Securing local oil seed supply in Ethiopia

SAMANU is an established Ethiopian producer of fast-moving consumer goods and carries leading brands for edible oil, soaps and detergent and pasta.

After years of being dependent on  imported crude oil for its edible oil production, the company is now embarking on an ambitious local sourcing project. This will allow SAMANU to become less dependent on hard currency – while creating jobs, increasing food security, and providing increased income for thousands of local farmers.

From import to local sourcing

As of today, Samanu has depended on imported unprocessed oil, which they refine, pack, and distribute to the Ethiopian consumer market. A newly constructed Solvent Extraction Plant, cofinanced by Norfund, will allow the company to backwards integrate in the value chain into sourcing the raw material for edible oil production locally. To ensure enough volume of locally produced oil seeds, SAMANU intends to develop large oil seed clusters in Ethiopia over the next six years, aiming to provide livelihoods for up to 200,000 smallholder farmers.

While SAMANU will buy established crops like soybean and sesame, the company is also targeting a new large and growing market in Ethiopia for sunflower- and rapeseed oil. These are new crops for Ethiopian farmers. Through this Business Support grant, Norfund supports SAMANU in assisting contracted smallholder farmers with inputs like high quality seeds, fertilizers, training, and capacity building, as well as agricultural technology to boost productivity.  With this, SAMANU has the ambition to become the leading buyer of sunflower in Ethiopia.

Will thousands of farmers choose to start growing sunflower and rapeseed?

While planting new crops constitutes a high risk to farmers, there is a financial case for them to grow sunflower and rapeseed as new rotational crop for existing crops.

The first step when introducing a new crop is to test different seed varieties in demo-plots in different parts of the country. The demo-plots function both as a testing plot for SAMANU to analyze which seeds to buy for the farmers, as well as to showcase and promote the new crop towards the farmers.

“The farmers want to see successful Sunflower pioneers before trying this new crop themselves. Being patient, giving them time to learn from demo-plots, while showing them respect and answering their questions is crucial for SAMANU’s success.”

Malick Coulibaly, SAMANU

SAMANU’s plan is to source from both farmer clusters and commercial farmers*. The company will provide improved seeds and training to farmers, and as sunflower is a new value chain, the clusters will be monitored directly and regularly. In the first years, SAMANU will provide hybrid seed, OPVs (open pollinated seeds) as well as input and output financing to incentivize the farmers. A dual strategy to establish clusters with hybrid seed while promoting OPV to surrounding farmers will allow the business to grow supply faster.

* The financial contribution from Norfund Business Support will be used for farmer clusters only, not to commercial farms.

Farmer clusters, intermediary agents and professional field extension teams

SAMANU’s sourcing model involves working with trusted intermediary agents who will be the key contact points for the farmer cluster groups. The agents are envisioned to provide financing, extension, and loyalty programs to farmers. This will facilitate growth in supply, while also reducing side selling risks. In addition, SAMANU is investing in and establishing professional field extension teams that will provide agronomic advice, capacity building, and monitoring support to the intermediary agents and farmers.

With SAMANU’s wide variety of consumer products being produced, the company can buy multiple different crops  from the farmers, including wheat, soybean, sunflower, rapeseed and maize. Hence, introducing sunflower as one of several rotational crops will increase the local farmers’ crop productivity, improve soil fertility, and enhance resilience.