The hum of machines has grown quiet in the busy processing plants on the outskirts of Addis Abeba. Factories that once churned out edible oil and animal feed are shutting down, caught in a storm triggered by soaring soybean prices. Over the past two months, soybean costs have surged by as much as 70pc, reaching unprecedented levels of around 8,500 Br a quintal, wreaking havoc across industries dependent on this crucial crop.
Manufacturers and exporters have begun raising alarms, urging swift government intervention. In a recent letter to the Ministry of Industry, the Ethiopian Edible Oil Manufacturing Industries Association, representing 60 domestic companies, complained about a startling 50pc price hike within two months. The sharp increase, coupled with severe supply shortages, has put immense pressure on these manufacturers, forcing several companies to suspend production and lay off their workforce.
Mohammed Yousuf, chairman of the Association, described the situation facing processors as dire. At least seven plants have already suspended their operations, unable to cope with the drastic price surge.
"Many businesses have been compelled to lay off workers," Mohammed said, stating the widespread impact on thousands of jobs and fragile supply chains.
Soybeans, increasingly coveted on international markets, are being exported raw before reaching domestic manufacturers. Those active in the edible oil industry, which depends heavily on soybeans as the primary input for roughly 85pc of its production, argue that they have become a victim of these exports. The Association has called for an immediate but temporary halt to the export of raw soybeans, hoping such a move could stabilise the local market and help domestic processors.
Prices for edible oil products have inevitably risen alongside soybeans, recently hitting up to 1,600 Br for five litres. Soybeans are vital for edible oil, with one quintal producing up to 10Ltrs. The remaining product — oilseed cake — is equally lucrative and widely sought after internationally, particularly in China and Kenya. This demand has made soybean farming attractive but strained local supplies.
Genene Lemma, a major shareholder of a processing facility in Burayu, Sheggar City, is one of many businessmen impacted by the rising prices. His plant, which could process up to 400Qnts a day, has been forced to suspend operations entirely due to the rising prices and shortage. Despite having regular customers, his company had yet to establish export channels. Shortages in the local market have left him unable to maintain steady production. His workforce of 100 employees remains idle, kept on payroll in anticipation of improved market conditions.
"We've temporarily suspended operations," Genene told Fortune, sharing the industry's pent-up frustration. We'll have to wait until prices stabilise."
Industry experts echo these concerns and advocate for policy reforms.
Addis Garkabo, former general manager of the Ethiopian Oil Manufacturers Association, is one of the people with an understanding of the industry pressing for a strategic policy shift. He observed the rapid growth of manufacturers, from 26, mostly small-to-medium companies, to 38, dominated by large-scale businesses. With feed processors also expanding, soybean demand continues to outstrip domestic supply.
Addis argued that exporting raw soybeans is detrimental to the economy, noting that global soybean giants prioritise processed exports because of their high-profile margins.
"There is a need for a strategic shift," Addis insisted.
The authorities agree with this assessment, pushing for raw soybean export bans unless value is added.
Abebaw Admas, head of export product competitiveness at the Ministry of Industry, is unhappy with existing trade policies, allowing raw soybeans to be sold internationally at prices equal to processed soybean cakes, discouraging manufacturers.
International market volatility complicates matters further. Global soybean prices recently plunged by about 30pc to 450 dollars a ton, yet the authorities here have set the minimum export price at 550 dollars. This decision hopes to protect foreign exchange revenues and discourage exports below domestic production costs. However, exporters have criticised this policy, blaming it for making them uncompetitive in the international market.
Mesfin Abebe, senior advisor to the State Minister for Trade & Regional Integration (MTRI), defended the government's pricing strategy. He argued that despite the international price drop from last year’s 650 dollars a ton, soybeans from Ethiopia remain in demand due to their organic nature. According to Mesfin, the authorities setting floor prices reflects domestic market realities.
"They should have been selling at 740 dollars to match their domestic prices," Mesfin said.
Between July and October this year, Ethiopia exported over 10,000tns of soybeans, earning around six million dollars in export revenues. Last year's figures were substantially higher. Over 152,000tns were exported, generating 91 million dollars. The export decline is partly blamed on domestic price surges, which have left exporters struggling financially.
Edao Abdi, a prominent exporter and president of the Ethiopian Pulses, Oil Seeds, Spices Processors & Exporters Association, blamed banks for inadequate support. His request for a loan exceeding 100 million Br has been stuck in administrative limbo for months, severely undermining a planned 10 million dollars export deal.
"We've only managed to export one-tenth of our initial plan," he told Fortune, warning that such financial constraints could undermine the federal government’s goal of earning 700 million dollars annually from soybean exports.
Agricultural officials, however, point to improved conditions for soybean farmers who had long struggled with weak market access and declining prices.
Esayas Lemma, head of crop development at the Ministry of Agriculture, described farmers as victims of market instability but noted their recent improvements in profitability. Expanded soybean cultivation areas, now covering around 839,240hct, produced approximately 19 million quintals this fiscal year, an increase of four million quintals from the previous year.
Soybean production has grown robust from in the decade beginning in 2014. Experts credit this growth to increased cultivation area, better yields, and supportive policies. Around 15million harvest was recorded last year, with Amhara, Oromia, and Benishangul-Gumuz regional states being the leading producers. The country has witnessed key shifts – notably the rise of Amhara Regional State as a major soy region, with over 145,000 soybean farmers.
Getu Ayalew, 60, who lives in Jawi Wereda, West Gojjam Zone of the Amhara Regional State, is one of these farmers. He has enjoyed notable gains this season. He grows maise, sesame, and soybeans and sold his entire harvest of 40Qtls for around 8,000 Br a quintal, an impressive improvement over last year's mere 3,000 Br a quintal.
"It's a good season for us," he said.
Agricultural economist Assefa Tilaun (PhD) cautioned against excessive optimism, warning farmers that the soybean market remains unpredictable. Historically, unstable market conditions have driven farmers away from soybean cultivation, leading to disputes over unsold crops. While the recent resurgence in soybean prices benefits farmers, Assefa advised them to remain cautious and adapt production strategies carefully.
"Farmers should be prepared," he warned.
Assefa and other industry experts strongly advocate for prioritising processed soybean exports. He argues that exporting raw soybeans reduces national gains, urging a broader shift toward processed, value-added products. Such an overhaul, he insisted, is crucial for Ethiopia's soybean sector to flourish sustainably.
Regional agricultural expert Enana Abebe from the Agricultural Bureau in the Amhara Regional State echoed the positive sentiment but cautioned that production costs, particularly for fertilisers and machinery, have risen sharply, up nearly 60pc compared to the previous year. She saw farmers enjoying better markets but simultaneously burdened by these increased costs.
"Farmers are experiencing better markets, but production costs have also risen in tandem," she said.
The expansion in farming, however, has not translated into greater availability for processors and exporters, who remain stuck in shortage-induced turmoil. The feed processing industry, too, faces persistent difficulties, exacerbated by inflation and limited supplies.
According to Biniam Dereje(DVM), general manager of Elf Manufacturing & Commercial Processes, a major animal feed producer 64Km from Addis Abeba, the industry is absorbing the financial strain for now, hoping for better days.
PUBLISHED ON
Mar 23, 2025 [ VOL
25 , NO
1299]
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