Market Assessment

Open Sesame: A Value Chain Analysis of Sesame Marketing in Northern Uganda, ICRISAT, 2013

    Uganda is the world’s fifth largest producer of sesame. This sesame value chain analysis aims to map the value chain for sesame for both the local and export markets, in order to identify opportunities to enhance the incomes of growers and other actors in the value chain.
    The four specific objectives were to:
    1. Describe the structure and functioning of the value chain;
    2. Measure the economic returns to participants along the value chain;
    3. Identify market constraints and opportunities; and
    4. Identify opportunities for market expansion.

    Methods for info gathering
    A combination of qualitative tools and quantitative tools were used for different categories of actors along the value chain. Structured questionnaire were used to collect quantitative data from farm households and local traders. Checklists and unstructured interviews were used to obtain qualitative data from key actors along the value chain, including established sesame dealers at regional markets, exporters, officials from the Ministry of Agriculture, Non-Governmental Organisations (NGOs) and industry associations.

    A Strengths, Weaknesses, Opportunities, Threats (SWOT) analysis was used with sesame seed traders to assess the internal and external factors that affect the performance of the trade now and in the future. The SWOT tool is a 2 x 2 way analysis where strengths/weaknesses (internal factors) and opportunities/threats (external factors) are presented. A SWOT analysis is a subjective assessment of data organized in a logical order that helps in understanding, presentation, discussion and decision making.

    Summary of results
    The challenges to sesame production at the farm level include: lack of equipment for land preparation, which leads to late planting; crop losses from pests and diseases, which reduces yields; non-availability of seed; and labor, particularly for weeding the crop which is sown broadcast. Smallholders produce small amounts, their bargaining power is weak and prices are low. A sesame value chain map was developed showing the volume handled by the various actors along the chain as the commodity moves from farm gate to the consumers and export markets. The study found that, of the total sesame produced, 77 % is sold. Of the total sesame produced, 42 % is exported, 10 % is sold to urban consumers, and 25 % is sold to rural consumers. Therefore, only half of the sesame that is produced leaves the production regions to regional and export markets.

    The market structure involves numerous traders, which reduces the farmer’s share of the final price. On average, the farmer receives 70 % of the ex-local assembly level price and 60 % of the ex-regional level price. Thus, if farmer were to sell collectively at regional level there is potential for a 10 percent increase in prices compared selling at the farm gate. Traders reported the most important traits were grain color (86%), cleaned grains (71%) and percentage of foreign matter (54%). Traders preferred white colored grains when buying sesame. Sesame II, an improved variety promoted by this project, is white in color and therefore has high market demand. Nonetheless, traders did not report rejection based on grain color. The majority of traders had no shape preference in either buying or selling. Interviews with traders indicated that buyers were satisfied with quality of sesame on offer and 80 % reported that the quality of sesame in the market was improving. Unlike traders, exporters and rural assemblers gave a higher priority to cleanliness. The problem of cleanliness of arises during the shelling and drying stages of sesame harvesting. Most farmers thresh and dry sesame on the bare ground, this leads to unclean sesame grains since sesame becomes mixed with soil. Uganda is the world’s sixteenth largest exporter, by volume.

    All sesame exports from Uganda are as raw seed rather than oil and other processed products. The three major export markets are Europe (Austria, Denmark, Germany and Switzerland), the Middle East (Turkey, Egypt and United Arab Emirates) and the Far East (Singapore, Japan and China). Sesame exported to Europe and the Middle East is used primarily for the cuisine and confectionery industry while exports to the Far East are used primarily for extracting sesame oil. Access to the European market has stringent certification and standardization requirements. Europe pays the highest value per unit for Uganda sesame, but accounts for only a small share of the total volume of exports. Most Uganda sesame is exported to the United Arab Emirates and China which pay the third lowest and the second lowest prices, respectively. Targeting the European market will increase the average unit price of exported sesame and the total value of exports. However, markets in the Far-East and China do not discriminate based on quality and have little if any requirements for entry. Consequently, farmer and traders have no incentive to invest in practices that will increase eligibility of sesame for access to higher value markets.