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International Journal of Agricultural Policy and Research Vol.2 (6), pp. 224-233, June 2014 Available online at http://www.journalissues.org/ijapr/
© 2014 Journal Issues

ISSN 2350-1561

Original Research Paper

Analysis of the dairy value chain: Challenges and
opportunities for dairy development in Dire Dawa,
Eastern Ethiopia
Accepted 28 May, 2014

Eyassu Seifu1,2*
Reiner Doluschitz3

of Food Science and
Technology, Botswana College of
Agriculture, Private Bag 0027,
Gaborone, Botswana.
2Department of Animal Sciences,
Haramaya University, P.O.Box
287, Haramaya campus, Ethiopia.
3Department of Farm
Management (410C), University
of Hohenheim 70593, Stuttgart,
*Corresponding Author:
Email: eyassu_seifu@yahoo.com
Tel: +267-3650100;
Fax: +267-3928753

The study was conducted to characterize the dairy value chain and to identify challenges and opportunities for development of the dairy industry in Dire Dawa, Eastern Ethiopia. A total of nineteen key informants were interviewed using a structured questionnaire. Moreover, secondary data were used to augment the information obtained through survey. The dairy value chain is not well organized in Dire Dawa. The roles and functions of all the actors in the value chain are not clear and there is a weak link between milk producers, traders and other stakeholders. Shortage and high cost of feed, lack of institution 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 at 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. The major opportunities for the development of the dairy sector in Dire Dawa include high demand for milk, presence of enabling policy that encourages investment in the dairy sector, absence of competitors, and easy access to transportation systems. Thus, in order to develop the Dire Dawa dairy industry, all the challenges identified in this study need to be carefully considered and addressed. Moreover, coordination and intervention strategies should be designed and applied across the entire value chain in order to develop the dairy sector. Key words: Challenges, dairy value chain, Dire Dawa, major actors, opportunities, coordination

Ethiopia has the largest livestock population in Africa,
estimated at 45,054,969 cattle, 20,562,832 sheep,
20,191,099 goats (MoARD, 2007) and 2.4 million camels
(FAOSTAT, 2009). Recent figures indicate that the livestock
sector contributes about 12-16% of national GDP, 30-35%
of agricultural GDP (MoARD, 2007), 15% of export earnings
and 30% of agricultural employment (SNV, 2008).
Livestock contributes to the livelihoods of 60-70% of the
population (Aklilu, 2002).

The livestock sector in general and the dairy industry in
particular do not provide the expected contribution to the
national income despite their large numbers due to several
factors. The development of the dairy sector in the country
is hindered by a number of technical, institutional and
socio-economic constraints. The growth in milk production
has been slow and the annual milk production is estimated
to be 1,089,488,251 litres (MoARD, 2007) which doesn’t
meet even the domestic demand for dairy products. As a

Int. J. Agric. Pol. Res.


result the country imports large volumes of dairy products
per annum to meet the domestic demand. In 2005, for
instance, the country imported 457,260 kg of milk (liquid
and powder) which is equivalent to 3,026,724 Birr
(MoARD, 2007). The dairy sector is dominated by
smallholder farmers who account for about 85% of...
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