From Farmers to Breweries: Bridging Gaps through Local Sourcing

For Ethiopia, a largely agrarian country, a simple development in agriculture comes as a boon. With 20 beer brands and the ever-increasing consumption reaching 10lts per capita, the nation imported over 156,600tns of malt last year to quench this thirst. In a bid to reverse this trend and support smallholder farmers, some breweries are reaching out to local farmers linking them to the commercial supply chains by locally sourcing raw materials. These breweries are paving the way for the

Since 2013, Feye Tessema, the 40-year-old farmer, had been harvesting sky-scraping amounts of products on his eight-hectare land situated in Bekoji wereda, Arsi Zone, 218.2Km from Addis Abeba.

The success would not have been possible with the application of usual farming methods. However, it is a result of his partnership with one of the renowned breweries in Ethiopia- Heineken Breweries S.C. The latter provided an improved variety of seeds while the former agreed to deliver malt barley.

Feye first experimented on two hectares of land after taking 12qls of seeds enabling him to harvest 60qls of output a hectare.

“The yield of the seed was unanticipated,” said Feye, who is amongst the four million smallholder farmers engaged in the production of barley.

After linking with Heineken in 2013, he managed to earn at least 1,200 Br on average for a quintal from his annual production- two times higher than the amount he collected four years ago.

“My productivity has doubled since then,” remarked Feye, a father of four.

Not only with Feye, the 144-year-old multinational company, after entering the Ethiopian market four years ago, managed to create a connection with over 24,836 farmers in Bekoji and its surrounding area- a four-hour journey from the company’s brewery plant located at Qlinto, Akaki Qality District. The number of people under this five-year programme has surged by 15 folds from the amount recorded during its inception.

“The seeds provided to the farmers yield more than the regular ones,” said Fekadu Beshah, External Communication & Sustainability manager of Heineken. “It is also pest-resistant.”

One of the farmers from Kofele wereda involved in the local sourcing project of Heineken Brewery, checking the yield of his barley farm.

Heineken, which started operations in Ethiopia by acquiring Harar and Bedelle breweries for 163.4 million dollars, implemented the programme of sourcing raw materials from farmers with the aim of getting between 28pc and 30pc input from local farmers like Feye.

“I built a warehouse and a residence after joining the program,” he said. “Now, I have a capital of around six million Birr.”

The success story is not exclusive to Bekoji.

A similar type of project has also benefited farmers and the unemployed youth living in the Kofele Town, Qore wereda 296.9Km from Addis Abeba, including Kemal Edeo.

Kemal, 26, had been looking for a job since 2012 after quitting his secondary school education program in Kofele.

Following the protests of the youth in Oromia, about 160 unemployed youngsters like Kemal have been granted a right to lease 80ha of land and own four tractors repossessed from investors who had failed to develop the land for a long time.

Then, after preparing the land for sowing through different mechanisms, Kemal, along with his friends, contacted Heineken’s representatives through the wereda’s agriculture extension workers.

Heeding their willingness to join the programme, Heineken provided training, pesticides and seeds to the youth- who are yet to see their products in the coming harvesting season.

Heineken, which started operations in Ethiopia by acquiring Harar and Bedelle breweries for 163.4 million dollars, implemented the programme of sourcing raw materials from farmers with the aim of getting between 28pc and 30pc input from local farmers.

“I expect 35qls to 40qls of barley a hectare,” he said.

Like Kemal, the rest targeted to produce 2,800qls of barley and supply it to the brewery in the next three months.

Heineken’s project dubbed Community Revenue Enhancement through Agricultural Technology Extension (CREATE) started operating with the target of covering 10,000ha of land with improved malt barley production, aiming to gain 20,000tns through local sourcing from farmers with 120,000 smallholder family members, according to Tarekegn Garomsa, a local sourcing manager at the Heineken brewery.

Heineken has implemented the project in partnership with European Cooperative for Rural Development (EUCORD).

Not only Heineken, its closest competitor in Ethiopia as well as in the global market, Diageo, has been conducting a similar programme since 2013. Known as New Vision for Development, the project encompasses 6,400 smallholder farmers, producing 8,000tns of barley a year collectively.

Dashen brewery also initiated a local sourcing programme in 2012 working with 64,000 farmers through the Amhara Regional Agriculture & Natural Resources Bureau. It finances and provides them with improved seeds and fertilizers to enhance their production. The brewery processes barley in its sister company- Gonder Malt Factory.

Another Brewery, Habesha, works collectively with farmers in the West Arsi Zone, Oromia Regional State.

“Our program has significantly improved the livelihoods of smallholder farmers to grow abundant and better crops and earn more money,” said Bruktawit Tessema, Communications & Brand manager at Diageo, which started operations in the Ethiopian market in 2012 after acquiring Meta Abo Brewery at 225 million dollars.

Besides barley, Diageo has started growing sorghum as an input for one of its beers since last year. It developed a new sorghum supply chain in the northern part of Ethiopia. After its success, Diageo received the Vision for Development Award from World Economic Forum (WEF) in New York on September 18, 2017.

Diageo won the award after submitting a proposal to the Forum and vying with other companies. The proposal was aimed at raising the capacity and earnings of farmers using locally produced agricultural raw materials.

Companies like Diageo and Heineken transport the barley produced by the farmers to Asella Malt Factory for processing. Then, at Asella the grain is transformed into malt making it easy to be fermented by the breweries.

The malt factory produces 360,000qls every year- over half of which is imported from various countries, whereas the rest is produced by farmers, cooperatives and commercial farmers. The amount has been steady for more than half a decade.

“As most traders usually mix the low and high-quality barley, it is hard to boost production,” said Samson Fisseha, cost and budget division head of Assela Malt Factory. “Half of the barley brought by the local producers won’t be turned into malt.”

Despite having suitable ecology, Ethiopia imported over 156,600tns of malt in the past fiscal year while producing only 52,200tns.

As studies indicate, the number is expected to grow in the years ahead owing to the expansion of breweries in the country. Presently, seven breweries are operational in Ethiopia, having a production capacity of over 12.6 million hectolitres of beer, producing over 20 beer brands in the nation. These companies require a minimum of 236,280tns of malt.

Due to the growth in the beer market, the total market consumption of malt is estimated to soar to 200,000tns in the next three years, according to the projection by Heineken Brewery.

“As the demand is very elastic, breweries will surely create more linkage with the local farmers in the future,” said Fekadu.



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