Ethiopia's Transformation Towards A Market-Driven Seed Sector

The Ethiopian seed sector is transforming into a pluralistic and more market-driven sector. Ethiopian seed companies are increasing production and quality, while Dutch companies are entering the market with high-quality vegetable seeds. It is part of a transition, supported by the Wageningen Center for Development Innovation (WCDI).

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

Resilience, an agribusiness consultancy, focuses on supporting ten Ethiopian seed companies in the project. These have emerged in the past fifteen years, during the liberalization of the agricultural economy. Until then, the Ethiopian government supplied almost all seed to farmers through public seed companies. These semi-governmental institutions did not properly match their production to demand, leading to shortages of sought-after seed and seed of varying quality. As a result, many Ethiopian farmers used part of the harvest to sow a year later and yields were often low. For example, the average potato yield in Ethiopia is less than 10 tons per hectare, compared to 21 tons per hectare worldwide.

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

Judgement
Resilience has created a checklist to assess the ten companies on sixteen aspects of a good seed company, says director Joep van den Broek. This involves assessing whether the seed is produced and cleaned correctly, but also about management - are the accounting and marketing in order? Resilience also assesses whether relationship management with suppliers and buyers is well organized and whether the companies have sufficient funds so that they can 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 the three or four weakest points.' A common problem of all seed companies is their lack of access to loans. That is why Resilience has now developed a financial product so that Ethiopian banks provide credit to the seed companies and guarantee the ENSP project.

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

Basic seed
The ten seed companies still receive basic seed from the research institutes of the Ethiopian government. They then propagate that basic seed on their farm or with farmers they work with. A new development is that local seed companies are allowed to register varieties themselves and import seed from abroad. Three of the ten companies will soon import varieties and test them in field trials. 'This is a tough and 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 companies supply seeds 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 oil seeds, such as sesame seeds. The seed for these crops is still mainly distributed through cooperatives in Ethiopia.

Vegetables
In addition, the cultivation of potatoes and vegetables is on the rise in Ethiopia. And Dutch seed companies come into the picture for these crops, also because the Ethiopian research institutes hardly breed vegetable seeds. Seven Dutch seed companies participate in ENSP. Five companies supply vegetable seeds, two companies are potato breeders.

Enza Zaden is one of the participants in ENSP. The breeding company from Enkhuizen supplies hybrid seeds in Ethiopia, mainly of tomatoes, peppers and onions. Hybrid seeds are high-yielding seeds 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. Like the other companies, the company trains thousands of farmers in the ENSP project how to grow with hybrid seeds. Farmers learn how and when to sow 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. 'A lot of development is needed before farmers understand the potential of our seeds.'

The training courses are often provided by Ethiopian graduates who do 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 chosen to produce seed in Ethiopia. Nunhems Zaden, BASF's vegetable breeding company, does that. Nunhems imports parent lines of vegetable varieties into Ethiopia, which are combined into hybrid seeds through controlled pollination on its advanced farm and then 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; therefore, additional registration trials are now underway in Ethiopia.

These tests should show whether the varieties to be registered are suitable for the Ethiopian climate and produce a good yield, says Ben Depraetere, director of Nunhems Ethiopia. Nunhems' hybrid seeds can potentially yield three times as much as the seeds used by most Ethiopian farmers, but all growing conditions must be right. To achieve this, Nunhems provides farmer field schools together with the local distributor and development organization SNV.

Tests
On the advice of WUR, the Ethiopian Agricultural Authority now allows companies selected by it to carry out the tests themselves under the authority's watchful eye, making the procedure faster and cheaper. Depraetere appreciates this reform and sees it as a step in the right direction.

In addition, two Dutch breeding companies operate in Ethiopia that supply open-pollinated varieties. This is seed that can reproduce through pollination, so the seed can be grown by farmers for several years. Bakker Brothers supplies older open-pollinated vegetable varieties in Ethiopia and introduces new hybrid seeds. EASI Seeds has similar plans. An interesting feature of EASI Seeds is that it uses youth to distribute seeds to farming communities. The company therefore trains youth to become local sellers of quality seeds and other agricultural inputs.

Lively
Because local and Dutch companies have different products and strategies, this leads to a vibrant seed sector under development, and that is exactly the goal of ENSP, says Gareth Borman, project leader at WUR. We also see this with the two potato breeders who are active in Ethiopia under the flag of ENSP. HZPC is a large Dutch potato breeder that imports seed potatoes into Ethiopia, while Solynta is a smaller biotechnology company specialized in potato seed breeding. These companies also work together with Ethiopian farmers, researchers and regulators on propagation techniques and the introduction of new technology. The Ethiopian seed market is still under construction, but has a lot of growth potential for companies. The demand for locally produced seeds of traditional food crops exceeds the supply and the total imports of vegetable seeds in Ethiopia have grown from virtually zero to 12 million euros in just five years. But growth is hampered by a shortage of foreign currency, Borman says. In Ethiopia, local distributors have to pay for seed imports in foreign currency and have to go to their bank for this. Ethiopia has a quota system on which scarce dollars and euros are spent. Because Ethiopia has a weak export position and the government spends a lot of money in foreign currency, there is a shortage of foreign currency in agriculture and horticulture.

Capacity building
WCDI has always emphasized that the project should strengthen both companies and government. It therefore advised the Ethiopian government to revise the Ethiopian Seed Law, says program manager Mohammed Hassena of ENSP in Addis Ababa. As a result, there are now three types of seed registration that better suit the different crops. Furthermore, the project recommended the creation of an independent authority, outside the Ministry of Agriculture, to focus on variety registration and protection of plant varieties. According to Mohammed, these legal reforms form the basis of the private seed sector.

In another example, ENSP co-funded the development of laboratory capacity for screening seeds for harmful viruses in Ethiopia. The tomato and pepper seeds that companies like Nunhems produce in Ethiopia must be virus-free before they are exported to the global market, Depraetere says. Until now, Nunhems has therefore sent 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 carry out these virus tests. ENSP paid for the training and Nunhems supplied the equipment, so that Ethiopia builds the capacity for this locally.

But ENSP has more examples of capacity building in Ethiopia, says Mohammed. 'We support two universities, in Haramaya and Bahir Dar, with curriculum development and MSc courses in plant breeding. We want these students to be trained not only in the technical aspects of seed production, but also in market development and legal issues. In addition, we encourage student internships at seed companies, so that we attract talented young people to the seed sector.'

Architect
The seed sector is gradually transforming into a vibrant, pluralistic and market-oriented sector. According to Van den Broek, WUR is the architect of this development. 'The Wageningen Center for Development Innovation has a world-class seed 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 social bottlenecks and has drawn up a transition plan to a market-driven seed sector based on a thorough analysis. WCDI also provided a toolbox to shape that transition. And very important: they are modest people. And that modesty fits in very well with the proud Ethiopians who do not allow themselves to be told what to do.'