Established in 2005, Soreti International Trading Company (SITCO) is a medium-scale edible oil and oil cake processor and exporter located in Adama town, Oromia region, 98 km from Addis Ababa. With over 200 permanent and daily employees, SITCO has a strong management and leadership structure led by a board of directors, owner/CEO Mr Bulbula Tulle (in photo), and an operational manager. It currently supplies crude soybean oil and soy cake to domestic and international markets. Additionally, SITCO is a member of the Ethiopian Pulses, Oilseeds, and Spices Processors Exports Association (EPOSPEA), exporting agricultural commodities to African, European, Asian, and Middle Eastern markets.

The raw material is currently sourced from aggregators (accounting for 80% of the total supply), with the remaining amount procured from the Ethiopian Commodity Exchange (ECX). The company’s main sources of raw material, i.e., soybeans, are the Jimma and Buno Bedelle zones.

The plant is currently operating at only 33.3% of its capacity due to insufficient raw material supply throughout the production year. The company plans to reach its full production capacity within two production seasons (by 2026) by extending the soybean sourcing period to ten months annually. The increase in production capacity will be achieved by (a) shifting from soya crude oil production to more refined organic edible oil to supply the domestic market, and (b) increasing the volume and quality of organic soy cake supplied to the export market.

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Improving the Production System of Smallholder Farmers through Promoting Organic Contractual Farming Practices to Ensure Sustainable Supply Linkages

This project demonstrates that improving the production system of smallholder farmers through promotion of intermediary climate-smart contract farming practices can ensure sustainable supply linkages.

CASA signed an agreement with SITCO, which in turn signed two separate agreements with aggregators and cooperatives, including Limu Inara Farmers Multipurpose Cooperative Union (LIMFCU) (photo). Running from July 2024 through December 2025, the CASA partnership with SITCO aims to address the dysfunctionality of the supply linkage with smallholder farmers and farmers’ cooperatives. The project will facilitate demand-based technical assistance for producers, improving their adaptive capacity and resilience to climate change through the introduction of contract farming. The contract farming arrangement will involve SITCO, cooperative unions, and aggregators, supported by relevant government institutions (i.e., agriculture, cooperative and trade offices). Embedded services (e.g., inputs, training, extension and advisory services) will be provided to target farmers via the company.

The collaboration offers a significant business opportunity to source higher quality and increased quantities of organic raw materials by working with smallholder farmers in a contract farming arrangement and through existing channels (aggregators and ECX). This approach aims to achieve cost efficiencies and improve profit margins through economies of scale.

SITCO will receive technical support from CASA to leverage investment capital for upgrading its processing capacity. This partnership will also enhance the company’s production capacity to its full potential and ensure the expansion of its smallholder farmer supply chain. As a result of the CASA/SITCO partnership, 85% (3,187) of the participating smallholder farmers are expected to properly use inputs and seeds, improve agronomy skills, and apply knowledge gained from embedded services provided in the contract farming model contributing to increased productivity by 35% per hectare at the household level. Therefore, in the post-CASA expansion phase, SITCO aims to reach an additional 3,750 farmers (30% women, with 2,500 via coops’ organic contract farming arrangements and 1,250 via aggregators) through increased investment, motivating other similar companies to replicate this business model.

SITCO’s total production capacity is expected to increase by up to 80% due to the improved supply and quality of soybeans from target farmers during the project implementation period. Smallholders’ income is projected to rise by up to 30% per tonne, enhancing food security and climate change resilience. This improvement will result from better inputs (such as a 35% increase in yield per hectare due to the application of inoculant), improved seeds, and training on advanced agronomy practices, post-harvest handling techniques, and extension services provided through the contract farming arrangement.

Of the total project cost of £113,331, CASA’s contribution in technical assistance and a grant award is £67,461. Individual participating households are expected to realise an average additional annual income of £150.

SITCO strives to be a trustworthy leader in agro-processing and a major exporter of Ethiopian agricultural products in both domestic and foreign markets. This will be achieved by improving farmers’ production systems through the application of organic fertilizers to secure quality and adequate input and procuring additional edible oil refinery and packing machinery. Expanding sourcing models will help SITCO achieve its business objectives by fully utilizing the company’s production capacity. As a result, SITCO plans to expand its business model, ensuring sustainable supply linkages with different parties through partnerships with various financial institutions, investors, and other organizations and NGOs.

Updated: January 2025