Building “Win-Win” Relationships Between Smallholder Producers and Dairy Processors in Ethiopia | Agrilinks
Ethiopia’s dairy sector has the potential to not only significantly increase the availability of nutritious milk and dairy products for consumers, but to also enable its smallholder livestock farms to be nationally and internationally competitive.
The AGP-LMD Project intends to increase production by 200,000 liters per day through additional milk collection, processing and marketing, which in turn is expected to result in 10,000 off-farm jobs. One of the keys to the success of the Project’s dairy sector goals is the improvement of the business capacity of milk-processing entrepreneurs who are willing to engage with smallholder producers. Hiruth Yohannes, a Project client, is a dairy processor who has been able to improve the quantity and quality of her firm’s milk products while serving as the principal buyer of raw milk from approximately 2,000 smallholder dairy producers.
The formalization of the milk value chain and the establishment of processing plants like Hiruth’s provide smallholder producers with a reliable, supply-based relationship, with processors providing them with opportunities to invest in their own productivity. Additionally, processors like Hiruth reduce the business risk of smallholder producers by consistently purchasing milk 365 days per year.
The case of Hiruth and the 2,000 smallholder producers from whom she buys is just one example among many that demonstrates the benefits of AGP-LMD’s unique dairy value chain development approach in Ethiopia. When smallholder producers are certain their milk will be purchased, they are subsequently more willing to increase investments in better feeds and in better cows, which raises the productivity of herds that supply Ethiopia’s dairy processors, and generates increased incomes for the smallholder families that supply them.
In summary, the AGP-LMD Project’s investments in formal dairy processing create win-win business relationships that benefit processors as well as smallholder farmers!
It won’t happen overnight, but we have already seen how our program has positively impacted Ethiopia’s dairy sector, thus strengthening the country’s dairy industry and helping it meet its full potential. Working at both ends of the dairy value chain in Ethiopia is creating “win-wins” for everyone!
For further information contact Marc Steen, USAID AGP-LMD Project chief-of-party at email@example.com.