MARKET-DRIVEN ACACIA MEARNSII-BASED TANGUAY SYSTEM FOR SUSTAINABLE BIOENERGY PRODUCTION IN THE UPPER BLUE NILE BASIN, ETHIOPIA

As energy demand increases in urban areas of Ethiopia, the expansion of smallholder plantations, particularly Acacia mearnsii woodlots, has become essential in meeting bioenergy needs. However, small-scale farmers have been underrepresented in the value-added bioenergy production systems. This study explores factors influencing value addition and benefit distribution in the market-driven A. mearnsii-based Tanguay system for bioenergy production. A random sample of 148 producers and 52 traders was surveyed using snowball sampling, supplemented by 7 interviews, 6 focus groups, and field observations. The Heckman two-stage model analyzed participation and product volume in the bioenergy market. A. mearnsii woodlots cover 31,000 hectares, producing 145,000 tons of charcoal annually (equivalent to 8.3 million sacks of 17.4 kg), valued at $43 million. These plantations sequester 5.3 million tons of CO₂ and reduce deforestation on 93,000 hectares. Small-scale farmers earn $1,936 annually, accounting for 60% of their income, while traders earn between $5,000 and $30,000. The first-stage probit model revealed that age (p<0.03), experience (p<0.003), access to credit (p<0.034), and contract marketing (p<0.000) significantly influenced farmers' decisions to engage in value addition. The second-stage Heckman model revealed that training services (p < 0.041), livestock holdings (p < 0.054), and age (p < 0.058) were key determinants of the volume of bioenergy products for value addition. The total relative commercialization margin was 58%, indicating that marketing actors captured a larger share of the final market price, with farmers earning 42%. The study concludes that A. mearnsii woodlots support bioenergy production, income for smallholders, local revenue, job creation, and better rural livelihoods. Improving market access, forming cooperatives, and providing technical training are keys to achieving equity and sustainability in bioenergy production in Ethiopia. Keywords: Acacia, bioenergy, commercialization, income, market access, policy, smallholder planta-tions