As part of the 2nd WoodCluster Fieldschool in Ethiopia, the Market & Value Chain Analysis group set out to map the value chain of Eucalyptus products from the Chefasine Kebele (village) and capture market dynamics in the nearby towns of Tula and Hawassa. The group comprised of the students Patricia and Beatus (Sokoine University of Agriculture in Tanzania), Antonny (Makerere University in Uganda), Alexander (Rhine-Waal University in Germany), Redat (Hawassa University in Ethiopia), and the supervisors Kendisha, Asabeneh and Busha (TU Dresden in Germany).
The group wanted to diagnose the value chain of Eucalyptus products from Chefasine to local markets and conduct a market survey on costs, prices and actors involved in the Eucalyptus value chain. It was clear to us that the small-scale farmers sell their standing trees at the farm gate and were often unaware of the downstream market condition of their products and thus, had limited power in bargaining for better selling prices. Therefore, we hoped the brief analysis would give the small-scale farmers helpful insights about the market and on the possible options for improving their position.
We started by interviewing 3 Eucalyptus producing farmers in Chefasine, all of which had quite different stories to tell.
Mr. Kassa had been planting Eucalyptus for 12 years. The farmer sold his trees as standing trees to a middleman, who organized the harvesting and transport to the market. He did not have the capacity to do these activities on his own, thus easily accepted the price offered by the middleman. He was not satisfied with the price he got but had limited bargaining power.
Mr. Berhanu had his Eucalyptus woodlot for almost 20 years. The current rotation was not intended for sale, as he was planning to build a new house and thus, was going to use them as building poles. His previous harvests were sold to traders in Tula. He used his social networks to market his trees. Once he had a number of offers for his trees, he consulted with his wife, who made the final decision on which offer to accept. The farmer still did not receive a satisfactory price for his trees due to lower bargaining power compared to the middlemen.
Ms. Adanech has been growing Eucalyptus for 18 years now. It is an important source of fuelwood for her own household. The remaining wood would be sold to middlemen who bought the standing trees at the farm gate. In times of limited income from other crops, the Eucalyptus woodlot would allow her to make some much needed cash. But she is not happy with the price. To improve her situation, she has been collaborating with a broker whom she got to know through the WoodCluster PIP workshop in 2018, but even these efforts have not allowed her woodlot’s value to increase much.
After interviewing the farmers, we set out to conduct a Eucalyptus market analysis at Tula and Hawassa markets. In Tula, we met one trader of Eucalyptus poles and split wood and another trader selling Eucalyptus firewood. Both received their supply from middlemen. The Eucalyptus poles seller said that the current market conditions were not favorable due to the low prices and limited demand. The low demand causes a lot of the wood to remain in storage for a longer period of time and thus, would often depreciate quicker during the rainy season. The firewood seller was similarly unhappy due to the low demand. She stored her firewood in 3 rooms of her house. She hoped to finish the construction of these rooms once she accumulated enough profits from selling firewood. The rooms would eventually be rented out to tenants.
In Hawassa, we talked to two traders operating in larger Eucalyptus pole markets. In such an urban setting, the market conditions seemed to be more favorable. Still, their profits were limited.
With all the information collected, we were able to calculate the value addition at each value chain node. Synthesizing the interviews at the farmer and market levels, we figured out that a Eucalyptus tree after 3-4 years gets sold as poles for 14-17 Birr/pole (1 Euro = 32 Birr) at the farm gate to middlemen. A middleman would sell the poles to a wholesaler in Hawassa for 25 to 55 Birr/pole. The only value-adding activities wholesalers were engaged in was the assortment of the poles into size classes. The selling price to consumers thus ranges from 38 to 55 Birr/pole, as surveyed in the market in Hawassa.
By coordinating with the Woodlot inventory studen group, we were able to establish the market price of farmers’ woodlots. It became clear that the farmers were only receiving a small share of what their product was sold at on the market. There is a potential for them to maximize their revenues from woodlots, also as a way to motivate tree planting and to meet the increasing demand of wood products in the domestic market.
On the last day of the field school, we presented our findings to the farmers. We mapped the full value chain of each of the 3 farmer’s Eucalyptus products on a flipchart and explained how much value was being added at each stage. We showed the farmers the prices at which they could sell their product if they would collaboratively harvest and organize the transport and marketing in Tula. We finally recommended them to further cooperate amongst each other and at least share market information. For the long-term a potential solution was recommended to be a tree marketing cooperative.
The experience was extremely insightful for all the participating students. Interacting with farmers and traders gave us the opportunity to practice many skills required during field research activities. We thank the participating farmers and traders for their willingness and openness to share their experiences with us. We also want to express our gratitude to Asabeneh for interpreting the interviews and Belayneh (Chefasine village administrator) for facilitating our research.
By Alexander Koch, Beatus John Temu, Antonny Tugaineyo and Kendisha Hintz