Guji Zone, Oromia Region, is blessed with one of the most suitable climate and soil type for livestock production in Ethiopia. It is also home to one of the best cattle breed (Borena) in the country. Abdul-kadir Ahmed, 27 and a father of two boys, lives in Negelle, the capital of Guji. Abdulkadir gave up teaching to start a small restaurant in June 2005, which he ran for a little more than a year until he realized that dairy collection would be a more promising business. While he was in the restaurant business, Abdulkadir realized that the milk marketing system in Negelle could be more efficient. De-spite high production in the zone, Abdulkadir had difficulty obtaining quality milk at the right time and the right place. He also knew that pastoralists complained about lack of market for their milk. When Abdulkadir came across USAID-PRIME’s call for small grant proposals in August 2014, he knew that was the right opportunity to make contributions to improving the milk market system.
Abdulkadir applied for the grant immediately, and won in September 2014. Since then, he set up a center (Abdi Milk collection and Distribution Center) for his dairy business and bought equipment, including two refrigerators, a milk churner, and a lactometer. He also employed four people (three of whom are women) who earn an average of ETB 750 a month (over USD 35). Abdulkadir’s business involves collecting milk from neighboring sub-districts within 50km radius of Negelle Town. He is working with four agents who collect milk from about 10 other sub-agents each. In all, the subagents collect about a hundred liters of milk a day from more than 120 households. His products include fresh milk, home-made yogurt, but-ter, cheese, and buttermilk.[read more=”Continue Reading..” less=”Less”]
The business is benefitting all the actors in the value chain. Pastoralists sell their milk at their doorsteps when previ-ously they had to travel 20-30km to Negelle to sell their milk. As the result of the business, pastoralists have access to a sustainable market and higher prices. The price of milk used to be highly unpredictable. Today, they sell their milk at 12 birr (USD .60) a liter to sub-agents, who sell it for 13.5 birr to agents. Abudlkadir pays 15 birr to agents for a liter of milk, which he sells for 21 birr (USD 1). Consumers also have access to safer and more quality milk while previously it was exposed to mishandling, direct sunlight, and unsanitary conditions in the collection process, resulting in contami-nation and wastage. For Abdulkadir, it presented a viable and promising business. In less than two months, Abdulkadir has already started to make a profit. October saw a huge upsurge of revenue. Just in two weeks’ time, he has made a profit of more than ETB 6000 (USD 300), expecting a monthly profit of at least ETB 12,000 (USD 600) for October. He is optimistic that the following months will be even more profitable. Due to lack of quality control, Abdulkadir lost some money in September, but it was a learning opportunity. Now, he has put in place a system to enable him to collect quality milk and keep track of his suppliers. Abdulkadir is sure that he has made the right decision and investment that would benefit not only him but also his clients. “Starting to make a profit in just two months of operation,” says Ab-dulkadir, “is an indicative of the potential for the business, the many benefits for me and my clients.”
Abudulkadir’s major challenge is reaching pastoralists, who do not have access to markets due to long distances from Negelle. There is abundant organic milk in sub-districts like Haddessa and Dido, which are about 90km from Negelle. Linking with these sub-districts would benefit not only his business and producers but all actors in the chain including, agents, consumers and processors. Reaching these sub-districts requires a modest investment in motorbikes, which he is looking into options to procure.
USAID, through PRIME, is working to improve the dairy value chain by giving small grants to businesses that have the potential to improve the income and livelihoods of producers and other actors in the value chain. This intervention contributes to meeting FTF’s goal of “Expanding Markets and Trade” and IR 1 of “enhanced human and institutional capacity development for increased sustainable agriculture sector productivity” under the program element of “Agri-cultural Sector Capacity”. In all its operational areas, PRIME is offering this opportunity and receiving more applica-tions from entrepreneurs in different agricultural and pastoral sub-sectors.[/read]