Promoting agro-enterprises in the highlands

of Ethiopia through improved institutional

support services: Experiences of market

oriented dairy and fattening development

Berhanu Gebremedhin, Dirk Hoekstra and Azage Tegegne,

International Livestock Research Institute (ILRI)

Presented at the 28th triennial conference of the International Association of

Agricultural Economists (IAAE), Foz do Iguaçu, Brazil, 18-24 August 2012

Background

Smallholder-led commercial transformation

of agriculture underlying strategy in Ethiopia

Improving Productivity and Market Success

(IPMS) of Ethiopian farmers project :

intended to demonstrate, on a pilot basis,

market-oriented transformation of

smallholders in Ethiopia (2005 – 2012).

Commercial transformation of smallholders

Commercial transformation of smallholders

entails market orientation and market

participation.

Long transformation process from subsistence to

semi-commercial and then to fully

commercialized agriculture.

Need for multi-pronged approach, and an all

inclusive, context specific, target group(s)

oriented options and programs which are

sustainable.

The five prime movers towards commercial

transformation

Technology

Improved human capital at all levels

Sustainable growth in physical capital (markets, roads,

dams, irrigation systems, energy etc.)

Effective organizations, and

Enabling political and institutional environment.

An integrated approach to promote

smallholder commercialization Technologies to enhance innovations

Human capacity development at all levels (especially the

key change agents and farmers)

Connecting smallholders to markets

Increasing access to assets and services

Reducing the risk and vulnerability in smallholder

production systems

Sustainable management of natural resources

Environment for enhanced participation of public, private

and the third sector (NGOs).

IPMS Project Components

The IPMS project is an action research project

aimed at demonstrating market-oriented

transformation.

Five major project components:

improved knowledge management,

capacity building of value chain actors and

service providers,

participatory commodity development,

research, and promotion of lessons and

experiences for scaling out and up.

Project principles/concepts

Participatory commodity value chain

development

Innovation systems perspective

Market oriented extension, and

Mainstreaming gender, HIV/AIDS and the

environment.

Market oriented developmental changes in

improved dairy 2005/06 2009/10 %∆

Number of households

producing

682 2, 156 216

Number of female-headed

households

104 352 238

Number of improved dairy

cows producing milk

532 1879 253

Milk produced (liters) 726, 924 3, 320, 000 356

Milk yield (liter/day) 4.48 5.79 29

Real revenue (million Birr) 2.2 6.5 200

Proportion of milk sold (%) NA 62 ---

Proportion of households

selling

NA 52 ---

Input supply and services in dairy development

Private AI service

Community animal health workers (CAHW)

Multiplication and distribution of forage seeds,

seedlings and cuttings.

Commercial production of seeds by farmers has not

reached commercially viable stage.

Animal feed

Animal feed, both in quality and quantity, main constraint

of dairy development. Successful interventions include:

Development of grazing land enclosures and

promotion of stall feeding through cut and carry

system,

enrichment plantations of improved forage species,

development of irrigated and backyard fodder,

processing of crop residues to increase their feed

value, and

improved awareness of and access of farmers to

processed feed.

Dairy sales and marketing

Adoption of grade animals and associated

practices had the most significant effect on

household milk production, and revenue.

Collective marketing and processing increased

household access to milk markets:

Establishment of milk collection centers

Milk processing in small local cooperatives

Processing by some of the larger dairy

producers in some of the district towns

Developmental changes in market oriented

improved small ruminant production

2005/06 2009/10 %∆

Number of households

producing

27, 523 54, 554 98

Number of female-headed

households

4, 657 9, 519 104

Total number of animals

fattened

164, 296 314, 077 91

Real revenue (million Birr) 46 120 159

Shoats fattened per

household

NA 6 ---

Proportion of animals sold

(%)

NA 50 - 95 ---

Proportion of households

selling

NA 100 ---

Fattening cycle/year NA 2 ---

Market oriented developmental

changes in cattle fattening 2005/06 2009/10 ∆%

Number of households

producing

6, 157 24, 391 296

Number of female-headed

households

308 2, 121 587

Total number of fattened

animals

9902 47, 524 380

Real revenue (million Birr) 44 207.5 867

Cattle fattened per

household per year NA 2 ---

Proportion of animals sold

(%) NA 100 ---

Proportion of households

selling NA 100 ---

Fattening cycle/year

NA 1.5 ---

Input supply and services in improved

meat production

Private bull stations

Improved access to processed feed

Multiplication and supply of forage seeds,

seedlings and cuttings

Credit for fattening purposes, and

Community-based livestock insurance schemes

Mixed results were achieved on these

interventions

Fattening practices and income

Significant benefits to farmers from fattening of animals

shorter fattening periods and stall feeding

de-worming animals at the beginning of the fattening

period

Use of concentrates during the fattening period

commonly accepted

Use of crop residues widespread.

urea treatment of crop residues and stover choppers

have so far not been adopted widely

Marketing of live animals

Marketing not a major problem.

Most animals are sold in nearby local markets,

through individual or collective action.

Market linkages had mixed results.

Export market value chains still developing for

smallholders

Conclusions and implications

The financial viability of private input supply and service

provision are constrained by the lack of economies of scale

(low business volume), and competition from government

subsidized service provision in the same location.

The crowding out effect of the public input supply and service

provision needs to be reconsidered.

The project demonstrated successfully the use of credit for

fattening purposes.

Both farmers and credit institutions should adopt a commercial

attitude towards credit rather than the usual (project) attitude in

which credit is considered as a subsidy.

Also, once the amount of credit required per farm increases,

group collateral systems may need to be replaced by other

flexible systems.

Conclusions and implications (2)

The use of a community based insurance scheme for

small ruminants can be used to stimulate commercial

fattening with credit, especially benefiting women.

This insurance scheme may also be considered as collateral for

the individual and/or group loans.

Institutionalized support structure is also needed to scale out

such schemes.

The awareness of farmers of processed feed is

increasing, and is likely to increase faster with the level of

market orientation.

Hence, once the scale of the fattening businesses increases,

feed agro dealerships should be further developed to ensure a

regular quality supply of feeds.

Conclusions and Implications (3)

The traditional production and technology focused

extension service approach is inadequate for market

oriented agricultural development; market oriented

extension service is required.

sustained and continuous effort is needed to build capacity for

market oriented extension and to institutionalize it from federal to

district levels.

Provision of market information in various forms,

facilitating virtual or physical linkages of producers with

buyers, and formal and informal collective action for

produce marketing increase bargaining power of

farmers.

Conclusions and Implications (4)

Farmers who used improved technologies and

management practices benefited more than

those who did not

Strengthen promotion of technologies for market

oriented commodities

Thank You!!