Ethiopia’s oilseed sector expected to expand to meet growing demand

ETHIOPIA – Ethiopia’s production of oilseeds mainly sesame and soybeans is forecast to increase in the year 2018/19 basically as a result of growing demand for cooking oil and livestock feed, most notably soybean meal for poultry production, according to USDA’s June 14 GAIN report.

Rise in production is expected to greatly contribute to the country’s foreign exchange earnings since sesame is the country’s top oilseed export followed by Niger seed and soybeans.

However, production of Niger seed   is expected to remain unchanged from the previous year.

Sesame production for the year 2018/19 is forecast at 415,000 metric tons, up 25,000 metric tons from last year based on the assumption that farmers will plant more sesame next season because of higher local prices.

Production was estimated at 390,000 metric tons in MY17/18 exceeding the previous year’s level by slightly more than 70,000 metric tons.

The upward trend is attributed to several factors including favorable weather conditions, slight increase in area harvested better agronomic practices, and improved inputs.

Sesame accounts for one-third of total oilseed production mainly grown in the northern and north-western lowlands bordering Sudan and Eritrea, and is the second most important forex-generating crop after coffee.

Ethiopia is the world’s fourth largest sesame producers behind India, China, and Myanmar.

In 2016/17, exports of major oilseeds generated nearly US$360 million in exports and higher earnings may be realized following the efforts by the government to improve the sector through Integrated Agro-Industrial Parks (IAIPs).

This is one of the strategies the government is banking on to reduce import bills especially for cooking oil, for GDP growth, job creation, foreign exchange earnings, and small and medium-sized enterprise (SME) development.

One of the planned parks in Amhara will reportedly have a processing capacity of 2 million metric tons of oilseeds, more than double the volume of oilseeds currently produced in the country.

Consumption is projected to slightly increase to 50,000 metric tons compared to the previous year, as only about 5% is consumed locally.

This is attributed to rising agro-processing capacity and increased consumer demand for processed foods such as, edible oil, tahini, halva, and confectionary items.

Sesame exports will reach 360,000 metric tons in MY18/19 due to projected production increases and continued strong demand from China.

International market is driven by strong demand from China, tight supplies and a 25% increase in reference price, also pushing local sesame prices higher.

Ethiopia is the largest producer of Niger seed followed by India, Myanmar, and Nepal and it exports the seed mainly to the US.

MY18/19 soybean production is estimated at 120,000 metric tons, up 5,000 metric tons in response to growing local demand growing local demand for cooking oil, soy-based foods, and livestock feed.

Soybeans contribute nearly 10 percent to the country’s total oilseed production and account for only 4 percent of area planted to oilseeds.

Consumption is expected to continue its upward climb as consumers demand more soy-based edible oil and as the poultry sector demands more soybean meal.

soybean exports are expected to remain unchanged from the previous year’s record of nearly 80,000 metric tons and about 95% of exports go to five countries, India, China, Vietnam, Canada, and Pakistan.

Niger, cotton, soybeans, and sunflower are mainly used to locally produce cooking oils, local production of edible oils is forecast at 28,000 metric tons.

Consumption is driven by demand for palm oil, Niger seed oil, sunflower, soybean, linseed, ground nut, and cottonseed oils.

Imports of edible oil have been rapidly increasing over the last three years, with an average annual growth rate of a little more than 10% and forecast expects this to continue rising with imports reaching 548,000 metric tons.

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