Promoting agro-enterprises in the highlands       of Ethiopia through improved institutional        support services: Expe...
Background Smallholder-led commercial transformation of agriculture underlying strategy in Ethiopia Improving Productivi...
Commercial transformation of smallholders Commercial transformation of smallholders  entails market orientation and marke...
The five prime movers towards commercialtransformation Technology Improved human capital at all levels Sustainable grow...
An integrated approach to promote smallholder commercialization Technologies to enhance innovations Human capacity devel...
IPMS Project Components The IPMS project is an action research project  aimed at demonstrating market-oriented  transform...
Project principles/concepts Participatory commodity value chain  development Innovation systems perspective Market orie...
Market oriented developmental changes in  improved dairy                              2005/06    2009/10       %∆Number of...
Input supply and services in dairy development Private AI service Community animal health workers (CAHW) Multiplication...
Animal feed Animal feed, both in quality and quantity, main constraint  of dairy development. Successful interventions in...
Dairy sales and marketing Adoption of grade animals and associated  practices had the most significant effect on  househo...
Developmental changes in market orientedimproved small ruminant production                              2005/06    2009/10...
Market oriented developmental  changes in cattle fattening                              2005/06   2009/10   ∆%Number of ho...
Input supply and services in improvedmeat production Private bull stations Improved access to processed feed Multiplica...
Fattening practices and income Significant benefits to farmers from fattening of animals shorter fattening periods and s...
Marketing of live animals Marketing not a major problem. Most animals are sold in nearby local markets,  through individ...
Conclusions and implications The financial viability of private input supply and service  provision are constrained by th...
Conclusions and implications (2) The use of a community based insurance scheme for  small ruminants can be used to stimul...
Conclusions and Implications (3) The traditional production and technology focused  extension service approach is inadequ...
Conclusions and Implications (4) Farmers who used improved technologies and management practices benefited more than thos...
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Promoting agro-enterprises in the highlands of Ethiopia through improved institutional support services: Experiences of market-oriented dairy and fattening development

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Presentation by Berhanu Gebremedhin, Dirk Hoekstra and Azage Tegegne at the 28th triennial conference of the International association of Agricultural Economists (IAAE), Foz do Iguaçu, Brazil, 18-24 August 2012.

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Promoting agro-enterprises in the highlands of Ethiopia through improved institutional support services: Experiences of market-oriented dairy and fattening development

  1. 1. Promoting agro-enterprises in the highlands of Ethiopia through improved institutional support services: Experiences of market oriented dairy and fattening developmentBerhanu 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
  2. 2. 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).
  3. 3. 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.
  4. 4. The five prime movers towards commercialtransformation 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.
  5. 5. 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).
  6. 6. 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.
  7. 7. Project principles/concepts Participatory commodity value chain development Innovation systems perspective Market oriented extension, and Mainstreaming gender, HIV/AIDS and the environment.
  8. 8. Market oriented developmental changes in improved dairy 2005/06 2009/10 %∆Number of households 682 2, 156 216producingNumber of female-headed 104 352 238householdsNumber of improved dairy 532 1879 253cows producing milkMilk produced (liters) 726, 924 3, 320, 000 356Milk yield (liter/day) 4.48 5.79 29Real revenue (million Birr) 2.2 6.5 200Proportion of milk sold (%) NA 62 ---Proportion of households NA 52 ---selling
  9. 9. 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.
  10. 10. 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.
  11. 11. 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
  12. 12. Developmental changes in market orientedimproved small ruminant production 2005/06 2009/10 %∆Number of households 27, 523 54, 554 98producingNumber of female-headed 4, 657 9, 519 104householdsTotal number of animals 164, 296 314, 077 91fattenedReal revenue (million Birr) 46 120 159Shoats fattened per NA 6 ---householdProportion of animals sold NA 50 - 95 ---(%)Proportion of households NA 100 ---sellingFattening cycle/year NA 2 ---
  13. 13. Market oriented developmental changes in cattle fattening 2005/06 2009/10 ∆%Number of households 6, 157 24, 391 296producingNumber of female-headed 308 2, 121 587householdsTotal number of fattened 9902 47, 524 380animalsReal revenue (million Birr) 44 207.5 867Cattle fattened per NA 2 ---household per yearProportion of animals sold NA 100 ---(%)Proportion of households NA 100 ---sellingFattening cycle/year NA 1.5 ---
  14. 14. Input supply and services in improvedmeat 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
  15. 15. 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
  16. 16. 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
  17. 17. 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.
  18. 18. 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.
  19. 19. 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.
  20. 20. 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
  21. 21. Thank You!!

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