Seed is a key element in improving Grain Production, Food Security & Rural Development. Sustainable availability of good quality seed and well functioning seed marketing system is vital development issue, without which attaining the required agricultural production and productivity is impossible and has direct impact on achieving Food Security and Rural Development. The formal seed supply is not well developed in many developing countries, including Ethiopia. In Africa in general and Ethiopia in particular the informal seed marketing system dominates (80-90%) the seed marketing; in which Farmers have played important role in producing, saving and exchanging seeds at local level for centuries. Therefore, integrated approach and grass-root seed production-marketing institutional capacity building programs are fundamental to improve the efficiency of informal (farmers) seed marketing system at local level that could promote and strengthen farmer based institutions like farmers group, cooperatives, and community based seed banks through farmers'' participation to promote sustainable local seed business development in rural area of Ethiopia.