ETHIOPIAN DEVELOPMENT RESEARCH INSTITUTE

Food processing in developing countries: The case of ready-to-eat staple food (Enjera) markets in Urban Ethiopia

By Thomas WolduWith Girum Abebe, Ermias Engida, Seneshaw Tamru and Bart Minten:

Ethiopian Economics Association (EEA) 14th International Conference on the Ethiopian Economy

July21-24, 2016Addis Ababa

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1. Introduction• Quick growth of cities in developing countries - rapid food system

transformation

• 2010( > 50%), 1950s ( 30 % ) world population living in cities

• Growth of cities -higher commercial flows urban to rural, changes in the types of food eaten

• Shares of cities in total food consumption > urban population shares per se (Reardon et al., 2015)

• Urban food markets - dominant markets for farmers, at least as important as rural markets and - more important than export markets

1. Introduction• Studies on food system transformation in developing countries so far focused on;

• Modern retail revolution

• Share of branded and packaged foods

• Increasing share of food eaten away from home

• Finally, the issue of processed foods

• In Ethiopia, 1 million people are employed in food processing enterprises,

• But its functioning and transformation is not well understood

• In this paper, we look specifically at commercial enjera making in Ethiopia

• How increasing emergence of enjera making enterprises and preparation changes is leading to food system transformation,

• implication on gender, employment, & trade

2. Data and methodology• We rely on a number of secondary data

• HICES dataset from the past four rounds: 1995/96, 1999/00, 2004/05, and 2010/11.

• CSA large and medium scale manufacturing (CSA, 2012) and small scale manufacturing survey (CSA, 2015)

• We further fielded a number of primary surveys in three cities in• Addis Ababa; tier 1 cities; capital and largest city

• Dire Dawa; the tier 2 cities; 0.34 million in 2007 census

• Finally, Nekempte; tier 3 cities; 0.075 million in 2007 census

• We conducted the survey on mills, enejra sellers and enjera making enterprises

• To select a representative sample of outlets

• 10 sub-cities in Addis: half of them randomly selected (after geographical stratification)

• List of all mills from the wereda/kebele Trade and Industry Offices

• In each selected sub-city, four wereda/kebeles were selected randomly

• Within the selected wereda/kebeles, two ketenas were selected randomly

2. Data and methodology

• Taking into account the relative number of the outlets;• (a) At the kebele level; All the flour mills, large(>=5 mitads) and

medium(3 and 4 mitads) EMEs were surveyed• (b) At the ketena level; Informal microsellers of enjera (gulits)

and enjera retailers were randomly selected and interviewed

• A similar strategy with minor adjustments in Dire Dawa and Nekemt

• In total, information from 243 mills, 345 enjera sellers, and 214 EMEs

2. Data and methodology

1. We see that enjera consumption has been increasing rapidly over time (HICES)• Enjera makes 6% in 2000, 13% in 2005 and 38 % in 2011 of all teff expenditures

• We further note that it is especially the relatively rich urban population that buys enjera in ready-to-eat form

• This seems to indicate that improving incomes in Ethiopia will lead to further expansion of this sector

3.Results

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Q1 Q2 Q3 Q4 Q5Figure 1: Share of enjera expenditures in total teff expenditures in urban areas

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

3. Results

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 increasing rice imports in the country

3. Results

There are few large enterprises, who are also supplying for the export market

3. Results

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

3. Enjera making micro-enterprises that almost exclusively employ women are

rapidly starting up

• It is estimated that in Addis alone over 30,000 people are employed in enjera making enterprises and enjera retailing • i.e. between 0.5 percent and 1 percent of Addis’s total population

3. Results

Large Medium SmallUnit Mean Sd. Mean Sd. Mean Sd.

Males numbers 4.26 10.14 1.11 1.45 0.30 1.05Females numbers 11.45 7.24 5.68 6.16 1.54 0.96Total workers numbers 15.71 14.87 6.80 6.27 1.84 1.45

Employment by enjera making enterprises

4. We note upscaling of those enjera making enterprises that supply to the growing food service sector

3. Results

Large Medium Small Mean Mean Mean

SalesEnjera sales per week 6,080 1,287 364ClientsConsumers 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

• First, seemingly the rising opportunity costs of women• CSA data; costs of maids increase by 60 percent between 2000 and 2015

• Some people forego hiring maids who would make enjera at home and buy enjerainstead

• The maids also find it logical to make and sell enjera instead of serving

• Second, the growth of cities, the take-off of employment in services or in manufacturing, and income growth;• higher share of the population relying on out-of-home consumption, - development of a

food service industry, especially restaurants

• out-of-home food expenditures makes 3.8 % in 1996, 13.2% in 2011 of per capita expenditures in urban areas (HICES)

• This industry is mostly supplied by the increasing EME sector, seemingly giving an impetus to the emergence of especially larger EMEs.

4. Drivers of the changes

• Two potential drivers - for the increasing mixing of teff with rice;

• First, rice is replacing sorghum for whiteness and flexibility of enjera

• As stated by the large majority of EMEs, it improves whiteness and flexibility

• Second, improved price ratios compared with teff and with sorghum

4. Drivers of the changes

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Ratio rice over teff Ratio rice over sorghum

• First, enjera markets are quickly transforming and a large number of people, especially in urban areas, now buy enjera instead of preparing it themselves

• Second, enjeras are increasingly being prepared by mixing the local teff with imported rice, having important implications on food imports

• Third, micro-enterprises that prepare enjera are quickly emerging. • These enterprises are overall small but the relatively larger ones are catering to the

rapidly increasing food service sector in Ethiopia

• However, access to electricity is shown to be an important constraint to their operations.

• Fourth, formal export markets are taking off, now accounting for 10 million USD exports per year

5. Conclusion

• First, as developing countries’ economies grow and urbanization takes off, more attention is needed to the off-farm aspect of agricultural value chains as they have important impacts on employment, prices and food security for urban as well as rural populations.

• Second, as agricultural economies and cities develop, international trade is seemingly becoming increasingly important as these cities are easier to access, for food imports as well as exports• More attention should therefore be paid to trade policies and their impact

5. Policy implications

Thank you for your time!