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

1. 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

2. 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

3. 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

4. 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 52,037
Manufacturing of food products and beverages 686 67,471 38,134 18,612
Share (%) 31.61 38.40 40.05 35.77
Production, processing and preserving of meat, F&V 10 2,716 1,890 579
Manufacture 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

5. 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 1,744,544 532,859 445,209
Manufacturing of food products and beverages 60,860 913,798 269,354 239,945
Share (%) 52.19 52.38 50.55 53.89
Manufacturing of food products, except milling 25,430 373,259 116,458 110,102
Share (%) 21.81 21.40 21.86 24.73
Production, processing and preserving of meat, F&V 269 3,271 1,162 1,238
Manufacture of…
… bakery products 14,218 221,301 69,754 65,760
… other product n.e.c. 10,195 140,881 42,326 40,349
Manufacture of grain mill services 35,430 540,539 152,896 129,843
Share (%) 30.38 30.98 28.69 29.16

6. 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)

7. 2. Food processing in Ethiopia
• Share of food processing in total value added manufacturing (2011)
0
10
20
30
40
50
60
70
80
90
100
2 2.5 3 3.5 4 4.5 5 5.5
Sharefoodandbeveragesin
manufacturing(%)
log(GDP per capita)
Eth

8. 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

9. 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 28
Mixed teff 8 32 11 35 8 30 9 31
Red teff 11 44 13 42 10 37 10 34
Injera 2 8 3 10 3 11 7 24
Total teff 25 100 31 100 27 100 29 100

10. 3. Enjera and urban markets
• HICES 2011, urban areas: 16% of food budget on food eaten away
from home;
• Striking differences by poverty quintile
0
5
10
15
20
25
30
q1 q2 q3 q4 q5
Shareinfoodexpenditures(%)
enjera out-of-home

11. • 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

12. • 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

13. a. Enjera sellers
5. Operations enjera sellers and EMEs
Unit Large Small Retailers Gulits
wholesalers wholesalers
Gender head of household
share
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

14. a. Enjera sellers
Share in commercial enjera sales (%)
5. Operations enjera sellers and EMEs
0
20
40
60
80
100
Addis Ababa Dire Dawa Nekemte
Large wholesalers Small wholesalers
Retailers Gulits

15. 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 68.1
Enjera wholesalers % 3.8 3.7 7.5
Enjera retailers % 8.9 21.4 10.1
Gulits % 2.4 4.8 9.4
Institutions % 0.2 0.0 0.3
Restaurants % 2.2 0.5 4.3
Supermarkets/mini-markets % 0.0 0.0 0.0
Teff flour sellers % 0.0 0.0 0.3
Others % 0.0 0.0 0.0
Total % 100.0 100.0 100.0
Share commercial enjera % 15.2 29.9 27.1
Growth over last ten years (recall) % +4 +11 +3

16. a. Procurement
6. Procurement and sales
Large Medium Small
From inside city
From wholesale market, on truck % 4.1 2.3 0.0
From wholesale market, trader based there % 3.0 6.8 0.0
From cereal shops % 0.0 6.8 4.6
From mills that also sell cereals % 81.5 79.5 84.1
Other place % 0.0 0.0 9.3
From outside city
On temporary market % 3.7 4.5 1.3
Not on temporary market % 7.7 0.0 0.7
Total % 100.0 100.0 100.0

17. b. Sales
6. Procurement and sales
Large Medium Small
Clients
Consumers % 41.7 37.7 85.7
Enjera retailers % 13.2 17.0 6.3
Gulits % 0.3 0.7 2.6
Institutions % 0.1 0.9 0.0
Restaurants % 42.5 37.1 5.2
Supermarkets/mini-markets % 2.3 0.2 0.0
Others % 0.0 6.7 0.5
Total % 100.0 100.0 100.2

18. Enjeras increasingly being prepared by mixing the local teff with imported rice
6. Procurement and sales
Large Medium Small
Mean Sd. Mean Sd. Mean Sd.
Share magna teff 19.5 37.2 11.9 31.4 4.9 20.0
Share white teff 52.6 43.7 50.6 44.9 35.9 42.1
Share mix teff 11.2 29.7 24.7 39.7 37.6 40.6
Share red teff 2.4 13.5 0.6 4.0 3.0 13.7
Share rice 10.1 9.3 8.7 10.1 8.4 10.4
Share sorghum 1.3 3.4 0.9 3.6 8.1 16.0
Share wheat 1.4 5.5 0.0 0.0 0.1 0.8
Share maize 1.4 3.5 0.9 3.0 1.9 5.6
Share millet 0.0 0.0 0.0 0.0 0.1 0.7
Share others 0.0 0.0 1.7 11.2 0.1 0.9
Total 100.0 100.0 100.0
Large Medium Small
Mean Mean Mean
Addis Ababa 10.9 11.5 13.1
Dire Dawa 10.0 3.8 1.9
Nekempte 0.0 0.0 0.0
Share of rice by cityMixing of flour for enjera by enjera making enterprises

19. • Rapidly growing rice imports in the country
• Estimate that 20% of imports used in Addis for preparation of enjera
6. Procurement and sales
0
50
100
150
200
MillionUSD
Value of imports
0
50
100
150
200
250
300
1000tons
Quantity imported

20. 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

21. a. Employment and technology
7. Employment, productivity and value added
Large Medium Small
Total males numbers 4.3 1.1 0.3
Total females numbers 11.5 5.7 1.5
Total workers numbers 15.7 6.8 1.8
Average monthly salary paid Birr 1,073 810 772
Technology
Electric mitad numbers 7.19 1.49 0.50
Mitads on wood numbers 3.13 1.96 0.83
Current value of an electric mitad Birr 983 953 899
Current value of a mitad on wood Birr 264 342 166
Capacity utilization of electric mitads % 64.4 67.8 68.0
If 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

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

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

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

25. e. Associates of value added
7. Employment, productivity and value added
Dep. variable: Value added of enterprise Unit coeff. z-value
Labor
Family labor (male) log() -0.140 -0.77
Family labor (female) log() 0.431 2.17**
Non Family Permanent labor (male) log() -0.050 -0.24
Non Family Permanent labor (female) log() 0.475 3.25***
Non Family Temporary workers (male) log() 0.027 0.06
Non 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 0.02
Share mix teff % 0.002 0.60
Share red teff % 0.002 0.34
Share rice % 0.027 3.07***
Share sorghum % 0.006 0.75
Share wheat % -0.009 -0.30
Share maize % 0.016 1.30
Cooperative yes=1 0.416 1.93*
City dummies yes
Intercept 3.370 7.80***

26. 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

27. 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
0.00
1.00
2.00
3.00
4.00
5.00
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Ratio rice over teff Ratio rice over sorghum

28. • 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

29. • 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

30. • Attention to regulations of food processing when markets take off
Addis 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