Transforming Agri-food Systems in Ethiopia: Evidence from the Dairy Sector

1. Photo Credit Goes Here
Transforming Agri-food Systems in Ethiopia:
Evidence from the Dairy Sector
Bart Minten (IFPRI/ESSP)
[with Yetimwork Habte (PSI/ESSP),
Seneshaw Tamru (PSI/KULeuven) and
Agajie Tesfaye (EIAR)]
September 2019, AAAE, Abuja, Nigeria

2. INTRODUCTION
• Economic transformation in Ethiopia’s economy
• Important implications on food systems
• Look here at dairy development
• Interesting sector as:
1/ High income elasticities
2/ Important for nutrition

3. INTRODUCTION
• However, good data on the dairy sector
functioning and transformation are lacking
• Focus on understanding the transformation
pattern in the dairy sector supplying Addis, the
most dynamic part of the country
• Look at the inclusiveness of transformation for
1/ Remote vs non-remote farms
2/ Small vs large dairy farms

4. DATA
• Primary data:
- Survey fielded in January – February 2018
- 97 farms in Addis; 256 farms in suburban areas;
602 farms in rural areas (North and West Shewa)
- Stratified by distance to Addis
- 13 large farms (more than 25 cows)

6. DAIRY CONSUMPTION ADDIS
-
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
Poorest
quintile
quintile
2
quintile
3
quintile
4
Richest
quintile
USD/capita
Liquid milk expenditures (2016)
-
1.0
2.0
3.0
4.0
5.0
6.0
2005 2011 2016
USD/capita
Dairy consumption per capita

7. DAIRY CONSUMPTION ADDIS

8. DAIRY PROCESSING COMPANIES
0
5
10
15
20
25
30
35
Totalnumberofdairy
processingcompanies
- 100 200 300 400
Capacity
Actual
Liter/dayShola
Family milk
Sebeta agro-industry/Mama
Elemtu
Holland dairy plc
Etete
Ada cooperative

11. EMERGENCE COMMERCIAL FARMS
0
1
2
3
4
5
6
Rural Suburban
Farms with more than 25 cows (per woreda)
2007 2017

12. SUPPLY ADDIS ABABA
37%
32%
31%
Supply liquid milk
Rural Sub-urban Urban
44
28
11
16
Supply pasteurized milk (%)
Rural Sub-urban Urban Large farms

13. SERVICES – EXTENSION
0
.2.4.6.8
1
0 50 100 150
Travel costs (birr/person)
at time of survey 10 years earlier

14. ASSOCIATES OF ACCESS TO SERVICES
Use of extension agent
Access animal health
worker
Walking distance
medicines
Variables Unit Probit (marginal effect) Probit (marginal effect) Log (minutes) - OLS
Independent variables
Transport cost to Addis ln(Birr+1) -0.10*** -0.04* 0.42***
(0.04) (0.02) (0.14)
Farm size (Default: small
farm)
Medium dairy farm yes=1 0.09** 0.11*** -0.15
(3-24 cows) (0.03) (0.03) (0.10)
Large dairy farm yes=1 0.50*** -0.02 -0.56
(≥25 cows) (0.17) (0.07) (0.48)
Suburban/urban dummy Yes Yes Yes
Pseudo R2 0.03 0.07 0.10
Observations 955 955 918

15. ADOPTION – CROSS-BRED COWS
0
.1.2.3
0 50 100 150
Travel costs (birr/person)
at time of survey 10 years earlier

16. ADOPTION – PRE-MIXED FEEDS
0
.05
.1
.15
.2
.25
0 50 100 150
Travel costs (birr/person)
at time of survey 10 years earlier

17. ASSOCIATES OF MODERN INPUT ADOPTION
Share of cross-bred cow Use of commercial pre-mix
Variables Unit Tobit Probit (marginal effect)
Independent variables
Transport cost to Addis ln(Birr+1) -118.81** -0.10**
(52.02) (0.04)
Farm size (Default: small farm)
Medium dairy farm yes=1 69.38*** 0.07***
(3-24 cows) (22.57) (0.02)
Large dairy farm yes=1 293.58*** 0.22***
(≥25 cows) (75.10) (0.05)
Sub-urban/urban dummy yes=1 Yes Yes
Pseudo R2 0.09 0.27
Observations 921 955

18. MILK YIELD
200400600800
1000
0 50 100 150
Travel costs (birr/person)
at time of survey 10 years earlier

19. INPUTS AND MILK YIELDS
(1) (2) (3) (4)
Variables Unit coeff. t-value coeff. t-value coeff. t-value coeff. t-value
Cross-bred cow yes=1 5.27 9.51*** 3.55 9.20*** 3.23 6.62*** 2.85 8.27***
Months since birth calf ln(months+1) -1.21 -4.04*** -0.96 -3.70*** -1.00 -4.24*** -0.96 -4.25***
Age cow years -0.74 -3.85*** -0.37 -1.99
Age cow squared years 0.03 3.09*** 0.02 1.8
Number of calvings number 1.05 4.07*** 0.57 2.30**
Number of calvings squared number -0.08 -2.66** -0.04 1.56
Dry months before calving number -0.06 -1.30 -0.03 -0.64
Feed oilseed yes=1 0.29 0.86 -0.44 -0.43
Feed wheat bran yes=1 2.34 5.68*** 3.71 3.07***
Feed pre-mix yes=1 2.79 2.71*** 6.99 1.82*
Intercept 5.08 2.93*** 5.87 3.85*** 4.84 10.87*** 3.31 3.42***
Urban/suburban dummies no no no no
Woreda dummies yes yes no no
Household dummies no no yes yes
Number of observations 1845 1823 1845 1823
Number of groups 954 947
R-square overall 0.47 0.56 0.42 0.49

20. CONCLUSIONS
• Large changes in the dairy sector in Ethiopia
• Midstream and downstream:
(1) Increased dairy expenditures (growth city and
income)
(2) More dairy processing companies

21. CONCLUSIONS
• Upstream:
(1) improved access to services,
(2) higher adoption modern practices,
(3) higher yields,
(4) upscaling,
(5) sizable urban farm sector
• Issue of inclusiveness of small and remote farms