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 682 2, 156 216
producing
Number of female-headed 104 352 238
households
Number of improved dairy 532 1879 253
cows producing milk
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 NA 52 ---
selling

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 27, 523 54, 554 98
producing
Number of female-headed 4, 657 9, 519 104
households
Total number of animals 164, 296 314, 077 91
fattened
Real revenue (million Birr) 46 120 159
Shoats fattened per NA 6 ---
household
Proportion of animals sold NA 50 - 95 ---
(%)
Proportion of households NA 100 ---
selling
Fattening cycle/year NA 2 ---

Market oriented developmental
changes in cattle fattening
2005/06 2009/10 ∆%
Number of households 6, 157 24, 391 296
producing
Number of female-headed 308 2, 121 587
households
Total number of fattened 9902 47, 524 380
animals
Real revenue (million Birr) 44 207.5 867
Cattle fattened per NA 2 ---
household per year
Proportion of animals sold NA 100 ---
(%)
Proportion of households NA 100 ---
selling
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!!