Last year, Bavaria opened a new brewery in Ethiopia for the production of local beer, Habesha. It was a big step for this family company from Brabant, in the South of the Netherlands. Next up: developing a local production chain for barley. With welcomed assistance from Agriterra, the company will rise to that challenge too.
Ethiopia is just one part of Bavaria’s plans to expand into African markets. The way this new venture has been financed is unique with no fewer than 8,000 local shareholders. Most of them are SMEs, people who run bars or are part of the regional distribution chain.
Within the next five years, Bavaria will decrease its ingredient imports and rely more on local supplies. The company will work exclusively with barley produced in the country, not just as part of Bavaria’s ethos, but as a requirement for brewers from the Ethiopian government.
Insufficient local supply
There are challenges with this as there is a shortage of local barley. Ethiopian farmers who produce the crop run small enterprises and produce a crop quality that is not up to standard. In addition, the cooperatives lack storage resources.
“What we want to develop is a local production chain,” says Stijn Swinkels, Chief New Business Development at Bavaria, “but we cannot do this on our own. Agriterra has ample experience in this area, which is why we’re very happy to work with them.”
Bavaria and Agriterra have set up a pilot project with Admas, a union of farmers’ cooperatives. Habesha Breweries is working with local farmers to grow better quality barley. Agriterra is on hand to assist with professionalising the business, improving the cooperatives’ financial management and creating the barley supply chain. The farmers get better quality seeds, ensuring 20 to 30 per cent higher yields, and a guarantee that their produce will have a market.
There have been setbacks. In the first year of the pilot, Habesha bought only 30 per cent of the barley crop. Late and insufficient rains made for disappointing yields and farmers used a good portion of the produce to feed themselves. Other contentious issues included the price paid for the barley and the poor quality of seeds on offer.
However, none of these problems have pushed participants to leave. On the contrary, Swinkels says, “these obstacles are part of the effort and we are determined to continue.” Agriterra and Admas have agreed to carry on with the pilot for another year. In the meantime, Agriterra will be looking for new cooperatives, so they can also contribute to the creation of a local barley chain.
Chief new business development officer at Bavaria