ETHIOPIAN DEVELOPMENT RESEARCH INSTITUTE

Food processing, transformation and job creation: The case of ready-to-eat staple food (enjera) markets in urban Ethiopia

Presentation by Thomas Assefa and Bart Minten

(with Girum Abebe, Ermias Engida, Seneshaw Tamru)

EDRI September 2, 2016

Addis Ababa

PRELIMINARY RESULTS!

1

1. Introduction• Important changes in agricultural markets worldwide• One cause of food system transformation: Quick growth of cities and

the emergence of an urban middle class• Globally: in 2010 more than 50% in cities; in 1950 30%• Impact on food systems:- higher commercial flows urban to rural - changes in the types of food eaten- urban food markets often dominant markets for farmers

1. Introduction• Work in the past focused on: 1/ Modern retail revolution 2/ Take-off of branded and packaged foods 3/ Different diets urban vs rural• Especially processed food and convenience food often important in

changing diets• In this analysis, we look at commercial enjera making and retailing in

Ethiopia

2. Food processing in Ethiopia • CSA large/medium-scale manufacturing survey (2010/11) (>10 people)

Number of Number of Of which permanent

establishments persons engaged Male Female

Total 2,170 175,698 95,211 52,037Manufacturing of food products and beverages 686 67,471 38,134 18,612Share (%) 31.61 38.40 40.05 35.77Production, processing and preserving of meat, F&V 10 2,716 1,890 579Manufacture of…… grain mill products 197 10,077 5,590 2,419… bakery products 247 14,917 6,619 7,696… sugar and sugar confectionery 31 15,273 8,897 1,303… malt liquors and malt 10 6,049 4,398 1,021… soft drinks and production of mineral water 53 7,986 4,822 2,648

2. Food processing in Ethiopia • CSA small-scale manufacturing survey (2013/14) (10 people or less)

Number of Number of Of which permanent

estab. persons engaged Male Female

Total 116,604 1,744,544 532,859 445,209Manufacturing of food products and beverages 60,860 913,798 269,354 239,945Share (%) 52.19 52.38 50.55 53.89Manufacturing of food products, except milling 25,430 373,259 116,458 110,102Share (%) 21.81 21.40 21.86 24.73Production, processing and preserving of meat, F&V 269 3,271 1,162 1,238Manufacture of…… bakery products 14,218 221,301 69,754 65,760… other product n.e.c. 10,195 140,881 42,326 40,349Manufacture of grain mill services 35,430 540,539 152,896 129,843Share (%) 30.38 30.98 28.69 29.16

2. Food processing in Ethiopia • Food processing sector:- Number of establishments: 61,546- Permanent male: 307,488- Permanent female: 258,557

- Number of persons engaged: 981,269 (2 percent of economically active population)

2. Food processing in Ethiopia • Share of food processing in total value added manufacturing (2011)

2 2.5 3 3.5 4 4.5 5 5.50

102030405060708090

100

log(GDP per capita)

Shar

e fo

od a

nd b

ever

ages

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man

ufac

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)

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3. Enjera and urban markets • Enjera traditional pancake/bread• Main ingredient teff, but other cereals used as well• Flour mixed with water and starter (yeast); mixture ferments for a

couple of days; dough forms• Baked on an electric or wooden mitad

3. Enjera and urban markets • Consumption (kg/capita/year), based on HICES

1996 2000 2005 2011

kgs Share (%) kgs Share

(%) kgs Share (%) kgs Share

(%)White teff 5 20 6 19 7 26 8 28Mixed teff 8 32 11 35 8 30 9 31Red teff 11 44 13 42 10 37 10 34Injera 2 8 3 10 3 11 7 24Total teff 25 100 31 100 27 100 29 100

3. Enjera and urban markets • HICES 2011, urban areas: 16% of food budget on food eaten away

from home; • Striking differences by poverty quintile

q1 q2 q3 q4 q50

5

10

15

20

25

30

enjera out-of-home

Shar

e in

food

exp

endi

ture

s (%

)

• Fielded a number of primary surveys in three cities:1. Addis Ababa; tier 1 city: 3.3 million people 2. Dire Dawa; tier 2 city: 340,000 people 3. Nekemte; tier 3 city: 75,000 people

• Survey with mills, enejra sellers, and enjera making enterprises (EME)• To select a representative sample of outlets• 10 sub-cities in Addis: half of them randomly selected• List of all mills from the wereda/kebele Trade and Industry Offices • In each selected sub-city, 4 wereda/kebeles selected randomly• Within the selected wereda/kebeles, two ketenas selected randomly

4. Data

• Sample in Addis:(a) At the kebele level; All the flour mills, large(>=5 mitads) and medium (3 and 4 mitads) EMEs surveyed(b) At the ketena level; Informal microsellers of enjera (gulits) and enjera retailers randomly surveyed

• A similar strategy with minor adjustments in Dire Dawa and Nekemte• In total, 243 mills, 345 enjera sellers, and 214 EMEs• Proper extrapolation done for calculation market shares

4. Data

a. Enjera sellers

5. Operations enjera sellers and EMEs

Unit Large Small Retailers Gulits

wholesalers wholesalers

Gender head of householdshare male(%) 55 29 33 9

Age years 38 36 37 37

Level of education (years of schooling) number 11.8 8.4 7.1 3.5

Starting date outlet year 2003 2003 2003 2000

Share cooperative share(%) 65 36 6 0

Share of enjera in total sales of outlet share(%) 78 86 49 96

Share of sellers that make enjera themselves share(%) 100 95 46 100

Number of observations Number 31 45 225 44

a. Enjera sellersShare in commercial enjera sales (%)

5. Operations enjera sellers and EMEs

Addis Ababa Dire Dawa Nekemte02040

6080

100

Large wholesalers Small wholesalersRetailers Gulits

How important commercial enjera markets?

5. Operations enjera sellers and EMEs

Share different clients in mill (%) Addis Dire Nekemte Ababa Dawa Consumers % 82.4 69.6 68.1Enjera wholesalers % 3.8 3.7 7.5Enjera retailers % 8.9 21.4 10.1Gulits % 2.4 4.8 9.4Institutions % 0.2 0.0 0.3Restaurants % 2.2 0.5 4.3Supermarkets/mini-markets % 0.0 0.0 0.0Teff flour sellers % 0.0 0.0 0.3Others % 0.0 0.0 0.0Total % 100.0 100.0 100.0Share commercial enjera % 15.2 29.9 27.1Growth over last ten years (recall) % +4 +11 +3

a. Procurement

6. Procurement and sales

Large Medium SmallFrom inside cityFrom wholesale market, on truck % 4.1 2.3 0.0From wholesale market, trader based there % 3.0 6.8 0.0From cereal shops % 0.0 6.8 4.6From mills that also sell cereals % 81.5 79.5 84.1Other place % 0.0 0.0 9.3From outside cityOn temporary market % 3.7 4.5 1.3Not on temporary market % 7.7 0.0 0.7Total % 100.0 100.0 100.0

b. Sales

6. Procurement and sales

Large Medium SmallClients Consumers % 41.7 37.7 85.7Enjera retailers % 13.2 17.0 6.3Gulits % 0.3 0.7 2.6Institutions % 0.1 0.9 0.0Restaurants % 42.5 37.1 5.2Supermarkets/mini-markets % 2.3 0.2 0.0Others % 0.0 6.7 0.5Total % 100.0 100.0 100.2

Enjeras increasingly being prepared by mixing the local teff with imported rice

6. Procurement and sales

Large Medium SmallMean Sd. Mean Sd. Mean Sd.

Share magna teff 19.5 37.2 11.9 31.4 4.9 20.0Share white teff 52.6 43.7 50.6 44.9 35.9 42.1Share mix teff 11.2 29.7 24.7 39.7 37.6 40.6Share red teff 2.4 13.5 0.6 4.0 3.0 13.7Share rice 10.1 9.3 8.7 10.1 8.4 10.4Share sorghum 1.3 3.4 0.9 3.6 8.1 16.0Share wheat 1.4 5.5 0.0 0.0 0.1 0.8Share maize 1.4 3.5 0.9 3.0 1.9 5.6Share millet 0.0 0.0 0.0 0.0 0.1 0.7Share others 0.0 0.0 1.7 11.2 0.1 0.9Total 100.0 100.0 100.0

Large Medium SmallMean Mean Mean

Addis Ababa 10.9 11.5 13.1Dire Dawa 10.0 3.8 1.9Nekempte 0.0 0.0 0.0

Share of rice by city Mixing of flour for enjera by enjera making enterprises

• Rapidly growing rice imports in the country• Estimate that 20% of imports used in Addis for preparation of enjera

6. Procurement and sales

20002002

20042006

20082010

20122014

0

50

100

150

200Value of imports

Mill

ion

USD

20002002

20042006

20082010

20122014

050

100150200250300

Quantity imported

1000

tons

Implications on trade; however, some enterprises also supplying to the export market

6. Procurement and sales

Value of fresh enjera export in million birr Growth of enjera export by destination

a. Employment and technology 7. Employment, productivity and value added

Large Medium SmallTotal males numbers 4.3 1.1 0.3Total females numbers 11.5 5.7 1.5Total workers numbers 15.7 6.8 1.8Average monthly salary paid Birr 1,073 810 772TechnologyElectric mitad numbers 7.19 1.49 0.50Mitads on wood numbers 3.13 1.96 0.83Current value of an electric mitad Birr 983 953 899Current value of a mitad on wood Birr 264 342 166Capacity utilization of electric mitads % 64.4 67.8 68.0If on wood only, why no shift to electric mitads?-"Initial costs of electric mitad too high" % 75.9-"Running costs of an electric mitad too high" % 68.3-"Have no access to electricity required for mitad" % 36.1-"Wooden mitad faster in producing specific quantity" % 27.7

b. Productivity of EME 7. Employment, productivity and value added

c. Associates of higher-valued enjera (multi-nominal)7. Employment, productivity and value added

Slightly white Very whiteBase=red enjera Unit coeff. z-value coeff. z-valueDefault (red/mixed teff)Share magna teff % 0.025 * 1.64 0.074 *** 3.99Share white teff % 0.004 0.96 0.037*** 3.27Share rice % 0.016 0.73 0.055* 1.78Share sorghum % -0.098*** -5.25 -0.069** -2.03Share other cereals % 0.005 0.17 0.036 0.94Intercept 1.610*** 4.12 -3.066*** -2.73Number of observations 269 LR chi2(10) 112.62Prob>chi2 0.00 ***, **, *: significant at the 1%, 5% and 10% respectively

d. Associates of prices of enjera 7. Employment, productivity and value added

Specification 1 Specification 2 Specification 3 Specification 4Dep. variable: Log of price Unit coeff. t-value coeff. t-value coeff. t-value coeff. t-valueColor enjera red (default) Color enjera white yes=1 0.167 *** 3.77 0.107 *** 3.22 0.063 * 1.65Color enjera very white yes=1 0.229 *** 4.81 0.162 *** 4.51 0.090 ** 2.23Large wholesaler (default) Small wholesaler yes=1 -0.046 -1.58 -0.023 -0.79 -0.032 -1.15Retailer yes=1 0.000 0.00 0.039 1.53 0.064 ** 2.43Gulit yes=1 -0.292*** -4.23 -0.214*** -3.44 -0.128 ** -2.17Composition enjera (red/mixed teff default)Share magna teff 0.0004 0.68Share white teff % 0.0004 1.35Share rice % -0.0003 -0.28Share sorghum % -0.0064 *** -3.73Share other cereals % -0.0021 ** -2.36Cooperative yes=1 0.070*** 3.40 0.084*** 3.93 0.0846 *** 3.75Addis (Default)Dire Dawa yes=1 -0.086* -1.78 -0.068 -1.55 -0.048 -1.22 0.033 0.66Nekemte yes=1 -0.211*** -7.09 -0.158*** -5.63 -0.149*** -5.22 -0.116 *** -3.45Intercept 1.063*** 25.33 1.230*** 49.56 1.091*** 27.35 1.122 *** 20.79Number of observations 334 333 333 268

e. Associates of value added 7. Employment, productivity and value added

Dep. variable: Value added of enterprise Unit coeff. z-valueLabor Family labor (male) log() -0.140 -0.77Family labor (female) log() 0.431 2.17**Non Family Permanent labor (male) log() -0.050 -0.24Non Family Permanent labor (female) log() 0.475 3.25***Non Family Temporary workers (male) log() 0.027 0.06Non Family Temporary workers (female) log() 0.243 1.85*Number of total mitads log() 0.646 4.66***Share electric % 0.000 -0.07

Composition enjera (magna teff default)Share white teff % 0.000 0.02Share mix teff % 0.002 0.60 Share red teff % 0.002 0.34 Share rice % 0.027 3.07***Share sorghum % 0.006 0.75Share wheat % -0.009 -0.30Share maize % 0.016 1.30

Cooperative yes=1 0.416 1.93*City dummies yesIntercept 3.370 7.80***

1. Rising opportunity costs of women • Increasing employment opportunities • Costs of maids increased by 60 percent between 2000 and 2015 (CSA

data)2. Growth of the food service sector • Issue of comparability but HICES: 4% out-of-home consumption in 1996;

16 % in 2011• Sector mostly supplied by the increasing EME sector, giving an impetus

to the emergence of especially larger EMEs.

8. Drivers of the changes

3. Two potential drivers for the increasing mixing with rice - rice is replacing sorghum for whiteness and flexibility of enjera

- improved price ratios compared with teff and with sorghum

8. Drivers of the changes

20012002

20032004

20052006

20072008

20092010

20112012

20132014

0.00

1.00

2.00

3.00

4.00

5.00

Ratio rice over teffRatio rice over sorghum

• Urban enjera markets quickly growing and transforming:- More than 100,000 people employed in the sector - 250 million USD per year - Mostly women • Trade effects:- Enjeras being prepared by mixing the local teff with imported rice- Export markets taking off, now accounting for 10 million USD exports per

year• Enterprise growth (overall still very small enterprises)- By size: differential technologies, value addition and profitability- Relatively larger ones cater to the rapidly increasing food service sector

(already 16 percent of food budget)

9. Conclusions

• Off-farm segment in agriculture needs more attention: - important impacts on employment (especially for women), prices, and

food security for urban populations- important impacts on farmers• With food system transformation, international trade issues more

important• More focus needed on stimulating local (import-substituting) rice

production

10. Policy implications

• Attention to regulations of food processing when markets take offAddis Admas newspaper: “… police arrested about 5 people in Lideta sub city, about 23 in Kolfe Keranyo sub city (13 recently and 8 people already arrested related to the case before). 5 owners and 12 workers were suspected in Akaki Kaliti with 3 of the owners and the 12 workers being arrested while the 2 owners are still on the run. These people mix teff flour with earth, sawdust and other cereals’ waste products and bake injera using unpurified flour. These guys do mix 30 percent of teff flour with about 70 percent of the stated foreign matter.”

10. Policy implications