AMHARA NATIONAL REGIONAL STATE
HEAD OF GOVERNMENT OFFICE
AGRICULTURAL COMMODITY MARKETING
SYSTEM STUDY PROJECT
AN N E X 12
By: AKLILU WOLDU
ANRS – Agricultural Marketing Systems Study Project
Small-scale dairy production is an important avenue for income generation for mainly subsistence farmers in the Ethiopian highlands. Dairy products are a traditional urban consumption item, ensuring continued and growing demand. The temperate highland climate allows the use of crossbred dairy cows, raising farmer productivity (Halloway, et al., 2000). Smallholders who are estimated to contribute approximately 98% and 97% of total and marketed milk production dominate dairy production in Amhara Region, Similar to other parts of Ethiopia, (CSA, 2003). These are farmers who, besides growing crops for subsistence and for sale, mostly keep 1 to 3 cows with their followers on land sizes typically of about 1 ha in the intensively farmed Dega and Woinadega AEZs and about 1.5 ha in the extensively farmed Kolla areas (Biomass, 2002). In 2002 milk production was estimated at 493 million litres of which below 1% was marketed, 41% was consumed at home and the rest 58% processed into butter and other derivative dairy products (CSA, 2003). Considering Milk has no close substitute, the estimated total population of 3.5 million of dairy cows in approximately 3 million smallholdings (BOA, 2003; CSA, 2003) suggests that this sub-sector employs many poor farmers in the Region who derive a regular source of cash income and balanced nutrition. In like manner, some areas of the Region have traditionally been known as the land of “milk and honey”, showing how dairying was an important contributor to the village economy in ancient times.
Although smallholder dairy production accounts for most of the total milk production in the Region, individual cow productivity is low (BOA, 2003; CSA, 2003), while the potential for increased productivity per animal is considered to be high. Moreover, given most of rural farmers live in smallholdings and are resource-poor with 45% of rural households in the Region living below the poverty line (BOFED, 2003), there is a consensus that targeting smallholder dairy development efforts within the agricultural sector will have a good impact on poverty reduction.
In line with the above, the Regional government, in its recent comprehensive plan for agriculture (BOA, 2004), has given particular attention to the promotion of dairy development. The comprehensive development plan for crop and livestock is aimed at transforming the subsistence mode of agricultural production system into market oriented production system and its implementation has begun in 2004. The plan views improved livestock and products marketing as an important Regional development strategy to increase both rural incomes and foreign exchange. Dairy production and marketing has, therefore, been included as one of the intervention areas in the current commodity-based specialization and commercialization plan.
According to earlier reports (Debrah and Birhanu, 1991), however, market access poses a key bottleneck to the expansion of smallholder milk production and processing. Since the present dairy products marketing system in Ethiopia is young, not all market mechanisms are expected to be operational. Similarly, as Halloway, et. al. (2000) aptly put it, enhancing the ability of poor smallholder farmers to reach markets and actively engage in them, poses a pressing development challenge. Difficult market access restricts opportunities for income generation. Remoteness results in reduced farm-gate prices; increased input costs; and lower returns to labor and capital. The question of how to expand the market participation of...
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