Status and trends of major non timber forest products trade in Ethiopia

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1 Research Journal of Agriculture and Environmental Management. Vol. 4(4), pp , April, 215 Available online at ISSN Apex Journal International Full Length Research Status and trends of major non timber forest products trade in Ethiopia Baye Belay Ethiopian Institute of Agricultural Research, P.O. Box 23, Addis Ababa, Ethiopia, Accepted 23 March, 215; Published 27 April, 215 Among the range of NTFPs, gums and resins are important trade commodities with a potential for spurring economic and social developments both at rural and urban areas in Ethiopia. This study was conducted with an objective of assessing the status and trends of major Non Timber Forest products trade in Ethiopia based on secondary data during and the results revealed that, the average volume of gum and resins export is 3.1 million Kilograms. The value-to-volume ratio for exported gum and resins has shown increasing trend during the last 7 years. Sudan, Tunisia, China and India are the highest volume recipient countries for Ethiopian gum and resins export. The study recommends the need to link commercially oriented small and large scale farmers to value chains. This means, industries engaged in processing and/or export of value added gum and resins need to be supported or encouraged. Key words: Forest products and Trade INTRODUCTION Forest resources like NTFPs are among the natural resources that have several functions including income generation through trading such as gums, resins and others (MoA, 213). Ethiopia has substantial areas suitable for the cultivation of NTFPs. The contribution of NTFPs to rural livelihoods, the national economy and ecosystem stability is significant. In rural Ethiopia, a majority of the households make use of non-timber forest products (NTFPs) for different purposes, ranging from food, feed, energy, and medicine to income generation and cultural practices (Mekonnen et al., 213). Gums and resins contribute to local livelihoods, in terms of both cash income, gained by selling products to buyers, and subsistence value. Several gums and resins are used as herbal medicines, insecticides and hygienic and sanitation detergents (Mulugeta and Habte Mariyam, 211). As stated by Adefris et al. (211), gum and resins had about 2.8 million ha of area coverage during 211. Most of the the production of gum and resins comes from Amhara region followed by Tigray and Oromia. This study is carried out with the objective of analyzing the trend in the volume of export and import of major NTFPs during the year 1997 to 214, establishing the trend in the value to volume ration for major NTFP from 1997 to 214 and identifying major constraints affecting NTFP value chain in Ethiopia. METHODOLOGY Secondary sources of data on the import and export volume in kilogram and value in birr were used. Data on volume and value of imported and exported gums and resins were collected from revenue and customs authority. Trend analysis was the method of data analysis used both for value and volume of traded major NTFPs-gums and resins. The Value-to-Volume Ratios show the trend in status and trend of Ethiopia position in terms of value gained for exported and imported gums and resin products from international market.

2 198 Res. J. Agric. Environ. Manage Table 1. Aggregate volume and value of major imported NTFP. Imported Gum and Resin and natural Oleor ins Year Volume(kg) Value (birr) ,9. 816, , , , , ,839. 1,227, , , , , ,278. 1,188, , ,11, , ,889, , ,1, , ,616, , ,616, , ,616, , ,41, , , , , Source: Ethiopian Revenue and Custom Authority, 214 FINDINGS Trade performance in major forest products Trend in aggregate volume and value of imported major NTFP Gum and resin products are the major import and export items forestry sector contribute to the Ethiopian economy. These products are also an alternative and supplementary source of livelihood. Import trade has significant importance to the growth of the economy by way of supplying various goods the economy demand. Import plays the determinant role especially in country like Ethiopia where local supply could not satisfy domestic need both in terms of quality and quantity. The results particularly presents import related facts about major NTFPs. Table 1 presents the aggregate volume and value of major NTFP imported (Gum and Resin) during the last 18 years. During the period import value and volume has shown sharp increase. The Figures show there has been either a rapidly growing domestic demand for forest products particularly for the imported ones while the domestic supply side has constant growth pattern or the domestic supply has declined while the demand for forest products increase. This is particularly true for NTFPs where there has been a steady growth in imported volume. If we take a look at Figure 1, it may be observed that the volume of imported major NTFPs in Ethiopia recorded annual growth rate of 15% during the entire period, while the value of imported major NTFPs increased with compound annual growth rate of 27% significantly with 5% and 1% significant level respectively. Trends in the Export of major forest products Export is the major source of revenue for the country. The performance of export sector is measured by the volume of the product exported. Ethiopia is exhibiting tremendous performance in the export sector. For instance, the value of aggregate exports of the country shows sustained growth from Birr 3.9 billion in 21 to 43.3 billion in 211. During this period the overall export performance has grown ten times. The performance of export of major NTFPs has also similar trend. Export volume of major NTFPs during the period has increased by a compound annual growth rate of 5% significantly (Figure 2). Trend in value-to-volume ratio for major NTFPs The trend in the export Value-to-Volume Ratio (VVR) is an indicator of whether the product is either gaining or losing value from movement in world prices. It gives an indication of the extent to which the product can be

3 Belay 199 Thousands volume (kg) Value (birr) Year Figure 1. Trend in the volume and value of major imported NTFP Volume (kg) Value (birr) Figure 2. Trend in the total volume and value of export of major NTFPs. considered a relatively high-value export commodity. As is presented in Figure 3 the VVR for major NTFPs has been increasing particularly during the last 7 years. This shows that the price of NTFPs in the world market is increasing consistently and the revenue earned from a kilogram of exported NTFPs is rising, regardless of the change in the volume of export. This trend reveals that investment in the production and export of NTFPs is worthy and profitable considering the cost of production remains constant. Despite the increasing trend in the volume and value of forest products the trade balance which is defined as the difference between export value and import value is negative throughout the last 18 years. The negative value of net export show the country s dependence on the imported products and every year the country is spending million dollars for importing forest products that can be produced locally. Increasing dependence on imported products that can be produced locally is a sign of underperformance of the economy to produce and supply these products to meet domestic demand. The negative balance of net export also provides an opportunity for the forestry sector. Potentials of the sector to produce and supply imported forest products could be exploited to meet local demand and hence substitute import. Materializing potentials of the forestry sector to meet local

4 2 Res. J. Agric. Environ. Manage 8 VVR VVR 2 1 Figure 3. Value-to-Volume Ratio for Major NTFPs. 13 Year Net Trade Balance (in thousands) Figure 4. Balance of Trade of Forest Products. demand has two advantages. The first one is through foreign exchange saving by which dollars that used to be spent for importing forest products could be saved. In the process of materializing potential additional jobs and incomes would be created. These two benefits are directly linked to forestry sector role in reducing poverty through employment creation and generating additional income. The trade performance of the forest products of the country is characterized as having negative trade balance. As is presented on Figure 4 the negative trade balance has been also increasing at a higher rate. The net negative trade balance has increased between the same periods by 777%. This shows that the amount of USD Ethiopia has been spending to import forest products is almost 8 times more than the amount of USD earned from export of forest products. Major export markets and trend in export disaggregated by country of destinations Asia is the region where much of Ethiopian NTFPs are exported. Asia receives more than 57% of Ethiopian forest products followed by Africa which receives about 15% of the country forest product export. Europe and

5 Belay 21 USA are the least recipient regions of Ethiopian forest products. China and India are the major Asian countries which receive 8% of all NTFPs exported to Asia. Tunisia and Sudan are the only African countries that receive Ethiopian exported NTFPs exported to Africa. The percentage share recipient regions of Ethiopia s forest products export is presented on Figure 4. Conclusions Zenebe, M., Adefires, W., Temsgen, Y., Tinsae, B., Trehas, M., Demel, T. (213). Economic Contribution of Gum and Resin in Ethiopia. Journal of Plants, people and applied research; 11: MoA, Ministry of Agriculture (213). Non-timber forest products development training manuals series, Addis Ababa, Ethiopia. Mulugeta, L., Habtemariam K. (211). Available at Gum and resins are among key dry land NTFPs in Ethiopia significantly contributing to improve the lively hoods of local communities in terms of food security, income generation and also foreign exchange earnings for national economy. Production and trade of gum and resins therefore, touches the lives of a wide cross section of mankind. And the study clearly showed that investing in the sub sector is feasible option. So, the need to accelerate private sector involvement is the area should continue. REFERENCES Adefris, W., Zenebe, M., Tinsae, B. (211). Overview of research achievements and gaps on dry land forests of Ethiopia: The case of gum and resins bearing resources. Proceedings of the national workshop, Addis Ababa, 211.