Dairy Market Value Chain Assessment Report

1. Executive Summary

Outline

1. Executive

Summary

2. Context

3. Methodology

4. Dairy Market

system Map

5. Seasonal

Calendar

6. Who does Who

Pays Matrix

7. Key findings

7.1. Milk

Production

7.2. Milk

Marketing

8. Response Options

9. Conclusions and

Recommendations

10. Annexes

PRIME (Pastoralist Resilience Improvement Through Market Expansion) is a five-year, USAID-funded initiative designed to support resilience among pastoralist communities in Ethiopia, and thus enhance prospects for long-term development in Ethiopia’s dry land landscape where the pastoralist livelihood system prevails. To design relevant intervention system, PRIME aspired to train technical staff from a consortium of four organizations, and assigned these trained technical people to undertake field level value chain assessment around eight commodities, among which milk is one. Dairy Value chain team is a multidisciplinary team assigned to undertake milk value chain assessment in the Eastern, Dire Dawa (DD), Afar and Southern cluster of PRIME operational areas. The assessment is aimed at mapping market for milk Value Chain & diagnoses of milk market system in the identified areas. The key analytical questions designed by the team, to be answered during the assessment include;

What market system support as a key leverage point is required to improve household income gain from the dairy sector?

What are the dairy value chain major constraints, opportunities and leverage points which can improve the livelihood of pastoralist’s?

The field assessment has been undertaken with actors involved in the milk value chain, to analyze the relationship currently prevailing among the chain actors with an objective to identify factors constraining the milk value chain development and develop recommendation for intervention. Though the actors in the milk value chain in the study area have different features, the chain is built around six major types of actors: producers, collectors, aggregators, exporters/importers, retailers and consumers. Specialized actors such as: input suppliers, mostly pastoralist producers, collectors (mostly cooperatives), aggregators, transporters, Exporters/Importers, retailers and consumers are involved in the milk value chain in all visited areas. Actors that have mixed role whereas a single actor is aggregator, transporter and exporter (Jijiga) are also identified in some places. On the other hand pastoralists in some areas of the Borana act as collectors (Ollas) by hiring transportation and jointly marketing the milk in urban areas. Milk production is mostly undertaken by pastoralists in most of the assessed areas. However, there are few peri urban dairy small holders in Jigjiga, Dire Dawa, Awash and Metahara. The relationship between the actors in the milk value chain is not built on long-lasting mutual trust and transparent business communication. The first level collectors that buy the milk from the producers do not share market information with the producers. On the other hand the producers practice different milk adulteration practices to compensate for the loss they perceive due to price cutting practice of the collectors. Furthermore, in some places where larger aggregators and processors exist, the contracts signed between aggregators and processing enterprises are incomplete, legally invalid, and lacking specific details, which renders them ineffective and source of conflict.

The factors that challenge the milk value chain development in all clusters can be summarized classified as:

Natural including: seasonality of production, shortage and erratic rainfall, unpredictable weather,

Institutional including: poor animal health service, poor organizational capacity of cooperatives, lack of financial services, unavailable or limited market information

Infrastructural including: poor transportation and energy supply infrastructure,

Social including: poor market linkage between actors, poor coordination between actors, lack of market orientation of pastoralists, persistent clan conflict.

There is high inconsistency of milk supply across all PRIME intervention areas, as the availability of milk highly depends on pasture & water availability which in turn is depending on rain fall. Milk is hardly available for 2-3 months in the Eastern cluster and up to 4 months in the Southern cluster. Seasonality in the availability of milk makes price movement also highly seasonal. Good milk consumption habit and demand, strong social capital and high women involvement in the milk value chain are few of several opportunities identified in the assessment area. To addresses challenges constrain the milk value chain and gain existing opportunities the team propose the following major intervention options:

Building entrepreneurial capacity and market orientation of major actors such as: producers, aggregators and processors;

Improve coordination among supporting institutions including woreda level sector offices, NGOs and traditional institutions to jointly work towards improvement of the sector;

Support important input suppliers such as feed producers and traders, feed lot owners, veterinarian pharmacies and veterinarian service providers, and link them with the producers, to improve accessibility and availability of dairy inputs and services.

Mobilizing woreda level governments for improvement of services for dairy development.

2. Context

Livestock production is the dominant livelihood system of pastoralist in Somali, Afar and Borena areas. Though the sector is constrained by several natural, institutional, infrastructural and social factors, milk production and marketing has a paramount importance for household economic and nutritional status. Regardless of high economic importance, the dairy value chain in these areas is not well organized. The roles and functions of all the actors in the value chain are not sufficiently differentiated and the market linkages are weak between the actors. The competitive pressure of cash crops, such as chat and coffee in some and more productive areas that compete for resources (land, water, finance, labor) with the animal feed crops reduces the dairy VC improvement opportunities. There is a significant involvement of NGOs In the milk market system of the assessed areas focused on: producer cooperatives establishment and support through financial support in collection and processing center construction, supplying milk containers and processing equipment, provision of inputs for animal feed production and animal health improvement. However, it is obvious that the impact of such actions did not and does not sustain beyond the time of intervention as it relates to sustainable development of the dairy market system. Major challenges in the milk value chain development are summarized into:

Weak market integration and orientation of milk producers;

Poor transportation and energy supply infrastructure;

Production seasonality and inconsistency of milk supply;

Lack of knowledge and incentive to apply standard hygienic practices and milk quality control system;

Absence of private processors and undeveloped demand for processed products;

Attitudinal problem to commercialize camel milk and involvement of women in milk selling(Afar);

Land of access to markets in some woredas

Nevertheless, the sector has a wide range of opportunities to grow and overcome the mentioned challenges. The major opportunities that need to be exploited for upgrading the dairy value chain are the following:

High livestock potential in the pastoral areas (regardless of climate hazards and other constraints);

Highly developed social networks among milk traders, transporters, pastoralist producers and high role of women in the production and marketing of milk;

Developed and constant consumer demand especially in the Somali region;

Availability of ICT for potentially increased market information dissemination, direction and location of livestock migration;

Availability of resources from NGOs and local and federal government;

Emerging of interest by private entrepreneurs to invest in various value chain segments mainly in Afar, Dire Dawa and Jigjiga areas;

Possibility to capitalize on some practices for communal herding of milking cows in the Afar pastoral areas for milk collection, aggregation and marketing as huge number of milking cows are kept and managed jointly by individual producers.

3. Methodology

Literature review1: The assessment team reviewed documents relevant to the assessment such as existing study documents and other background information. Consultation and interviewing small respondent groups: Interactive and brief discussions were made with milk cooperative committee members, small and micro enterprise owners, pastoralists and government officials to generate valuable data with regard to market actions, constraints and opportunities in the dairy VC. Interviews with key informants: An interactive and semi-structured questionnaire survey was conducted with existing and potential actors in the dairy market chain. Telephone conversations were also conducted made to generate data with some actors. Rapid Consumer preference survey: A rapid survey of consumer preference has also been conducted in Yabelo town with 30 respondents were interviewed to assess dig-out the ‘no milk-no market’ paradox.

4. Market System Map

1 A set of secondary literature used is collected and made available as part of the assessment

Value Chain Actors Eastern Cluster: Actors in the eastern cluster include producer, collectors/cooperatives, aggregators/exporters, retailers and consumers.

Producers include pastoralists and small dairy farms (Berwako). Pastoralists supply their milk to local collectors on business transaction or kinship base to bring milk to woreda town collectors/retailers). Some pastoralists also sell their milk directly to consumers in nearby woreda town or on the highway to Jigjiga (Babile). Small dairy farms sell the milk produced and sometimes processed to individual and institutional consumers in the urban areas (Jigjiga).

Collectors – include village collectors who directly collect milk from producers and bring it to the nearby towns to town based collectors. Some of these collectors also sell the milk to consumers directly. Town collectors who aggregate the milk in bigger volume than the previous one from many village collectors based on their customer and/or kin ship network and send it to bigger market centers like Jigjiga and sell it to retailers. Cooperatives in Eastern cluster are observed as passive actors in the chain. Unlike collectors in towns like Fafan which have big market (Jigjiga), some town collectors (w/ro Shamsa Arab in Kebribayah) sell their produces mainly for town consumers (individuals, hhds, tea shops, and some time for refugees) acting as retailer as well.

Aggregators – These actors, in Jigjiga mostly, play multiple roles in the chain (as collector/aggregator, transporter and exporter). These chain actors are actively involved in collecting milk from village and town collectors, from where they bring the milk to Togwajale in Somaliland. They sustain the supply of milk even in dry season by extending their geographic coverage; hence stimulate the milk market regardless of season.

Retailers – Include: producers who sell their milk directly to consumers, town collectors who have no big market to send their milk to like the one in Kebribayah and tea/milk shops. The producers and collector type of retailer sell row milk and tea/milk shop type of retailer sell value added milk products such as boiled milk, acidified milk (yoghurt) and other form.

Consumers – are mostly individual households, city and town dwellers, restaurants, cafeterias, universities, refugee camps, drivers on the highway and others.

Dire Dawa: Actors in the Dire Dawa include: pastoralist, small holder commercial farmera, processors, retailers and consumer.

Pastoralists mostly sell their milk directly to consumers in the Dire Dawa town.

Smallholder dairy farms sell their milk for both processors and consumers.

Commercial farms which also have processing facilities (DPRIMO - DP) in addition to the milk produced by the, also buy milk from trusted stallholder dairy farms and increase their milk volume for further processing. They sell small amounts of raw milk to the local community and pasteurized milk and other milk products to consumers in the city.

Afar: Actors in this cluster include pastoralist/small holder, cooperatives/ collectors, Processor/Aggregator, Retailers and consumers. Pastoralists in most cases do not bring their milk to market centers. Few cooperatives in Mullu and Herdin supplies milk to the sole aggregator in Awash by public transport to mieso. The sole aggregator/processor in Awash of Afar also acts as a trans-border trader; using truck drivers to Djibouti (Yoghurt and butter). Milk collected from areas around Asayita is collected from villages and sold in Asayita town (it doesn’t go long distance). Southern Cluster: Milk value chain in southern cluster comprises actors such as pastoralist/producers, village level collectors/ also act as small aggregators, Retailers, trans - boardersand consumers. Market corridors around Teltele,Elwaye, Arero, Filtuare locked market areas though high milk potential is available, mainly due to high distance from main road.

Producers- are pastoralists and agro pastoralists who directly sell their products to consumers and some of them give / sell milk to local milk collectors and cooperatives.

Collectors-/ village level collectors and cooperatives/ are pastoralist and milk traders or purely milk traders who collect milk from ‘olas’(villagers) and bring it to aggregating and transporting site to send and sell it to their customers in Moyale. Cooperatives on the other hand collect milk from their members and nonmembers in the area and conduct semi processing. After butter is made the cooperative sell skimmed milk to the local community (the problem of skimmed milk market)

Retailers- include individual retailers in towns, milk shops, and some time producers. Individual retailers, particularly those found in Moyale are engaged in sell of raw milk, butter and skimmed milk (after homemade processing), they sale all the products to consumers in moyale town. The others only sale raw milk either to consumers in Moyale or to trans-boarders who brought the milk to Gambo- Kenya. Based on the discussion made with these retailers most of the milk is transported to Gambo- Kenya individually.

5. Seasonal Calendar Market System Months

Sep Oc Nov Dec Jan Feb Marc April May June Jul August

Eastern Cluster

Volume of production

L M M M M L L H H H H L

Mkt price H M M M M H H L L L L H

Sales Volume L M M M M L L H H H H L

Ava. of Pasture / water

L M M M M L L H H H H L

Need for vet. Service

H H H

Infrastructure H M M M M H H L L L L H

Cost of production

H M M M M H H L L L L H

DD level H M M M M H H L L L L H

Festivity & Holiday

H H H H

Conflict H M M M M H H L L L L H

School fee & year beg

H

Southern Cluster

Volume of production

H H L L L L L H H M M M

Mkt price L L H H H H H L L M M M

Sales Volume H H L L L L L H H M M M

Ava. of Pasture /water

H H L L L L L H H M M M

Need for vet. Service

H H H H

Infrastructure L L H H H H H L L M M M

Cost of production

L L H H H H H H H M M M

DD level L L H H H H H L L M M M

Festivity & Holiday

H H H H

Conflict L L H H H H H L L L L L

School fee & year beginning

H H

Afar Cluster

Volume of production

M M M M L L L L M H H H

Mkt price M M M M H H H H M L L L

Sales Volume M M M M L L L L M H H H

Ava. of Pasture /water

M M M M L L L L M H H H

Need for vet. Service

H H H

Infrastructure M M M M H H H H M L L L

Cost of production

M M M M H H H H M L L L

DD level M M M M H H H H M L L L

Festivity & Holiday

H H H H

Conflict M M M M M H H H H L L L

School fee & year beginning

H M

6. Who Does Who Pays Matrix for Core Dairy Initiatives

System Initiatives Current

Future

Who does Who pays Who does Who pays

Training/expo.visit NGO/GO Donor/GO PS/GO PS

Input Supply NGO/GO/PS Donor /PS PS/GO PS

Seed Capital NGO Donor PS/GO PS

Monitoring & follow up

NGO/GO Donor/GO GO/PS PS

Mkt Linkage NGO/GO Donor/GO GO/PS PS

Info. Assimilation NGO/PS/GO PS/ PS/GO PS

Research & Technology

NGO/EIAR Donor/GO GO/PS PS

Transportation PS PS PS PS

Org, Licensing GO Donor/GO GO/PS PS

Infrastructure GO/NGO/PS Donor/GO/PS GO/PS GO/PS

Enabling environment GO GO/Donor GO GO

7. Key findings

7.1. Milk Production

Though pastoralism and semi-pastoralism are the predominant livelihoods in the southern Oromia, north & eastern Somali and the Afar regional state, the livelihoods of the pastoralist households is constrained by risks of climate calamites, as these regions are predominantly arid and semiarid. Profound climate changes are now taking place, increasing the vulnerability due higher climatic hazards. The ability to apply the main coping mechanism and strategy in times of drought, mobility, is also reduced for these communities. In normal weather conditions, pastoralists follow mobile lifestyle according to seasons in search of pasture and water that enables them to produce, utilize and sell milk in order to generate cash to purchase grain and other food and consumer products. Though the secondary data reviewed has some controversies on the percentage of milk consumed on household level and sold to the market, it is indisputable that sales of milk has a paramount importance for family income and

household food. Cow, camel and goat milk is consumed in these areas, but only cow and camel milk are sold. Pastoralist milk production methods lack necessary technological, organizational and institutional capacity for successful and continuous participation in the milk trade value chain. Except in few places there is no experience of separately feeding milking cows, though it could be a good coping mechanism to sustain availability of milk during the dry season. Usually, pastoralist milk producers are located far from the market, lack economies of scale, face higher transaction and transportation costs and lack institutions for risk transferring & management. Hence, they could be left out from the value chain due to inability to meet the required volume, quality and consistency of supply. Yet, many of these problems are not insurmountable with appropriate organizational and institutional innovations. Among several constraining factors such as: (1) lack of genetic improvement services, (2) seasonality in feed availability, (3) poor health management, (4) poor animal husbandry practices are the critical problems that the dairy producers experience. Local government institution which are supposed to provide the necessary technological, extension, monitoring and support services has very limited capacity to reach these mobile communities, which together contribute to low productivity of the dairy sector. Practical problems were observed in Dire Dawa, Awash, Metahara, Jigjiga and the southern cluster major cities with regard to access to AI and animal health services and access to technologies for developing drought resistant feed crop varieties.

7.2. Milk Marketing Demand and consumption patterns are critical for the success of market - led dairy development. Consumers express their demand through the price they are willing and able to pay; and market transmits the price signal to producers for them to respond accordingly. With respect to this, there are a number of restraining factors. Per capita consumptions of milk and milk products in the assessment area just like the national level is very low due to economic and cultural reasons. The assessment team has conducted an interview in towns like Yaballo in the southern cluster, and has realized that the per capita milk consumption is very low and not significantly improving, mainly due to limited purchasing power of consumers and problems related with milk quality, mostly in the scarce season. Milk marketing in the pastoral society is challenged by several factors such as low market orientation of the pastoralists, low entrepreneurial skill among the market chain actors, weak institutional capacity of the market its self, seasonality of the marketing due to less/no produce during the dry season, low accessibility to market due to poor road conditions and loss of products due to poor handling and storage. For those producers who are residing far beyond the reach of road infrastructure, it is more than difficult to bring their produce to the market due to spoilage. In such cases the producers are obliged to process their milk locally on household level and sell the limited variety of products (mainly butter) through the informal market channels. On the other hand it is difficult for the collectors or aggregators to buy and transport small amount of milk to the marketing center, as they cannot reach the economy of scale due to high transpiration and transaction costs. These factors keep the system stagnant at its high subsistence-orientation. Most of the producer cooperatives visited by the assessment

team in Mullu woreda, Gursum, Fafan, Kebribayah of Somali regional state and in the Yaballo, Dire, Surupha, Miyo and other villages in Borana zone of Oromia regional state are operating at very minimum scale due to lack of developed market linkage, lack of support and follow up from local government, low demand for skimmed milk as the consumers’ preference is more for fresh milk and high seasonality of milk availability. It was observed by the team that cooperatives in the southern cluster are more active than those cooperatives in the eastern cluster that they are operating in a clear cooperative set up. As coping mechanism cooperatives in several areas engage in alternative petty trade such as sales of sugar, coffee and other consumables, because there is no possibility to fully engage to milk business during the scarce season. Other than seasonality in the availability of milk these entities are being challenged by lack of business communication and management skill, lack of technological facilities, lack financial services and weak integration with big actors. Though members are using cooperatives as a means to qualify for cooperative licensing, the businesses are mostly undertaken through informal business practices, mostly through kinship. The team has observed milk cooperative in Gursum and Fafan has a Coop legal personality, whereas the business is done at an individual level, unless the truck they rent in common to transport milk to Jigjiga is the only thing they share in common, otherwise working capital and cost/benefit of the business is owned individually. On the other hand there are strong private actors in the milk trade in the eastern cluster, while no such actors were identified in the southern cluster. Dire Dawa and Awash of Afar also have strong private actors which are currently involved in the milk trade chain. In Jigjiga and Dire Dawa there is product coming from a larger milk processor Mama; which is dominant in the high land market. But Mama pasteurized milk is not competitive in these areas as its price rises due to high transport and transaction costs. Though the milk market obviously stretches beyond the terminal market at Moyale and Tog Wajale the assessment team did not get sufficient information about the markets in Kenya and Somaliland. No Milk No Market Paradox There is ‘no milk-no market’ paradox in several places which the team assessed. Collectors such as cooperatives and individual producers in Shinile, Amibara, Surupha, Elwoye, Dubluk, Mio and Tuka areas are complaining, there is no market for their produces. On the other hand consumers in major cities such as Awash, Yaballo express high milk demand, but the availability is a problem. For Awash the team understands the conflicting idea is because of factors like long distance from the market site and transportation problem (eg. Halaydege of Amibara), attitudinal problem to sell camel milk and women involvement in milk marketing, weak market linkage and actors (No collector at production site and transporter to market site). One testimonial from a producer in Yabello informs that though they supply large amount of milk to the towns around them, they sometimes are not able to sell the milk and forced to return it home. The consumers in Yabelo on the other hand state that the milk supplied by the pastoralists or aggregators doesn’t reach them at a proper time when they want to buy it. Also, the milk arriving t market late in the day lacks quality.

To identify contradicting ideas raised by milk suppliers and consumers (No Milk No Market Paradox), the team has developed a semi- structured interview questions and gathered data from consumers in Yaballo town, in addition to pre-set EMMA questionnaire. Accordingly, it was confirmed that out of 30 consumers interviewed in Yaballo, 26 of the respondents have replied that milk quality (Adulteration) is a major issue which makes consumers reluctant to buy milk around Yaballo town. More than 12 consumers also responded that they have experienced stomach complications after consuming poor quality milk. Most the respondents cited that milk supplied to Yaballo town from nearby kebeles is highly adulterated. The adulteration practices of some milk business practitioners highly affect consumer confidence and create perception that milk from nearby areas is totally adulterated. The other cause for low demand from the consumer side is that the time at which suppliers bring milk to the market doesn’t fit with a time consumers want to buy. Actors and linkages The dairy value chain involves several activities from production of the milk through reaching to the final consumer in the market, though the chain structure differs across the clusters. These activities include input supply, milk production; Raw milk transportation, bulking and cooling, processing, transporting processed milk and milk products and retailing it to the final consumer. Involvement of the actors may be direct or indirect in the pastoral dairy value chain. The key actors include milk groups / cooperatives, Aggregators, Retailers, private and public veterinary service providers, saving and credit institutions, feed suppliers, private processors, exporters and milk and milk product consumers. The Livestock Production and Development, Animal Health and Cooperative Promotion Departments at woreda level, Food Security Office, and Development Agents (DAs) with the Farmers’ Training Centers ( FTCs) as well as Kebele administration are key local actors. Other important actors include agricultural research and education institutions, Non-Governmental Organizations (NGOs) and development projects. The interaction and coordination among the aforementioned service delivery government departments as well as NGOs was observed to be negligible and extremely weak & coordinated. The situation alarms that key actors should be brought together and strategize the intervention to transform the commodity. It requires to form a platform of actors in the dairy sector that coordinates actors and leads the innovation processes for a transformed and sustained market system of the dairy sector. Transportation Though the milk transportation task in the eastern and southern clusters has similarities in terms of transportation process, there is minor difference in the transfer of the product. The transportation task in the southern cluster has two segments. The first involves transferring the milk packed in 5-20 liter jerry cans from the production areas to the roadside bulking and collection centers. This is mainly done on the donkey and women backs by the producers themselves. In the second segment milk is transported from collection centers to the terminal market (mostly moyale) and less often Yaballo, traveling up to the distance of 30-240

kilometers. During milk transportation in this segment the producers are not travel with their milk. They send their milk by the drivers putting unique marks of string tied, color of the containers etc on the jerry can which enables their corresponding client in moyale to easily identify the container. In this segment the activity is done by two transporters. Two important transporters are Mohammed Amin and Abdi Boru Frighters association. Mohamed Amin mostly serve in Bukuluboma and Tuka area by his cars to the Moyale Market, this one serves the before noon market demand. The Abdi Boru frighters association Trucks transport milk from Finchuwa and Surupa, mostly to Moyale and rarely Yaballo which mostly serve the afternoon market demand, as they reach around 12 PM. In the eastern cluster the transportation of milk which is collected by few business agents come to the aggregator, which in some cases can be cooperatives, will be transported to Jigjiga from Fafan, Gursum, Babile and other villages around Jigjiga. The milk transported to Jigjiga either will be processed in Jigjiga town or being supplied to the retail trader in Somali land towns such as Harghessa. Due to seasonality of demand for milk in Somali land and/ Jigjiga area channel of milk marketing also varies, meant there is a time when demand in the counterpart towns reduced because of abundance of milk, mostly at the wet season, Jigjiga will be a terminal town. Another time when milk demand hikes in Somali land, trans-boarder transportation of milk increases and demand highly increase in Jigjiga. In the case of Diredawa and its surrounding the marketing channel is from pastoralist villages to Diredawa town to serve the milk need of HHs, cafes, restaurants, university students, intuitions and so on. During the wet season produce from dairy farms in DireDawa plus milk transported from surrounding kebeles by collectors/mostly women milk cooperatives fully address the existing demand of milk in the town. During the dry season when milk shortage is happened in the surrounding pastoral areas, scarcity of milk also occurred in Dire Dawa town. In the Awash area of Afar regional state and bordering woredas of Somali & Oromia, market channels to Awash town, mostly to Addis Kidan Milk processing enterprise; an enterprise which started with small capacity before five years and currently reached the daily buying capacity of up to 1000 liters & also under expansion to up-scale its capacity to the daily processing capacity of 10,000-20,000 liters. Poor Cooperative organization Rare presence of organized cooperative bodies has been observed in all clusters. In terms of presence the southern cluster has much higher number and better organizational capacity as compared to the Afar and the eastern cluster, but all the cooperative bodies visited have some major problems in common. These problems include weak institutional capacity, poor managerial skill, lack of market link because of no/limited linking, follow up and mentoring services. Multiplicity of actors and coordination challenges

In all the PRIME operational pastoralist areas there is a multitudes of heterogeneity of actors in the dairy development. There has been continuous ‘pouring in’ of resource by donors, directly through NGO projects and, indirectly, through government food security and productive safety net programs. A significant amount of public money is also being invested in infrastructural development, human capacity development and dairy research and extension. Nonetheless, there is no mechanism of ‘pooling in’ of resources which leads the intervention to duplication of efforts and inefficient use of scarce resource. The entire intervention arrangements in both GO & NGO programs promote organizational independence rather than institutional interdependence. For instance Dairy development initiatives which has been supported by NGO actors ends up at its inception level without enabling & institutionalizing the initiatives & without making proper linking to local government arrangement. The supply driven approach of NGO interventions initiate business entities such as cooperatives where there is no/limited sense of ownership among the members of these entities. Most of the milk cooperatives observed in all clusters have been initiated by the NGO actors, but non of these initiatives are fully functional at the moment, except few ones in the southern clusters. Multiplicity in intervention and lack of coordination alarms for coordinated intervention in future. Milk quality: Cause for poor quality of milk & milk product could be multiple, but it mostly starts from milking. Milk production in the pastoralist society is being influenced by several poor handling practices which also could be exposed to severe contamination. Most pastoralists did not tie the cow’s tail during milking, had no appropriate and permanent milking place, most of the pastoralists do milk animals on treatment, did not wash hands before milking, did not cover the milk and had no potable (boiled) water for washing hands and utensils. Container for milk storage and transportation among most of the chain actors is plastic Jerry can in all the clusters. The reason for all the actors to use plastic Jerry Can is that it is easy to collect milk from pastoralist villages to road side aggregation centers and also to the terminal market. But Plastic container by its nature is a cause for milk spoilage as it has highly susceptibility for high temperature. This poor handling and container facility together with adulteration practices highly damage quality of the product. This Poor hygienic practices, together with inefficiency in milk handling, absence of cooling facilities, limited awareness of the actors towards the risks related to poor hygienic condition leads to spoilage of the product. These all pose health risk to the consumers. Milk Marketing and Gender: Milk and milk product marketing is entirely done by the women in the pastoral area. Not only milk and milk product marketing but also management of these products at home is an exclusive responsibility of women. From Physical observation made by the assessment team and few informal discussions done with producers and aggregators, it is being confirmed that it is even taboo for a pastoral man to ask how his wife allocates milk and milk product in the household. There is an opportunity to mainstream gender issue & more empower women (

economically), so that they take the driving seat of the milk VC management, mostly in the milk cooperatives through various entrepreneurial & management trainings. Customer preference Rural household consumption patterns include fresh and fermented (sour) milk and ghee on a seasonal basis. However, the local customers’ preference in general is for fresh milk. Since it is very difficult to get fresh milk in the market, most cafés offer reconstituted milk ( fresh milk with unfresh milk). Among 30 people interviewed in Yaballo town 26 respondents have replied that they prefer to get fresh milk early in the morning to serve house hold demand for HHs and customers in business units. Most of consumers prefer to buy milk which comes from far away, perceiving that producers at far do not practice adulteration. In the eastern cluster households prefer to feed powdered milk for their kids to the fresh milk. Otherwise every consumer in all clusters prefer to consume fresh milk. Customer demand for powder milk in the southern cluster is totally insignificant while in the eastern cluster the demand is significantly high i.e consumers in Jigjiga revealed their preference for powder milk, as they believe it is safer for infants. Pricing and Profit Margin Milk prices along the market chain Seasons have a very important impact on the availability of locally produced milk. This is because of the effect the season has on the reproduction pattern of each individual species, movement of the livestock and the amount of milk produced per animal due to varying availability of pasture for grazing. Seasonality in milk supply would actually favour processing of milk as a means of preservation, enabling sales in times of scarcity, however this is not practiced. Milk prices vary according to seasons. In the wet season, production is higher and most households have some excess milk and prices tend to go down. Pricing and Seasonal calendar

Cluster Unit Price at Producer

Price at trader Retailer price Remark

Eastern Cluster

Wet Season

8 ETB 12 13

Dry Season

12 15 16-

Afar

Wet Season

8 11 13-14

Dry Season

12 15 16-19

Southern Cluster

Wet Season

11 13 15

Dry Season

14 16 18-21

Profit Margin: As indicated on the above table, high profit margin is available among traders (small & large traders) as compared to retailers. On the other hand even if we were unable to get sufficient quantitative data for major production costs among pastoralists/producers, the profit margin for the producers is highly insignificant according to secondary data we obtained, mainly due to high input costs & low productivity.

8. Conclusions and Recommendations The pastoral dairy sector is constrained by various socio-economic, institutional, organizational and technical problems. Shortage and high cost of feed, lack of organization that provides dairy related information, difficulty to get land, disease prevalence, lack of technical support, and lack of dairy related technologies are the major constraints related to milk production whereas problems related to milk marketing include lack of quality control of milk, lack of cooling and storage facilities as well as its transpiration at/to milk vending sites, poor quality of milk supplied from rural areas, sale of raw milk, inappropriate milk handling and storage vessels, and spoilage of milk due to lack of preservation and processing facilities. Actors along the market chain include pastoralist producers, traders and consumers. However there is no clear line drawn in the roles of the actors, as producers also often act as collectors and sellers, and traders also own livestock and produce milk in some cases. Even the consumers who are mainly urbanized people keep livestock in a smaller scale and produce milk. However their milk production is not sufficient for the household needs; hence they do purchase milk from the local market. Other consumers include hotels and restaurants. In general this study revealed that hygiene standards among the actors along the market chain are very poor starting with personal hygiene to equipment used for milking, storage and transport. Equipment used for milking, storage and transport include mainly traditional gourdes, plastic jerry cans and in few numbers aluminium cans. Traditional gourds that are usually smoked after usage pass hygiene standards, however the milk is often transferred to plastic jerry cans for transport and contribute to milk spoilage as they are difficult to clean. Though the sector is being constrained by several challenges, there is still opportunity to improve the sector.

9. Response Options After thoroughly making an inventory on the factors constraining the milk value chain the assessment team has proposed the following intervention options: Matrix for Response Options

Intervention option

Activities Advantage Disadvantage Feasibility Level

High Medium

Low

Support productivity improvement through genetic improvement & rangeland management

.Support selection of high yield indigenous breeds .Support cross breeding .Support access to AI .support integrated rangeland mgt practices

.productivity increased .Volume of produce increased .Milk Quality improved .stable availab.of produce

.Susceptible to disease & env. hazards . Loss of indigenous genetic make up

Improve availability of feed & management of milking cows

.Introduce drought resistant fodder seed var. .promote hay making practices .Support/strengthen private feed suppliers .support separate husbandry practice for milking cows

.Ensure stable availability of feed, hence milk .Strengthen drought resilience of milking cows . risk mitigation via herd division

.Costly approach . Limit mobility

Improve animal health services

.Support local gov’t in providing vaccination services . Support vet service coverage .Support private vet.practitioners .Support CBAH service delivery .Support bridging of research & extension

.Improve resilience to disease & related hazards .improve participatory animal health care .Facilitate tech. transfer in vet service

. Capital intensive

Support input suppliers

.Support expansion of private input suppliers .Improve input suppliers access

.Improve pastoralists access to inputs .increase volume of produce

. Capital intensive

to financial services .raising role of transformative institutions to support private input suppliers

Advocate commitment of Meso level value chain actors

.Organize Meso level dialogue at different levels . Propose alternative approaches to meso level actors

.Ensure integrated approach .It clearly identifies andates .It addresses strategic/policy constraints

.Difficulty to coordinate meso level rganizations

Building entrepreneurial and institutional capacity of major actors

.Support institutional CB &governance .Facilitate skill training in business management for COOPs .Strengthening entrepreneurial motivation of business actors in the milk VC

.Capacitated entrepreneurs become change agents

Leverage coordination among key institutions at grass root level

.Initiate & strengthen platform of institutions working towards development of milk VC .Facilitate inter stakeholders experience and learning on best practices in the milk vc .Scaling-up best practices .Mainstreaming best practices in dairy & rangeland dev’t via traditional institutions/ indigenous knowlege

.It leverage knowledge Exchange among stakeholders

.

Improve Financial Service provision

. Identify appropriate FIs

.Solve systemic constraint that

.

systems among FIs for milk VC

which can establish long lasting partnership with milk VC actors . ID transformative institution & influence improvement of financial service provision system .Build capacity of FIs to expand their outreach services to pastoral area entrep. In the milk VC

hinder access of small actors to FSs .Expand service coverage of FIs & enhance inclusiveness of small actors in the Milk VC . Entrepreneurs in the Milk VC Become motivated & level of participation scaled up

Raising awareness of milk VC actors on milk sanitation & hygiene issues

. Support mechanisms for setting appropriate quality standard . Support acquisition of appropriate milk handling containers .Support the scheme of reward for quality milk supply at processing level .Organize marketing bazaar among milk VC actors to promote quality produce &processing of milk products . Support innovative researches on milk safety

. Stimulate demand among consumers .Producer attitude become market oriented

Strengthening Milk VC marketing information system

. Support introduction of SMS based mkt information . Support mkt information data

.Enhance mkt information among milk VC actors

base .Promote integrated metrological & early warning system

Creating enabling environment for dairy sector dev’t

.Support action research to assess policy constraints & initiate new policy possibilities . Communicate research output with all level relevant gov’t institutions . Support government commitment in implementing enabling policy measures

.Remove policy barriers in the dairy sector .Develops clear implementation guideline & strategy .Stimulate actors in the dairy VC to be mkt oriented throughout the whole chain structure . Strengthens vertical chain integration

.May be capital intensive .Difficulty in the Inter sectoral integration & coordination

Empower Gender Role in the dairy Value chain

. Support CB trainings (in husbandry, marketing, mgt skill, sanitation & hygienic standards) and .Raising awareness of traditional institutions & the community on women roles in the dev’t of dairy sector .Promote involvement of women entrepreneurs in various exposure visits, learning & sharing events

.Women business skill improved . HH income increased & nutrition improved .Attitudinal change improved towards gender sensitivity .

.Newly adopted Initiatives may overburden women .Institutional/cultural resistance

Support the existing milk processing units

.Support processors quality control .Support mkt dev’t for processed milk products .Support business

.Product quality improved .milk consumption pattern for processed product improved

.Costly intervention .Consumers taste may be resistant for new products

link b/n input suppliers & processors, as well as milk suppliers & processors . Support processors access to financial services

. Business integration b/n actors become strong & consistent

Improve pastoralists market orientation

. Organize community & woreda level sensitization meetings to improve pastoralist mkt orientation for milk production .Promoting/Strengthening small women group in pastoralist villages to improve quantity & quality of milk supplied to mkt .Support newly emerging milk groups/Coops as an entry point to reach large number of pastoralists to tap untapped milk marketing opportunities .Provision of training for pastoralists on milk quality mgt, sanitation & hygienic practices .

. Quantity & quality of milk circulate in the mkt increased .Hygienic practice among pastoralist milk marketing improved

10. Annexes Annex 1 Milk Market Channel in the pastoral areas of eastern, southern and Afar Cluter as well as Dire Dawa city Council

Key: Milk Market Channel Annex 2. List of Actors interviewed for the assessment

S/N Name Cluster Specific location

Role Full address

1 Iskufilan cooperative

Eastern Muli Collection 0923198252

2 Hamdayle Plc Eastern Diredawa Production and processing

0932202377

3 Primo dairy farm Eastern Diredawa Production and processing

0911603096

4 Hafkath Plc Eastern Diredawa Production and processing

0915015600

5 Al-nasri cooperative

Eastern Gursum Collection 0915054731

6 Alla amin cooperative

Eastern Fafan Collection 0933342826

7 Hormud coopeartive

Eastern Fafan Collection 0915741594

8 Barwako cooperative

Eastern Dhuxusha Collection 0915228014

9 Barwako Milk Processing (Amir)

Eastern Jijiga Processing 0920824377

10 Barwako dairy farm

Eastern Jijiga Production and

0915741904

processing

11 Aleel Adan Riyale Eastern Jijiga Fresh milk retailer

0915774703

12 Kadar Jama Eastern Jijiga Exporter 0915742875

13 Deneke Eastern Jijiga Powder milk Importer and retailer

0924006824

14 Tawakal cooperative

Eastern Kebribaya Collection 0933414664

15 Alla Mahadle cooperative

Eastern Heradin Collection 0915006585

16 Abdi rashed Eastern Jijiga Transporter 0915741594

17 SRS, cooperative promotion office

Eastern Jijiga Promotion of cooperatives

18 Addis Kidan Milk processor (Gashew)

Afar Awash Aggregator, processing and retailer

0911015004

19 Amibara woreda cooperative office

Afar Amibara Cooperative 0913194068, Demoze , organizer

20 Alaydege coop Afar Amibara Non functional

0910020826

21 Pastoralists in Diba PA

Afar Awash Productionand sales

22 Betaseb dairy farm Metahara Production 0911315620(organizer)

23 Mister mele cooperative

Afar Asayta Collection 0912182248

24 Arado Cooperative Afar Asayta Collection 0912182248

25 Demazo Afar Asayta Woreda cooperative Officer

0913194068

26 Birhan Dairy SME Metahara Production 0911315620( organizer)

27 Etafar Adama Collection, processing and retailer

091132980

28 Surupha cooperative

Southern Surupha Collection

29 Gizachew Leta, zone coop expert

Southern Yaballo Facilitation 0910062030

30 Burka Jirenya Southern Elwaye Collection 0926101568

31 Dharito milk processing cooperative

Southern Dharito Collection and processing

33 Gudisa Ebsa, coop expert

Southern Mio Collection 0912162360

34 Debo Huka, Coop chair

Southern Tuka Collection 0926620520

35 Halimo Ibrahim Southern Udet Retailer

36 Silesh Yorghot Southern Yaballo Collection

37 Faluma Milk retailer

Southern Yaballo Collection & retailing

0911967009

38 Firie Yorghot Southern Yaballo Collection

39 Consumers Southern Yaballo

40 Waqat gargara Southern Negelle Collection

41 Tadelech Teyib, Coop member

Southern Gordala 0927138237

42 Ilama Isak Southern Filtu Producer and retailer

43 Gizachew Leta Southern Yaballo Zone cooperative expert

0910062030

44 Debella Geleta Southern Yaballo SME office 0925568122

45 Bare Gelgelo Southern Dubluk Cooperative chair person

0912127211

46 Mohamed Amin Southern Moyale Transporter 0911808515

47 Dermi Galma Southern Moyale Trans border trader

Annex. 3 Interview questions for Milk consumers in Yaballo town Date: May 20-21, 2013 Objective: To identify consumer preference in Yaballo town with regard to product quality, taste, ease availability, trust towards customer and price. This assessment is used for milk VC, rapid assessment of PRIME Program.

1. Do you consume milk and milk products? Yes____________ No___________ 2. If Yes, How frequent you consume it? A) twice a day b) once a day c) once every two days

d)once a week 3. Where do you consume milk mostly? a) in cafes b) In hotels c)At home d) other 4. What Is your reason to consume it there? A) Socialization & to enjoy outside b)good taste &

quality c) good quality and service d) only good service 5. How do you identify quality milk/milk product? A) using my own quality tasting b) later reaction

of the product on my health c) color and smell d) other 6. How do you evaluate the quality of the product /service provider where you take milk/milk

product? A) Very Poor b) poor c) Fair d) good e) v. good 7. Who do you think is the cause for producing/supplying poor quality milk/milk product? A) some

pastoralists/producers b) collectors c) retailers d) the processor( final service provider)

8. Is there any cluster/woreda/kebele in your opinion is renowned by it quality milk?-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

9. Is there any cluster/woreda/kebele/village In your opinion is renowned by its adulterated & poor quality product?-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

10. What is your attitude towards consuming milk/any milk product out of your home? A) I don’t have trust & I am disparate b) Very good, & I also trust my customer c) I suspect there is some adulteration d) it Is not that much harmful

11. Is there any time( month or season ) when you stop consuming milk because of price escalation? A) yes b) rarely yes c) No . If yes please state the time-------------------------------------------------------

12. What Is your substitute good for natural milk? A) powdered milk b) pasteurized milk c) tea d) coffee e) I don’t have substitute good for milk because I extremely like it

13. Do you consume other milk other than cow milk? A) yes b) No. If yes please state it------------------

14. Is there any distinguished café/hotel or Yoghurt house somebody canhas to trust in Yaballo town? A) Yes b) No c) I don’t know

15. If yes please list it/them------------------------------------------------------------------------------------------------------------------- What do you think Is the reason for its trustworthy? -----------------------------------------

16. Have you ever faced any illness due to poor quality of milk or any milk product?----------a)yes b) No. If yes please describe it------------------------------------------------------------------------------------------------------------------------------------------

17. Thanking you for your cooperation, please add any idea which you suppose is important for this assessment.-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------