Sesame value-add and processing in Ethiopia is a promising opportunity. Here we feature an example of a brownfield opportunity, in which an investment of nearly $10 million in expanding an existing processor could return an estimated IRR of 30-40% over 10 years.
Sesame production is growing by 10% annually, with area expansion projected to increase production by a rate of 20%. Productivity is expected to increase from 0.68 to 1 tons per hectare, surpassing the world average and becoming second to China. There is significant potential for growth in terms of quantity and quality through various improved production techniques and cultivation of additional new land.
Though there is limited local use and consumption of sesame in Ethiopia, tahini is increasingly demanded by Middle Eastern and Asian businesses, as well as by restaurants and hotels. Exports are a major opportunity. 88% of Ethiopia’ sesame is exported, with China and Israel major importers. Ethiopia’s export earnings from sesame grew by 24% from 2010-14.
In the near-term there is clear demand for hulled and roasted sesame on international export markets and ground sesame (tahini) in domestic and regional markets. By increasing in-country value-add, Ethiopia can tap into higher-end markets not yet being accessed, building on its successful brand image as a large supplier. In the longer-term, sesame oil may be a significant opportunity with the local Wolega variety being ideally positioned for oil extraction. However, in the near term it may be challenging to successfully enter the global sesame oil market due to significant fluctuations in domestic prices
and strong competition from large global exporters such as India and China.
WHY INVEST IN ETHIOPIA?
Strong supply of quality raw inputs :- Favorable climates have introduced a large diversity of sesame seed varieties including the world-famous Humera variety that is used in confectionery. Northwestern Ethiopia is particularly well suited for sesame production with Amhara a major producer of Humera sesame. Furthermore, there is an opportunity to align with Ethiopia’s Agricultural Commercialization Clusters (ACC) initiative. The identified Amhara Sesame Cluster has some of the highest sesame production in the country, comprising a 40% share of national production.
Proximity to key export markets :- Ethiopia is a top-10 producer of sesame contributing 7% of global sesame production. Sesame is already Ethiopia’s second-largest earner of foreign exchange; the cluster alone brought in revenues of ~ETB* 4 billion from sesame sales in 2015. Ethiopia’s geographic proximity to key Middle-Eastern export markets such as Israel and Egypt is a key advantage and presents a growing sales opportunity.
ETB= Ethiopian Birr
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The Agricultural Transformation Agency is an initiative of the Federal Government of Ethiopia Off Meskal Flower Road, across from Commercial Graduates Association