Ethiopian Business Review

Revival of Niger Seed Oil Business

 Producing cooking oil from Niger seed is an established tradition in Ethiopia. However with increased imports of cheap palm oil in the last couple of years, Niger seed oil became scares in the market. Recently things are changing; with declining appetite of the public for palm oil, Niger seed oil business is reviving with plenty of brands entering the market. Pictured above is some of the bottled Niger oil produced locally and abundantly available in many parts of the city. Producing cooking oil from Niger seed is an established tradition in Ethiopia. However with increased imports of cheap palm oil in the last couple of years, Niger seed oil became scares in the market. Recently things are changing; with declining appetite of the public for palm oil, Niger seed oil business is reviving with plenty of brands entering the market. Pictured above is some of the bottled Niger oil produced locally and abundantly available in many parts of the city.

Ethiopia is a country of paradox that it frequently lacks what it possesses abundantly. As one of the top producers of oil seeds which are the main inputs for cooking oil production, the country should have been a major producer of the product. But the country imports a large amount of edible oil. Four years ago with the skyrocketing prices of this dearly needed household consumption, the government interfered to ban all importers and started importing and distributing the item through its own channels.

New developments however seem to change the circumstances recently. Local production and distribution of cooking oil has been expanding in the past few years. In Addis Ababa, around Megenagna, in a market place called Shola  Gebeya, the business for cooking oil is booming. Several shops sale the product in wholesale and retail. Particularly in the place called “Rani Yezeyit block”, after the name of the producer, Niger seed (Nueg) oil has now become very famous. The shelves of every shop are filled with packed  vessels of  one, two, three and five litters of oil.   

Hussein Aydo, 34, and a father of two runs one such shops in the same block. He sells close to 250 litres a week and his daily revenue has reached ETB1,500. He learnt the business five years ago; when he was hired as a shop keeper in one of those shops in the blocks. “The number of these oil shops is increasing,” Hussein told EBR. “Buyers and producers are also growing side by side” he adds. 

Tsegereda Teklu, 21, who works as a shop keeper for one of the oil selling shops agrees with Hussein. She herself sells around 45 litres of oil worth of ETB2,000 every day almost more than double she used to sell a couple of years ago. Most of her customers prefer the unbottled oil which is sold directly from the barrel to their own vessel. The demand is increasing daily, Tsegereda explains. Tsehay, Alem and Gondar are some of the famous brands in the edible Niger seed oil market.

Despite the fact that there is a visible price difference between the locally produced Niger seed oil and the imported palm oil, several people prefer the locally produced one. For example, while one litre of the local cooking oil is sold for 44 birr, the palm oil is sold for nearly half of that - 24 birr. Tirunesh, a mother, in her 50s, whom EBR approached while purchasing cooking oil in the Shola market said that, in the previous days her family used to consume the palm oil which has been sold at the kebeles. “I didn’t like it that much and even people are talking about its negative impact on health,” she says. “I found the Niger seed oil very convenient for cooking that a small amount is enough for a good test and it is also good for health.”

Although the controversy on the health of palm oil still continues, there are experts with a different opinion. “Palm oil’s negative impact on human health is very meagre. Of course most of the things that we use have some negative side effects, so the case of palm oil is just limited to that extent. That is why the government is importing it. If it was as such dangerous for human health the government would not import it in bulks,” Said Mehari Birhane, Food distribution director at Ethiopian Food, Medicine and Health Care Administration and Control Authority. Despite such views, there are reports of sickness caused by palm oil among elderly people in Ethiopia. Since palm oil has saturated fat, it causes cholesterol to increase and contributes for hypertension, heart attack and weight gain according to medical researches. Such news has even been aired on Ethiopian Television few years back. These have contributed to the resurgence of the local cooking oil business in recent years. 

Niger seed oil has become famous in all parts of Addis Ababa according to consumers. The products are available in large quantities in supermarkets and regular shops all over the city.

According to the Central Statistical Agency (CSA) survey 2011/2012, more than 3.4 million small holder farmers have produced 7.3 million quintals of oil seeds on 880,871 hectares of land. Surprisingly more than 50Pct of the oil seed products were supplied to the market where as only 34.87Pct is used for household consumption. This indicates that oil seed products are less consumed at household level by producers compared to 79.3Pct of vegetables, 66.98Pct cereals and 62.03Pct of grains consumed at household level. Niger seed is one of the top produced oil seed in the country. Last year for example more than 2.1 million quintals was produced on close to 304 thousand hectares of land

Though the number of established medium and large oil manufacturing has reached 36 as of 2012, they produce only 20Pct of the 272,149 tonnes edible oil demanded in the country. The remaining share of the demand was being fulfilled by the import of Palm oil from Indonesia and Malaysia. Consumer Associations at Kebele level distribute palm oil at grass root levels since 2011. The government started the distribution of cooking oil and other basic consumer goods through this channel to reduce the galloping inflation in the country at that time. Since then the country has been importing 16,000 tonnes of palm oil monthly since May 2011. The quantity of import grew to 25,000 tonnes in 2012. In recent year Palm oil has emerged as one of the country’s top six import items by taking 3.1Pct share of the country’s total import which worth USD277 million. 

Ayenew Tekelu is an owner of Tsenu Cooking Oil factory which produces Niger seed edible oil. He also tells that the number of Niger seed oil consumers is increasing. “Four or five years ago, my annual sale was around ETB200,000 but nowadays it has a great increment and last year, I sold ETB700,000 worth of edible oil” he told EBR. This year, he expects to surpass a million birr.

He also states that four or five years ago his factory production capacity was limited to 300 - 400 litters of edible oil in a week. But now that is what his factory produces daily. “If there were no frequent power interruption we could have produced even more,” he asserts. 

Quality of locally processed oil usually scares some buyers. But the country’s Food, Medicine and Health Care Administration and Authority (FMHCAA), says that it is monitoring the production of big oil factories every three months. Samples will be taken from each oil seed crusher and producer to be tested for quality of ingredients. The authority shuts down factories which produce below the required quality standard. 

According to Gemechis Melaku, deputy head of Addis Ababa Trade and Industry Bureau, the city administration also inspects oil seed crushers and factories regularly.

“We control their preproduction and post production process in collaboration with health bureau and other stakeholders,” he told EBR. The administration takes serious measures on factories that produce bellow standard and without due license.“Recently we shut down edible oil processing plant, around Kaliti, which has been working without license. Moreover the owner of the company was sentenced for Five years in prison along ETB101,000 fine.” However the monitoring activities of the government is limited and there are many who produce cooking oil with low quality and sometimes illegally. 

Although there are now signs that there is huge market for local oil products, current industry players in the sector have limited capacity: finance, technology and know how. These factories could have no capacity to meet the huge demand. 

This has attracted a couple of giant companies to establish cooking oil factories in the country. Midroc Ethiopia’s USD600 million investments a couple of years ago to produce 150,000 tonnes of oil annually and the Malaysian Palm Oil manufacturer investment of ETB401.1 million can be mentioned as some of the recent development in the sector.


2nd Year . July 2014 . No.16


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