Niger Oilseed – Ethiopia’s Hidden Card
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Ethiopia’s production of Niger Oilseed in MY 2020/21 is forecast at 300,000 MT, which is up slightly by 5,000 MT over last year’s revised figure. This estimate assumes improved yields due to good weather conditions and increased harvested area. Over the last several years, Niger Oilseed production has shown steady growth, most of which is driven by increased area harvested as farmers respond to the rising price of Niger Oilseed-based cooking oil and other derived products such as animal feed.
Recently, this vital Oilseed has been added to the list of ECX traded commodities, which is expected to create improved market incentives for farmers to expand Seed production in the years to come. Niger Oilseed, also known as now, is the second most produced in Ethiopia, accounting for a little more than one-fourth of Oilseed production. Close to 800,000 small-scale farmers produce Niger Oilseed, and more than 95 percent of production is concentrated in the highlands of Oromia and Amhara. Ethiopia, India, and Myanmar are the world’s largest producers of Niger Oilseeds.
MY 2020/21 consumption is projected to reach 288,000 MT in Ethiopia, up roughly by 10,000 MT from the preceding year due to increased domestic demand for cooking oil. Consumption is expected to keep growing in the coming years as demand for cooking oil and livestock feed continues to grow. Expansion of edible oil processing facilities and new integrated agro-industrial parks are anticipated to spur demand for Niger Seed.
The agro-industrial parks are expected to utilize Niger Seeds as a raw material for cooking oil production and other by-products, such as Niger Seed cake for animal feed. Recently, a new edible oil industrial facility was inaugurated in Bure Integrated Agro-Industrial Park and can produce 60 percent of the country’s demand for cooking oils. In addition, a couple of other privately owned large-scale edible oil factories are under construction that is anticipated to go operational in the next couple of years. The large factories should produce cooking oil that would satisfy Ethiopia’s demand and substitute imports with local productions.
Niger Oilseed Trade in Ethiopia
Export of Niger Seed in MY 2020/21 is forecasted at 12,000 MT, which remains unchanged from the previous year’s figures. Export volumes have contracted slightly more than half due to increased local market prices. The surge in local prices of Niger Seed has resulted in squeezed export margins, discouraging traders from exporting the crop. Some traders export other Oilseeds (such as groundnuts) with better price margins. Besides, the volatile security situation in major growing areas (especially in the zones of East and West Wellega) has affected Niger Seed trade in the past couple of years.
There is increasing competition between local edible oil processors and Niger Seed exporters, and exporters purchase Niger Seed from the local market at prices higher than the international market. Currently, traders sell Niger Seed to global markets at a loss. Data from Trade Data Monitor indicates that monthly average export prices were below local market prices for the period between October 2020 and January 2021.
Exporters, on average, registered a loss margin of $25 per MT, compared to the profit margin of $55 per MT over the same period in the previous year. With this elevated local price, the local food processors struggle to source Niger Seed at reasonable prices. In February 2021, Niger Seed export prices increased to $1,069 per MT from $907 per MT in October 2020, up 18 percent. The rise in current prices is not expected despite the arrival of the new crop since the beginning of January 2021. See Figure 5 for details on export and local market price trends.
Other sources: USDA
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