity Value

Hides (Bovine) 1,440 10,296 3,197 32,535 3,051143,76

9 4,502 79,760

Sheep or lamb skins 3,137 175,419 4,770260,41

3 4,355317,11

9 2,734 251,278

Goat or kid skins 1,372 30,568 2,927 53,797 3,782159,05

0 4,097 187,229

Other hides/skins 283 24,786 456 43,829 279 10,848 162 7,122

Total 6,232 241,068 11,351390,57

5 11,468630,78

6 11,495 525,390

Table 13 (contd.)

2003 2004 % change 2004/2003 Average Export

Type of Hides & Skins Quantity Value Quantity Value Quantity Value Quantity Value

Hides (Bovine) 5,456 52,873 7,231 68,649 32.5 29.8 4,146 64,647

Sheep or lamb skins 3,411 301,640 4,153352,36

7 21.8 16.8 3,760 276,373

Goat or kid skins 3,169 129,997 4,012163,13

0 26.6 25.5 3,227 120,629

Other hides/skins 23 1,904 134 5,851 482.6 207.3 223 15,723

Total 12,060 486,414 15,529

589,99

7 28.8 21.3 11,356 477,372


Like coffee Ethiopia's export of hides and skins are destined to different countries around

the globe. Italy, which is known to be one of the best in leather products in EU countries,

has been the major and long standing buyer of Ethiopian hides and skins. Her import



39/93


from Ethiopia, for example, was worth in the range of Birr 102.3 million and 283.7 over

the past six years, though transaction fluctuation has been noted during the period mainly

because of a falling or rising commodity prices. The shaded rows in Table 14 show

countries importing relatively large volume of hides and skins from the country.

Table 14: Ethiopia's Export of Hides & Skins by Country of Destination, 1999 - 2004(tons & '000 Birr)

1999 2000 2001 2002

Importing Country Quantity Value Quantity Value Quantity Value Quantity Value

China 36 3,960 41 3,392 171 18,559 376 30,384

Djibouti 0 0 19 797 872 37,274 39 3,302

France 16 1,317 1 433 2 942 19 3,974

Germany 44 3,784 84 8,026 113 11,205 11 3,503

Great Britania 769 56,546 794 61,722 871 95,519 1,167 112,287

Greece 72 818 189 1,826 200 4,519 189 2,051

Hong Kong 463 2,231 742 4,623 632 8,461 1,240 9,603

India 197 7,929 1,852 58,706 1,682 62,286 740 36,995

Indonesia 420 26,320 596 42,994 285 23,284 240 15,734

Italy 3,781 102,337 5,858 130,632 5,552 283,746 6,459 230,687

Japan 52 4,147 132 8,678 103 9,016 70 9,106

Malaysia 203 14,249 318 23,794 170 15,599 243 21,482

Netherlands 29 1,595 43 2,384 93 1,240 57 1,113

Pakistan 0 0 0 0 9 492 0 36

Romania 12 2,452 30 6,034 32 10,795 40 8,105

Spain 34 3,120 335 21,690 246 19,383 229 13,208

Switzerland 0 0 0 0 66 4,740 30 2,693

Thailand 62 6,177 77 4,569 108 12,312 89 8,422

United States 0 0 0 12 20 1,000 21 834Others 45 4,086 240 10,261 240 10,412 236 11,872

Total 6,232 241,068 11,351 390,575 11,468 630,786 11,495 525,390



40/93


Table 14 (contd.)

2003 2004 Average Export


China 1,563 37,295 3,542 90,723 955 30,719

Djibouti 14 1,244 18 592 160 7,201France 13 2,741 21 4,611 12 2,336

Germany 76 7,710 24

Trade Sector Report Final

Documents