Inclusive Business Model Analysis: SAMANU, Ethiopia

Developing the sunflower flower value chain in Ethiopia by supporting local farmers

Articraft Industries, a subsidiary of SAMANU Group, is an oil refinery located in Dukem, Oromia region, with SAMANU's headquarters in Addis Ababa, Ethiopia

The refinery started operations in April 2021 and has met its short-term objective of tripling SAMANU’s oil production capacity; but mostly through reliance on imported crude oil.

To decrease dependency on the imports of crude oil, Articraft aims to focus on developing the sunflower value chain, which is very nascent in Ethiopia, by enhancing the local farmers’ capacities to produce large quantities of the needed raw materials; sunflower and soybean.

Sunflower oil is the primary cooking oil product Articraft is refining, given the crop’s high oil content and nutritional benefits. While soybean has benefited from government support towards establishing the value chain, the sunflower value chain is still not extensively adopted in Ethiopia’s agricultural production.

Through the NICFI program, Articraft is developing a business case in increasing local production of sunflower and soybean as raw materials for their operations. This analysis gauges the organisational capacity, operational requirements and enabling environment needed towards achieving this goal.

Main questions

To explore the ambitious vision, Articraft through the Inclusive Business Analysis, sought to answer the following questions:

• What enabling conditions will drive growth and sustainability of Articraft
• Which sourcing model (cluster farmer model, commercial farmer model, direct model) makes the best business case for Articraft and under what conditions?
  
• How can Articraft provide services to farmers in a commercially viable way?
  
• What is the capacity of Articraft to organize an inclusive supply chain that meets its volume and quality requirements?
  
• How do different income drivers affect Articraft’s performance?
• What are the benefits to be accrued by Articraft from serving premium markets?
  

Summary of recommendations

Our analysis shows a promising business case at farm-level, business level, and agent level. Based on this analysis, the report outlines the following findings and recommendations:

1. Enhanced internal capacity results in effective and efficient service delivery to, and sourcing from, farmers
2. Pilot, test, and optimize the intermediary agent sourcing model before scaling
   
3. Pilot and test a service provision package that demonstrates win-win for Articraft, intermediary agents, and farmers
   
4. Pilot, test, and optimize the cluster farm production before scaling
   
5. Improve the business case through optimizing the product mix and exploring dollar generating products to support import needs