Today, the sesame market in Ethiopia, one of the major exporters of the seeds in the world, is blooming and the reasons are many. Farmers are celebrating better yields through enhanced inputs such as pesticides and fertilisers. Exporters are reaping the benefits of trading outside ECX's floor and being exempted from credit ceilings set by the National Bank of Ethiopia (NBE) after the devaluation of the Birr by 15pc in October 2017, writes BERHANE HAILEMARIAM, FORTUNE STAFF WRITER.
One of the three million farmers engaged in the cultivation of sesame in Ethiopia is Almaz Yemane, who for over a dozen years has been cultivating sesame in Humera and Benishangul, in the Northern and Western regions of Ethiopia.
Lately, she has found that the market has gotten better. Just three years ago, Almaz used to sell a quintal of sesame for 1,800 Br. The past fiscal year, the same amount has come to fetch 3,350 Br. The volume has likewise improved, yielding from 120qls to 130qls on 100ha of land to 372qls in the same period.
The trend is similarly felt by farmers of the Kafta Humera wereda, inside Humera city. In the three years from 2014/15, average yield grew from four quintals to 5.26qls a hectare.
"It is the result of weather conditions that have been getting better these past years," she said.
But the Ministry of Agriculture & Natural Resources (MoANR), which targets the production of sesame for the current fiscal year to reach 350,000tns, and generate 500 million dollars in exports, cites that the reasons are multifaceted.
"Provision of better inputs in terms of fertilisers and pesticides contributed to the production growth," said Fisseha Tolosa, a senior agronomist at the Ministry, "but the expansion of cultivated land coverage and better infrastructure in the farming areas played an even significant role."
Workineh Hiruy, the manager of Legude Agriculture Plc, and a farmer for a quarter of a century at Niguara, a special zone in Humera, is likewise reaping the benefits. He finds that production has improved, as a result of better weather, and the returns are getting better too.
"I am selling a quintal of sesame today twice the price I used to just two years ago," he said.
Export prices are similarly up, satisfying exporters. This is unlike the case in 2015 when they complained of diminishing revenues, especially as a result of new competitors, such as Sudan, who began exporting similar quality sesame seeds.
Muley Addis, who has been exporting sesame for almost a decade, attributes the spike in the price of sesame to a shortage of sesame production in East African countries such as Sudan, Kenya, Uganda and other northern producers of sesame like Tunisia.
"This is complemented by the fact that countries such as India and China are running out of sesame, and have started to eye Ethiopia as a major source," Muley told Fortune.
In January, the global price of sesame reached 1,450 dollars a ton, compared to the months of July and August which was 1,050 dollars.
This is in the face of export revenue of oilseeds, including sesame, having dipped the past year. It was 307 million dollars less, by around 49pc compared to the previous year. After a study by the Ministry that found lack of finance, traceability and updated market information were hampering the sesame market, a regulation was drafted by the Ministry of Trade (MoT) to allow farmers to trade sesame outside the Ethiopian Commodity Exchange (ECX) trading floor, which has been mandatory.
The effort was a bid to mimic the performance of coffee. Just months after another amendment allowed coffee to be traded outside of the ECX floor, it fetched 215 million dollars in the first quarter of the current fiscal year.
The draft regulation on sesame is expected to be implemented soon, according to Kahsu Kelali, senior sesame expert at the Ministry, and allow the trading of sesame without the price being set by ECX.
For Amare Kebede, assistant professor at Haramaya University's science department who has been researching oilseeds since 2012, however, the reforms should be more comprehensive.
"Making the production value-chain market-oriented, genetically improving sesame seeds so they become resistant to pests, and expanding irrigated farmlands are necessary," Amare said.
The global price of the sesame has ranged between 1,500 dollars and 1,800 dollars a ton this year, with China, Turkey, Saudi Arabia and Israel as the main export destinations of Ethiopia. China, akin to the overall exports of goods, takes the most significant share.
A proof of its global demand, Ethiopia's sesame dominated ECX's floor this past December. It surpassed coffee both in value and volume, taking a 63pc share of the entire 105,208tns of commodities that were traded and raking in 2.2 billion Br. It was a 17pc and 24pc surge in value and volume, with a six percent price increase compared to the previous month.
From 26 different sorts of sesame Humera/Gonder, which is the type Almaz cultivates at one of her farms, makes up for over a third of the volume of sesame that was traded.
Likewise, in the half-year of the current fiscal year, 166,691tns of sesame were traded, which was worth 5.2 billion Br. Again it had a higher volume than that of coffee's 133,818tns, but a lower value.
For this surge, some exporters cite the devaluation of the Birr by 15pc against a basket of major currencies last October in a bid to make exported goods more competitive in terms of price on the global market. The National Bank of Ethiopia (NBE) also excluded exporters from the credit cap that was imposed on commercial banks shortly thereafter.
"Since their returns are in foreign currency, the devaluation helped exporters cover transportation and labour costs that are paid in Birr more easily," Temesgen Tafete, Ambassel Trading's export sector manager.
Most of the sesame that is traded at ECX comes from the Humera, Metema, Wollo, Chanka, Wellega and Pawi, from four regional states of the country. The volume that is cultivated has grown from 30,000tns a quarter of a century ago to 430,000tns in the past fiscal year. Much of this is sourced from the Amhara and Tigray regions where a total of 600,000ha of land is cultivated for sesame.
To ensure that there is more productivity in these areas, and profitability as a result of that, a project by the Netherlands government called Sesame Business Network (SBN) has been engaging with farmers in the northern part of Ethiopia since 2013.
The project is working with 7,500 farmers on modernising sesame production by establishing a network for the value chain system of the farmers and the traders. It also gives training to the farmers on modern sesame cultivation methods, reduction of post-harvest waste, and accessing loans.