Bridging the broken Dairy and Poultry Value Chains

Value Chain /supply chain involved the interaction various actors from production to consumption. A value chain to be efficient, it requires active actors and support provides which facilitate the transformation of production to the end consumer. Covid-19 impacted many value chains by affects one or more of important actors of the various value chains. When people mobility limited internationally, the aviation and the hospital sector lost huge revenue. The estimated loss of airlines industry is expected to be about $240 billion dollars. Our Airlines indicated an 80% loss of revenue. China, Europe and US Dairy producers seriously affected by Covid-19 lock downs. Hotels and restaurants are main consumers of dairy and poultry products. Based on assessment conducts in December 2019 (by Target Business Consultants), the demand for poultry products increased significantly when Addis Ababa hosts international conferences which involves many people. Demand falls as the volume of conference tourism falls. Hotels and restaurants are also major customers for dairy products. The missing of the international tourists creates a vacuum in our poultry and dairy supply chain.

Locally, people mobility is also affected by Covid-19. Since mid March, many government and non-government employees are working from home and their mobility is restricted as a result. Many people minimized or totally stopped going to café and restaurants and limited themselves from visiting supermarkets.  Though we don’t have the data to what extent that dairy processors are affected, the fall in demand is felt at the level of dairy farmers. In some parts of Addis Ababa Milkshed (130+km radius), the milk purchase price fall from ETB 17 to ETB 12. Some small-scale processors are buying to convert the milk into butter, anticipating more butter sales after Easter. Commercial Poultry producers are also felt the effect of Covid-19. Some commercial poultry farmers downsized their production. Some of them who have hatcheries are disposing thousands of day-old chicks on a daily basis in a country where day old chicken used to be sold like a gold.

The effect of Covid-19 is too much for the poultry and dairy sub sectors which have been suffering from the ever-increasing price of feed and unregulated market. There are hundreds of thousands of smallholder dairy farmers in the Addis Ababa Milkshed with a holding of two to five dairy cows. For many, dairy is a main sources of household income. From one dairy processing plant (the AKA Sholla) in 1990, we have now about 20 dairy processors across the country, where many of them are located in the Addis Ababa Milkshed. Many development organization and the government of Ethiopia invested a lot to develop these sub sectors since the imperial time. The worrying part of the dairy sector is its sensitivity for a price fall. Small scale dairy farmers cannot continue feeding the hungry cross breed cows for more days, let alone months. If the impact of Covid-19 prolonged for more months, there is a huge risk of losing thousands of dairy cows, which may hold us back to many years behind. Similar risk is facing the poultry sub sector.

Dairy feed supply will also be affected when the production of beer decline, as the supply of spent grain will decline. The competition for molasses for the production of alcohol (as a sanitizer) affects the supply of molasses to be available for dairy farms. If wheat flour production declines (possible decline of demand for bread and other wheat based products), the supply of wheat bran will also decline. The price of feed ingredients spike as the price of cereals and grains increased from the increase as the public buy more for stoking and probably when some vendors hordes. and the supply chain affected,The coming rainy season may help to minimize the stress but the impact of overall decline in feed supply will be very high which push the feed price much higher. As we are away from the harvesting season, it is common to face short supply of animal feeds.

Normally demand after Easter grows for dairy and poultry products. However, due to the disconnection with consumer, usual demand growth couldn’t not be as usual. It is unlikely that people will continue to go to Supermarkets, cafes and restaurants to buy milk and dairy and poultry products during a lock down. To rescue these two sub sectors, measures has to be taken before it is too late. The first and most important intervention should be bridging the missing value chains. Proposed courses of actions may include the following

  1. Processors to rethink a different distribution method to reach end consumers, house to house delivery, with a premium price to compensate extra delivery costs, to outsource for micro-enterprises (motor bike delivery, etc )
  2. The informal sector (whole milk seller without pasteurizing) is the most affected one as cafe’s and restaurants disconnected from their customers. Processors, can play a key role in reaching end consumer by increasing their capacity utilization. Most of dairy processors are often operating under capacity due to limited milk supply.
  3. Government coordinated supply through Covid-19 initiatives (like food banks)
    • To supply quarantine centers including to hotels dedicated for quarantine
    • To supply for the homeless and job less
  4. The poultry sector (jointly) to promote easy to cook (at household level) poultry menu to encourage household consumption
  5. To distribute though consumer association (requires freezer / fridge)
  6. Creating brands and products for house delivery for those who can afford. Those who are on the business-like In-N-Out or any new comers can do a lot in reaching end consumers who stayed at home.
  7. Promoting poultry and dairy products:
    • Key stakeholders ( Ministry of Agriculture, Development organization and the relevant trade association) promote to triggering more demands.
    • to be cautions on misleading messages in connection with Covid-19 on the consumption of dairy and poultry products. Advising the public how to use sanitize grocery products or using safely (including pouch milk, chicken meat and eggs)
    • To ensure that any emergency lock down measure not to affect the supply chain
  8. Ensuring that delivery and distribution of these products are safe enough from Covid-19 transmission.
  9. To work around possible supports in animal feed supply chain.
  10. Innovative approach to communicate and address value chain bottlenecks as we don’t have the luxury of conducting workshops or conferences.

By Getnet Haile, Target Business Consultants Plc getnet@targetethiopia,com

The Local Capacity Development (LCD) project is completed successfully. A closeout program was conducted at Golden Tulip Hotel. The Kaizen Company ( a US based consulting Firm) and Target Business Consultants Plc jointly implemented the project since 2014. More than 100 local NGOs benefited from the project. It was so exiting to hear success stories from the participating local NGOs.

Among the impressive financial management support were

  • Development of a model financial management manual based on assessment of multiple local NGOs and customization support of their FM manuals in the form of coaching and training
  • Open House Program for supporting the financial management staff of the local NGOs in any matters of financial management
  • Acceleration of Budget Utilization: This package was conducted for multiple weeks with the participation of program and finance staff of local NGOs in addressing the challenge in low level budget utilization. The program was conducted in a round table approach with the adoption of business management system – diagnosis, symptom identification, rout cause determination, prognosis and remedies. Results were distributed to round table members in the form of news letter.
  • Customized training for program people on finance for non-financial managers
  • Customization training and support on the best use of accounting software in dealing with budgetary control and meeting multiple stakeholders reporting requirements.

Target is grateful to The Kaizen Company and team for the successful collaboration for the last five years.

From Left to right: Asnat Mulugetta (from Kaizen), Woderyelesh Habtihun (from Target) and Seble Girma (from Kaizen) were among the key players during project implementation

Addis Standard reported

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