Livestock/meat, Milk/Dairy Products, Hide & Skin Value chain Assessment Report
RAIN Project, Mercy Corps
Somali Region and East-Hararghe Zone of Oromiya Region of Ethiopia.
(First draft)
Assessment Team:
1. Munkhzaya Badarch
2. Hassen Abdurehman
3. Dr, Gizaw Taddesse
January, 2010
1
Content
Content ................................................................................................................................ 2
Acknowledgement…………xxxxxxxxxx .......................................................................... 3
1. INTRODUCTION .......................................................................................................... 4
1.1 General Background ................................................................................................. 4
1.2 LIVESTOCK PRODUCTION SUPPORT SERVICES ........................................... 5
FEED........................................................................................................................... 6
WATER SOURCES ................................................................................................... 6
ANIMAL HEALTH.................................................................................................... 6
BREEDING ................................................................................................................ 7
LOCAL SLAUGHTERING HOUSE FACILITIES ................................................... 7
CREDIT ...................................................................................................................... 8
1.3 Objectives of the Study ............................................................................................. 8
1.4 Scope (Limitation) of the study ................................................................................ 8
1.5 Targeted Outcomes from the Study .......................................................................... 8
1.6 Study Methodology................................................................................................... 9
1.6.1 Description of Study area................................................................................... 9
1.6.2 Study Methodology............................................................................................ 9
2. LIVE ANIMAL AND MEAT VALUE CHAIN .......................................................... 10
2.1. Livestock market places, distribution and accessibility......................................... 10
2.2. Livestock market actors and linkages .................................................................... 11
2.3. Livestock transportation......................................................................................... 13
3.4 Livestock market constraints, opportunities, solutions and recommended project
interventions .................................................................................................................. 14
3. Milk Value Chain .......................................................................................................... 18
The assessment gave in depth look into cow and camel production, since they are
the main milk resource livestocks. Though, goat milk is produced occasionally in
some of the RAIN area. Please see the milk value chain map at below. .................. 18
3.1 Milk Value Chain Actors and linkages ................................................................... 18
Producers................................................................................................................... 18
District level market .................................................................................................. 19
Traders and Cooperatives ......................................................................................... 19
End market and Demand ........................................................................................... 20
Support sector ........................................................................................................... 20
Enabling environment ............................................................................................... 21
3.2 Constraints, Opportunities, Solutions and Recommended Interventions ............... 25
4. HIDE AND SKIN VALUE CHAIN ............................................................................. 31
4.1 VALUE CHAIN ACTORS, LINKAGES AND MARKETING CHANNELS...... 33
4.2 Constraints, Solutions, Opportunities and Proposed Project Interventions ............ 35
5. Enabling environment ................................................................................................... 38
5.1 Tax Policy ............................................................................................................... 38
5.2 Export regulations ................................................................................................... 39
5.3 Market places .......................................................................................................... 39
5.4 Market information system (MIS) .......................................................................... 40
5.6 Financial services .................................................................................................... 40
2
Commercial Banks ........................................................................................................ 41
MFI’s............................................................................................................................. 41
NGO’s ........................................................................................................................... 42
5.7 Other livestock sector support ................................................................................ 42
6. Conclusion and Recommendations ............................................................................... 43
Acknowledgement…………xxxxxxxxxx
Abbreviations ……..xxxxxxxx
Executive Summary……………xxxxxxxxxxxxxxx
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1. INTRODUCTION
1.1 General Background
The livestock sector in Ethiopia plays multiple purposes both in the mixed agricultural
and pastoral production set-up. In the highland, livestock constitute a major part of the
mixed farming system, providing draft power, producing milk and conferring a certain
degree of security against crop failures. For the pastoralists in the lowlands, livestock
husbandry is their sole means of survival; livestock is serving as a source of feed and
income, a living saving bank, coping mechanism and measure of social status. The sector
has continued contributing significant portion of the national economy and still promising
to the economic development of the country.
The agricultural sector in Ethiopia contributes 47% of the country’s GDP and to more
than 80% of the export, and employs over 85% of the population. Out of these the
livestock sub sector contributes 12 and 33% of the total and agricultural Gross Domestic
Product (GDP), respectively and provides means of livelihood for 65% of the nation
population. Of the total household cash income from crop and livestock, livestock
account for 37-87% in different parts of the country, the contribution is high particularly
in the pastoral areas where a huge livestock resource is residing. The sector also accounts
for 12-15% of total export earnings, the second major source of foreign currency through
export of live animals, meat, hides and skin. However, in recent years illegal trade has
been growing in the expense of official export common in the boarders of Ethiopia, and
the situations is most critical on Somali boarder because of the large production of
marketable livestock and the tradition of cross boarder trade for goods and consumables
including food stuffs. FAO estimated that the annual value of livestock going through the
Somali ports of Berbera and Bossaso amount to more than US $ 120 million, 80% of
which is thought to be Ethiopian origin.
In Ethiopia, the pastoralist and agro-pastoralist of Borana, Afar and Somali are
considered the traditional source of livestock, supplying 95% of livestock destined for
export market.
Agro pastoral and pastoral areas of Mercy Corps RAIN Project areas have significant
livestock endowment and principal source of export trades in the country but the sector
national economic contribution and benefit at large and supporting the poor pastoralist
livelihood in particular is quite minimal given the size of livestock population. A number
of principal constraints impede these outcomes, traditional technologies, inputs limited
supply (feed, animal health, breeding stock, artificial insemination and water) poor or
non-existence extension service, high disease prevalence, poor marketing infrastructures,
lack of marketing support services and market information, limited credit services and
absence of effective producers cooperatives at the grass routes level and natural resource
degradation. Districts under Somali regional states(Gursum Somali, Gashamo, Aware,
Gunagado, Deghamedow, Deghabur and Kebribayah) and East Hararghe districts of
Oromia administrative region(Babile, Gursum and Midhag) do have a considerable
number of livestock resources by species which are raised via enjoying feed sources of
4
browse-rich, grazing plain grass lands and crop residues. It is difficult to make inference
about the trend of livestock population in the districts since it fluctuates depending on the
seasonal condition of pasture, water resources and disease outbreaks.
Table 1: Human and Livestock Population in the RAIN Mercy Corps operation areas
S/N
1
2
3
4
5
6
7
8
Districts
Gursum(Oromia)
Babile(Oromia)
Midheda Tola
Gursum(Somali)
Kebri beyah
Aware
Gashamo
Deghabur
Human
population
154,853
93,674
75,804
27,400
165,422
95,994
95,150
115,353
Livestock Population
Cattle
Camel
Shoats
69,776 6,033
85,365
36,337 1,973
23,877
75,000 13,019 73,151
59,986 3,446
226,874
66,665 3,944
254,094
80,360 15,960 311,360
68,880 13,680 266,880
83,230 16,530 322,480
Total
161,174
62,187
161,170
290,306
324,703
407,680
349,440
422,240
Livestock population per capita
Cattle
Camel
Shoats
0.450595
0.03896
0.55126
0.387909
0.021062
0.25489
0.989394
0.171746
0.965
2.18927
0.125766
8.28007
0.403
0.023842
1.53604
0.837136
0.16626
3.24354
0.72391
0.143773
2.80483
0.721524
0.143299
2.79559
9
Gunagado
Deghamedow
171,270
54,530
276,590
0.318386
&
10,530
211,530
0.061482
1.23507
Source: CSA 2002 for East Hararghe districts
Somali Region LCNRDB 2005 IPS data
Contrary to the poor livestock economic benefits of the RAIN operation areas due to the
aforementioned constraints, the areas have suitable environments for livestock
production. The vast grazing land areas, if properly developed and managed via
improving the traditional feed storage and preserve practice, introducing improved forage
species, conserving the rain-fed pasture land using area enclosure and practicing cut and
carry feeding systems, could contribute the alleviation of feed shortage problem. The
densely populated indigenous breeds which have good and organic meat quality could
increase marketable surplus if improved and market oriented management practices are in
placed. The geographical proximity to the livestock and its products importers of
bordering African countries and Middle East together with the massive domestic demand
following rising population and urbanization offers significant incentives for increased
market oriented livestock production.
1.2 LIVESTOCK PRODUCTION SUPPORT SERVICES
The mode of live animal production in all the 10 districts of RAIN operation areas is
traditional, livestock producers having reasonable business orientation practice.
Traditional fattening in the farmyard and buying young aged small animals and reselling
after keeping for sometime is becoming popular practice by the producers. Common to
other pastoral groups, in these areas female animals are kept for reproduction and sold
when they do have reproductive and/or health problems. Male cattle are usually kept for
draught power and serving cow during breeding. In some areas particularly East
Hararghe and some parts of Kebri beyah districts of Jijiga Zone, fattening of young and
old bullocks is a common traditional practice. Small ruminants are mainly raised for
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household cash source during crop failure in the agro-pastoral area and at time of poor
livestock milk production in the pastoral areas.
FEED
During this assessment it has been witnessed that feed shortage seconded by water is the
most important production constraint in all most all project areas. For example feed is the
critical problem hinders pastoralists to supply marketable animals to the nearby market
place in Eastern Gashamo districts of Somali Region and Midhaga districts of East
Hararghe zone. The feed supply problem is not limited only to the shortage of rain-feed
natural pasture and crop residues but also those who could offer to buy.
Sources of feed supply in the RAIN areas come from unimproved rain-fed natural
pasture, communal rangelands and fallow. Crop residues (straws, green and dry maize
and sorghum Stover), aftermath grazing are also assuming increasing importance in many
agro-pastoral areas. In the agro-pastoral areas, grazing resources have deteriorated as a
result expanded agricultural practice and massive competition from invasive species
(Lantana camara, cactus and some bush encroachments). Despite ample grazing area,
pastoralists are restricted to areas close to permanent water sources in the lowlands,
resulting long distance travel in search of water and overgrazing.
The neighboring districts of East Hararghe mixed agricultural production practicing
communities of Haramaya, Kersa and Chelenko districts are traditional practicing of feed
preserving from crop residues and making dry grass straw in relative mass amount which
can be make use of the pastoral communities who do have feed shortage stressors.
WATER SOURCES
Because of the erratic and insufficient rain reception in the pastoral areas water shortage
is the most vital and common constraints in livestock production. The main water source
are natural and man made earth dam water points (common in Aware and Midhaga
districts respectively), privately owned traditional wells and cemented man made water
reserves/birkas/ where permanent water sources do not exist(Gashamo districts). The
yields and quality of water sources decrease dramatically during the dry seasons. Hence
water point rehabilitation and proper management practice should be in placed
particularly in the communal water sources, since communal water sources are
dramatically declining its potential because of the less excludability potential and
minimum cares they could have.
ANIMAL HEALTH
Livestock diseases inflict a heavy loss on the sub-sector through low production,
productivity and causing rejections in the importers countries. Similar to the other
extension services, animal healthcare extension is often far below the demand from the
livestock producers and local traders. Animal health service is constrained by limited
veterinary inputs supply and lack of pastoral way of life tailored made service delivery
system (established functional CAHWs). Apart from high mortality rates, they affect
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fertility, growth rate and traction power output. The incidence of rinderpest, contagious
pleuro-pneumonia, sheep and goat pox, Foot and Mouth Disease, Lumpy Skin Diseases,
anthrax, blackleg, haemorrhagic septicemia, bovine tuberculosis, mastitis, bruceloass,
internal and external parasitic infestations, etc. have severely limited the livestock
production and export potential of the country.
Only limited number of animal health posts is staffed with both human and veterinary
inputs, the majority remained with only the physical structure lacking the basic veterinary
inputs (drugs and equipments).
The limited veterinary service extension in the RAIN operation areas does have threefold
negative impact affecting the livestock and its products market supply at various levels.
Among the aforementioned disease types some of them impacting milk yield like mastitis
and brucellosis, the parasitic infestation and the skin diseases (FMD, Pox, and LSD)
impede the hides and skin supply pattern. The diseases under “Line A” can cause a risk
of ban from importer countries and strangulating the whole export trades and eroding the
pastoralist livelihood, since they derive their total food source and cash income from the
livestock.
Some smuggled veterinary drugs are common to be sold in the market, a practice that
seriously compromised the new initiative which is at infant stage (CAHWs and
government extension service) effectiveness.
BREEDING
Livestock husbandry is dominated by indigenous breeds with low yield and but well
adapted to the climatic and feed shortage stressors, the prevailing livestock production
constraint. Crossbred cows are unknown outside dairy farms around the major towns. The
MOA has been providing improved heifers or bulls as well as artificial insemination
services around the big towns’ and in some selected districts in East Hararghe. None of
the RAIN operation areas are practicing artificial insemination and improved breed
produce except some initiatives in Babile Oromia by Menschen FÜr Menschen.
However, both the level of service and the number of improved animals distributed are
much too low to create impact on the national dairy herd.
Milk yield improvement through linking improved breed (cross or local Borena) and
popularizing the practice of Artificial insemination (AI) is mandatory to enhance the
nutrition and livelihood status of the pastoralist.
LOCAL SLAUGHTERING HOUSE FACILITIES
The slaughtering infrastructure is equally under developed with the other supporting
services. In East Hararghe (Babile and Gursum Oromia) respective districts municipality
provides slaughtering service for cattle meat butchers with a minimum veterinary
inspection service fee of 2 Eth Birr/head and tax fee for municipality is 15 Eth Birr/head.
Small animals are commonly slaughtered in a individuals home village. Each district
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slaughtering house slaughter minimum 4 cattle per day, this figure becomes high during
Muslims and/or Christians religious festival days. The slaughtering house and
equipments facility is very much poor and continued compromising meat and hides and
skin quality. Both in the export and municipality slaughtering house the level of animal
byproduct utilization is rather weak. Nearly no quantity of tallow is produced despite a
strong demand from the local soap factories. While a certain level of bone meal, blood
meal, and edible fat production takes place in Addis Ababa, virtually all blood and rumen
contents go to waste. Full recovery of animal by-products is achieved only in the case of
hides and skins. However, the quality of hides and skins is poor because of poor handling
and disease problems.
CREDIT
The source of livestock credit supply is the respective Woredas through the safety net
programs and the microfinance institutions. In East Hararghe producers receive credit and
use for fattening. But there has been complaining about the disagreement between the
payment schedule, repayment period and producers benefit from fattening mismatched.
1.3 Objectives of the Study
This study has the following objectives:
 Assess the current situation of livestock/meat, Milk/dairy products & hide and
skin marketing and value chains in Somali and Oromiya regions of Ethiopia
 Identify Livestock/meat, Milk/Dairy products & hide and skin value chain actors
and their relationships.
 Identify local contextual specific constraints and opportunities for sustainable
development of value chains.
 Define and implement commercially viable strategies and interventions
strengthening business linkages between chain actors, increase their level of
competitiveness and enable them receive higher social and economic benefits.
1.4 Scope (Limitation) of the study
The scope of this value chain assessment is restricted to Mercy corps RAIN project area
at Somali region & east-hararghe of oromiya regions of Ethiopia. From Somali region;
Kebribeyah, Gursum, Aware, Gashamo & D/bur are included and from Oromiya region
(Eat-hararghe); Babile, Midega & Gursum are included. Similarly, SCFUK is also doing
the same value chain assessment in other districts of Somali region.
1.5 Targeted Outcomes from the Study
The core outcome expected from this value chain assessment is:
 Define effective & sustainable strategies and interventions promoting efficient
livestock/meat, Milk/dairy products, Hide & skin value chains characterized by
8
strong business linkages between value chain actors and increased level of
competitiveness and increased social and economic benefits.
1.6 Study Methodology
1.6.1 Description of Study area
Somali region is one of the Ethiopia’s largest regions. It borders Djibouti to the north,
Somalia to the east and north-east and Kenya to the south. The altitude of the region
ranges from 200m in southern/central parts, to 1,800m in jijiga zone. The region is
mostly categorized as arid/semi-arid in lowland areas, cooler/wetter in higher areas.
Annual rainfall is 150-1,000mm per year. Temperature ranges from 19oC (Jijiga Zone) to
40oC (the southern zones).
1.6.2 Study Methodology
For this value chain study, both primary and secondary data have been used. Primary data
sources were key informants selected purposively from each study area where are
secondary data sources were already done assessment findings and articles reviewed.
Single-visit-formal-survey method has been used to collect the required information from
selected key informants at the study area through interview and FGDs methods using predesigned questionnaires.
Due to the limited time and resource constraint (man power), the assessment mostly
focused on qualitative data collected through the informant interview and participatory
focus group discussions. During the assessment, the team visited 7 districts from Somali
region (Aware, Gashamo, Dhegahbur, K/beyah, Gursum, Gunagado* & Degahmadow*)
and 3 districts from East-Hararghe Oromiya region (Babile, Gursum & Midega). The
team had met discussed with agriculture office head at each district and at regional level,
9 focus group discussions, 18 individual interviews with producers. Similarly, in order to
identify market and marketing opportunities, the team met and discussed with local
traders from each of the districts, tannaries, meat exporting slaughter houses and diary
processing farms at Dire-dawa, Nazret, Debreziet, Mojo and Addis-ababa. We also met
with federal government officials at Addis-ababa (I.e. Animal and Plant Health
Regulatory Directorate) to discuss regarding the Animal health and quarantine in the
study area. In addition to all the above, the team has visited different stakeholders and
parteners to get their experience regarding livestock/meat, milk and hide and skin value
chain in the study area. All the key informants we have met and interviewed at presented
in Annex I.
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2. LIVE ANIMAL AND MEAT VALUE CHAIN
2.1. Livestock market places, distribution and accessibility
Similar to other market places in Ethiopia livestock marketing in RAIN operation areas
follows a three-tier system: the primary, secondary and terminal markets through which
animals go into the hands of small traders and then mainly to large Somaliland traders.
Final buyers, which include butchers, meat processing factories, producers, fattening
cooperatives or live animal exporters, purchase livestock at any stage.
There are about 120 livestock market centers recognized by the Ministry of Agriculture.
Out of it 11 in Somali region and the 3 districts of East Hararghe each do have its own
town centered market places. Hence all the Mercy Corps RAIN operation areas except
Deghamedow and Gunagado districts of Deghabur Zone have market places in their town
center. Most of these places have no well organized livestock marketing infrastructure to
offer basic watering, feeding, resting and quarantine facilities. The situation is worse in
the remote pastoral areas, where only some have perimeter fencing to facilitate tax
collection, in which municipalities charge tax on buyers and sellers up on entrance and
exit from the market, tax fee is quite variable among districts and subject to each district
officials decision. Many of the market in the RAIN operation areas feed in to each other,
especially when the market days are different. Aware district producers and traders seized
accessing Deghabur market for almost a year ago due to the government restriction
following the instability due to insurgence movement. Amazingly some proximal markets
like Babile and Gursum Oromia have the same market days and less probable to feed in
to each other. The most common market day of these livestock market is Monday and
Thursday and no market of Friday. Hartishek market under Kebribeyah district has a well
developed market infrastructure developed by ACDI/VOCA but yet it is not working in
its full service packages that could be available in market places.
Figure 1: Mercy Corps RAIN Operation areas and market places
10
2.2. Livestock market actors and linkages
In most districts of RAIN, producers and local small traders are involved in selling
livestock direct to the consumers and big domestic or illicit traders. Common to see
Somaliland and Djibouti traders buying animals in the market places. Producers and big
traders reported the strong involvements of brokers and commission agents in the
livestock transactions. In Babile terminal market only there are 36 women tea makers, 7
feed sellers, licensed 175 brokers/commission agents, 200 traders(100 femal & 100
male), 120 trekkers to Togowchale and some hand pump, depression water point “Haro”
water suppliers working in Babile market.
Discussion with key informants witnessed that there is no associations or cooperatives of
livestock producers involving in the livestock marketing. Producers usually sell their
animals individually but when they migrate far from market they send marketable
animals for an acknowledged community member who knows market place, this people
are sometimes paid 50 Eth Birr per day in case of Kebri-beyah .There are no grades and
standards applied to livestock, physical observation the measure of unit applied in the
market place. There is strong prior marketing arrangement and personalization of
exchange in the livestock market via clan based brokers/commission agents, producers
usually can not sell animals to whoever offers higher prices.
Individual producer and traders in cooperative form involved in fattening, they usually
buy small animals from market and keep for sometimes before reselling. Fattening
initiatives in East Hararghe has been undergoing by producers and bureau of agriculture
which needs to be popularized through actors support.
Brokers involvement in all the market place is quite significant and highly controversial
thought around their service importance which needs further investigations. Outsider
traders reported that brokers avoid the risk of buying raided animal, since brokers and
producers believed to be known each other. On the other hand it was reported; brokers
are usually work for the buyers and tend to join together with each other in fixing prices.
Traders and producers do have their own separate brokers who usually collect fee from
their client sellers and buyers worth 10 Birr/head of small animals and 100 Birr/camel
and cattle.
It has been learnt from this assessment that 10 export abattoirs are operational in Ethiopia
but none in the pastoral areas, where 90% of their supply comes including Somali and
East Hararghe. Abattoirs have their own commission agents/client traders in different
places for different types of animals. Abattoirs commonly involved in exporting chilled
and frozen beef, mutton and goat meats to Middle East, Saudi and Egypt. Elfora abattoir
is the only company which has been involved in meat packing for export market.
Both horizontal and vertical link among producers and traders is very loose. Either of the
two principal market actors’ knowledge is very lose. Xxxxxxxxxxxx
11
Support Sector Services
End Market
Middle East and Gulf
Market through Berbera
port
Middle East and Gulf
Market through Berbera
port
Somaliland Traders
(Togowchale)
Live animal
Exporters
Export
Abattoirs
Bush markets
District level
market
Terminal
markets
Processors
Somaliland Traders
(Hargeissa, Bur’o)
Producers
Enabling environment; traditional norms, government policy and regulations support
Livestock value chain map
Big Traders
Foreign
Traders
Small Traders
Cooperatives
Market groups
Collectors
Commission
Agents
Commission
agents
Big Traders
Small scale
Traders
Local
Bluchers &
Restaurants
Small scale
Fattening units
Traditional
Feedlot
practitioners
Districts under Deghabur administrative Zone
&
Kebri-beyah District
COMMON ILLICIT TRADE
Districts under East Hararge
administrative Zone &
Gursum Somali
PARTIALLY TO CENTRAL
 Limited Quarantine &
Certification service by
regional labs &
quarantine stations)
 Financial support via
credit facilities
 Alternative source of
market information
 Poorly designed
transport service
(trucking/trekking)
 Limited credit service
in East Hararghe but no
in Somali region
 Truck drivers are
primary source of
market information
 Trekking is the popular
means of
transportation
 Primary vet inspection
service by CAHWs
 Nearly no market
place services(water,
health etc---)
 Poor road network and
infrastructure
 Small scale feed &
water sellers
 Women tea makers
 Vet service with
limited input supply
 FTC extension service
 Unreliable depression
water source
12 &
 Rain-fed pasture
crop residues are the
main feed sources
2.3. Livestock transportation
In almost all districts producers trekking animals by themselves, where as traders usually
do have clients who trek animals with a service fee of value differs on the distance
between the market places. For example it takes about 3-4 days to trek camels from
Babile to Togowchale at a cost of ETB 1,500 birr/person, usually 5 people trek 100
heads. Traders prefer trekking since it has minimum marginal cost (cost per head) when
compared to trucking.
Traders who supply for central markets and abattoirs use ISUZU track to trucking
animals. Those abattoirs involved in this assessment (LUNA and HELMIX) where
complaining about the poor transportation facilities which they believe compromise the
quality of meat, skin and hides.
Table 2: MARKETABLE LIVE ANIMAL POTENTIAL UNDER MERCY CORPS RAIN OPERATION
AREAS
Livestock Population by
species
S/N
1
2
3
4
5
6
7
8
Name
of
Districts
Gursum(Somali)
Aware
Gashamo
Babile(Oromia)
Midhaga
Gursum(Oromia)
Kebri-Beyah
D/bur
Cattle
59,986
80,360
68,880
36,337
75,000
69,776
66,665
83,230
Shoats
226,874
311,360
266,880
23,877
73,151
85,365
254,094
322,480
Camel
3,446
15,960
13,680
1,973
13,019
6,033
3,944
16,530
Cattle
(10%)
5998.6
8036
6888
3633.7
7500
6977.6
6666.5
8323
9
D/hamedow
G/Gado
54,530
211,530
10,530
5453
Off Take Rate
Camel
Shoats
(6.5%)
(35%)
223.99
79405.9
1037.4
108976
889.2
93408
128.245
8356.95
846.235
25602.85
392.145
29877.75
256.36
88932.9
1074.45
112868
&
684.45
74035.5
Sources: Somali Region IPS (2005) and CSA (2002) for East Hararghe districts
Off Take Rate (ILRI 2008), discussion Paper NO. 12: Improving market opportunities
Given the ILRI research findings and this assessment rough estimation on small sample
size interviewed household, live animal annual off take rate estimated as 10% for cattle,
35% sheep, 38% goats and 6.5% camels out of the respective species population in a
given year on time.
At present the pastoralist and ago-pastoralist has continued suffering from erratic rainfall
which leads to feed shortage and water source drying stressors evidenced with the
unsuitability nature of the area particularly for cattle. Small ruminants (sheep & goats)
and camel are becoming the only living coping mechanism through livelihood
13
diversification for the pastoralists who predominantly depend on livestock. The fast
reproduction potential (like 2 pregnancy period/year) of sheep and goats becomes the far
most marketable potential animals in these areas.
3.4 Livestock market constraints, opportunities, solutions and
recommended project interventions
Constraints 1: Livestock production is
based on traditional practices and
subsistence oriented
1. Credit supply for livestock sector
is very minimal in terms of
coverage
2. Producers are not well business
oriented(forced sell due to
sudden cash needs)
3. Lack of commercial & improved
forage feed source options
4. Lack of pastoralist way of life
tailor made veterinary service
Constraint 2: Poor market development
1. Access to market is limited by
security reason
2. Inadequate market places with
only tax collection facilities
3. Lack of market information
4. Lose horizontal and vertical ling
among actors
5. Lack of holding/Concentration
places/
6. Livestock marketing is seasonal
7. Poorly designed transportation
facilities
8. Poor road network and facilities
Causes of the Constraint:
 The household extension package which combines
credit supply, training and technical assistance are
almost non-functioning(DAs usually work on nonextension activities; like credit repayment and
administrative missions)
 Limited rain-fed natural pastures availability following
recurrent drought and limited attitude and access for
commercial and improved forage feed sources.
 Both surface and underground water sources are
dramatically declining
their availability and
accessibility because of
drought and lack of
appropriate management practices
 The existing Woreda and CAHWs vet service delivery
is constrained by input supply and lack of collaborative
effort
Causes of the constraint:
 Inter clan conflicts and market route restrictions in
Deghabur districts(Gashamo people do not have access
to Deghabur market)
 Besides market place inadequacy, the market place
facility is very much constrained
 The prevailing market information system is the
informal way of peoples communication
 Producers supply animals to the market following their
cash demand and buyers are also irregular
 No standard livestock transportation facility; the
popular means of transportation is trekking and
sometimes ISUZU which cause animals to loss body
condition before reaching to the market place
 Roads connection among the pastoral market places and
the way to the central market never been under modern
construction
14
Opportunities:
The beginning government extension service - Government and limited number of civil
organizations are extension service providers in RAIN operation areas. Government
extension service is beginning to introduce and promote market oriented livestock
production, which includes promoting animal fattening, promoting improved forage
technologies, improved feed conservation, animal management and veterinary services.
To realize this mission middle level professional with animal science, natural resource
and crop production disciplines assigned farmers training center serving 3 adjacent
Kebeles per site.
Although signs of livestock extension services are there, the coverage of the service is too
limited compared to the massive need. The crop sector has received more emphasis that
the livestock. This calls serious attention for the development of market oriented
livestock extension service popularization.
Huge & quality livestock resource - With the current challenging environmental
condition, the number of livestock resource residing in the districts is quiet large and
organic in its nature. Even if, empirical studies not resourced in this assessment, the meat
quality from pastoral areas has been remained unchanged its color on deep freeze.
The Small scale fattening initiatives- Even if the practice is traditional and on its infant
stage, pastoralist and agro-pastoralists have the initiative to keeping animals for sometime
on the local resources and resell when the body condition becomes improved. In the East
Hararghe producers tend to cattle but the pastoralist is practicing on small ruminants
(shoats). In the East Hararghe side producers usually receive credit and use mainly for
fattening purposes under the prevailing government safety net programs which later have
positive impact on livestock commercialization. The Gursum Oromia agriculture office
has also started fattening program.
Hence it is important to build on these efforts, evaluate them to learn lessons and
strengthen the fattening promotion service to promote market orientation and solve the
supply constraints because of the livestock market seasonality.
Improved Forage Development Cooperatives - Forage development initiatives are on
practice in Somali region (Fafen & Kebri-Beyah) following the Fafen river basin. There
are two cooperatives working in this business in Fafen and 1 forage multiplication center
in Kebri-beya. These are the emerging green lights to solve the critical feed shortage
through popularizing forage multiplication centers and backyard forage development and
integrating forage with perennial crops.
Producers interest for “Pay for service/supply” -Producers’ willingness to pay for
veterinary service rendered by the CAHWs and in the respective government rural
clinics/posts is becoming growing. Similarly producers (in this case pastoralist/agropastoralists/ interest for commercial feed supply is very promising, this is reported in
Kebri-beyah district that producers were aggressively competing to buy feed(grass straw)
15
surrendered contraband feed source by district official and advertised for sell. In Aware
district it is not uncommon to see producers selling their feed in the area enclosure for
traders and even producers during the feed shortage stress following drought.
Popularity of private veterinary practitioners (input dealers and service providers)Primary animal health providers (CAHWs) and private pharmacies are physically
available in good number particularly in districts of Somali region. In all the operation
districts except Midhga CAHWs are functioning and 1 private pharmacy is available in
each Woreda district towns. Given the input supply limitation and lack of collaborative
work, the core vet service providers could not able to contribute much for producing
disease free marketable livestock and its products
Solutions
Improve feed source availability -Potential solution for the feed problem could vary
depending on the resource bases of a particular intervention area. In the study site, the
agro-pastoralist should capacitate to better utilize and conserve of the available feed,
controlling invasive species through mechanical removal, treatment of cactus and crop
residues to improve nutrient value, improving forage seed supply and popularizing the
farmyard forage development and intercropping forage with perennial crops.
Rehabilitating communal water sources - Private water sources are sometimes growing
in the expense of communal water sources, when water is owned by privately people give
more emphasis to taker of the private considering the communal as a side-source of
water. Therefore rehabilitating this water source and establishing some water user
committee, constructing some washing and livestock watering facilities improve the
effective utilization of the scarce water sources.
Organizing producers cooperative - To improve producers bargaining capacity and
decrease the high transitional costs producers commonly encountering from far market
place, poor road facility and time taken to reach market places, producers’ cooperative
deserves serious attentions.
Improving market information and linkage among actors -Initiatives for market
information are here and there. But they are not well organized and wider enough to
reach all actors particularly producers. Hence support and close technical assistant for
government marketing unit is very much important.
To boost the loser actors’ link there should be stakeholders’ workshop organized and
conducted in each districts.
Producers’ knowledge development and application training - The reasons for selling
livestock was clearly reported for the need to cover incidental cash needs of various
reasons, contributing for seasonality of the livestock market and supply shortage. Hence,
promoting market oriented livestock production system considering the national and
16
international quality requirement draws attention and should be filled through awareness
creation and knowledge development.
Exchange visit - Identifying positively deviating market oriented producers and creating
opportunities for others to learn from this people will contribute much leading the
commercialization of the sector.
Recommended Project Interventions
 Rehabilitating communal water sources through cash for work programs
 Assisting the government market information dissemination initiatives
 Identifying positively deviating market oriented livestock producers and design
producer to producer training
 Train producers on livestock commercial production and buyers quality requirement
 Lobbing and assisting the government to organizing producers and traders in a
cooperative
 Improve and capacitate the traditional feed storage and utilization practice
 Introducing feed improvement technologies, treating cactus and crop residues to
improve nutritive value
 Technical and input support for forage development cooperatives
17
3. Milk Value Chain
The assessment gave in depth look into cow and camel production, since they are the main milk
resource livestocks. Though, goat milk is produced occasionally in some of the RAIN area.
Please see the milk value chain map at below.
3.1 Milk Value Chain Actors and linkages
Producers
Total of 161,680 households and 100,572 households own cow and camels in their herd
respectively in RAIN area. Based on ILRI xxxxxx study shows the average milk
production has been calculated at the table 4. Milk production varies depending on
season. During the rainy season the milk production is doubled than dry season, due to
better availability of grass, fodder and water.
RAIN project area can be divided into three clusters in terms of milk production as you
will see from the value chain map. Gursum and Babile districts of Oromiya region, and
Gursum and Kebribayar districts of Somali region are half pastoralist and half agropastoralist area, where milk production and marketing has the highest potential. These
districts are closer to the main central markets such as Jijiga, Harar, Dire Dawa, and
Hargeissa, which brings better market opportunities for the producers. Not only the closer
location, these districts also have potential for fodder production due to water availability,
and better grazing land for its animals. However, not all kebeles are accessible by the
traders, some of the kebeles are far from the main road by 30-50 kms, which leads many
producers not to access in the market opportunities for their milk. The producers sell
about half of their daily produced milk to the local traders at collection points. There are
a few milk collection and sales points in these districts, mostly very close the main road
to Jijiga. Eventhough there is lack of organized groups and cooperatives of producers,
some of the producers, especially women, are organized into small informal groups. Each
group member collects milk from other members, brings the milk to the market, sells the
milk and gets the income by herself. This is practiced on turn by each member of the
group.
Degehabour, Degamedo and Gunagado districts are medium potential are in terms of
milk production and marketing. Degehabour town is two hours from Jijiga market. In
these three districts, both camel and cow milk produced ad marketed at the Degehabour
town market. Occasionally milk is transported to Jijiga market. However, due to security
and accessibility reasons, the traders are reluctant to collect milk from these area.
The least potential area for the milk production and marketing are Aware, Gashamo and
Midegatola district, due to its far distance from the main market and recurrent severe
drought and move of the animals in search of the better grazing area and water. Since the
milk is highly perishable product, far distance from the central markets makes it
impossible for the traders to travel to these areas to collect milk. Even in the central
18
towns of these districts, there is no milk market available. Recurrent drought caused milk
yield to decrease severely.
At producer level, both cow and camel milk is sold with 4-5 birr per litr during the rainy
season, while the price goes up to 7-8 birr per litr during the dry season, due to its
scarcity and high demand from the market. In East Hararghe cow milk is more common,
while in Somlai region camel milk is more common. The camels in Somali region are
more resistant to the drought, and produces milk 6-12 months in a year even during the
dry season, with average yield of 4 and 7 litrs of milk in a day in during dry and rainy
season. Cow produces average of 1,5-3,2 litrs of milk in a day during dry and raiby
season respectively.
District level market
The milk is main part of the food consumption for both agro-pastoralists and pastoralists.
Therefore, at least 50% of the milk has been consumed at household level. These
producers who have access to the market usually sell their morning milk at the market,
and use the afternoon milk for the household consumption. Since the consumers demand
only fresh milk, the milk is sold before noon every day. As you will see from the value
chain map, there are a few milk collection sales points in most of the districts, through
which the most of the milk sales go to the local consumers. District level milk markets
are available in all districts, except Aware, GAhsamo and Midegatola. Occasionally
during the rainy season, the producers sometimes produce butter out of surplus milk. One
serdin box of butter is produced from 2-3 lts of milk, and the butter is sold with 5 birr per
serdin box.
Traders and Cooperatives
There are one milk trading cooperatives in Gursum, Somali: Hormood cooperative. They
are women cooperatives involved in camel milk collection from six milk collection points
in Fafen area, and trade it to the retailers, restaurants and hotels in Jijiga. Hormood
cooperative is planing to establish a milk processing plant. There are two licensed milk
traders based in Jijiga, who exports milk every morning to Hargeissa through Wochalle:
Bashe Hassan and Mahamud Gass. Every morning, these two traders collect mostly
camel milk and sometimes cow milk from the collection points from Gursum, Oromiya,
and transports it with Plastic containers (jericans) on the normal truck to Wochalle. On
Wochalle, they sell it to Somaliland traders, who sells the milk at Hargeissa market to the
end consumers. The licensed traders follow the export regulations, and bring hard
currency to the local economy. There are number of traders who trade milk informally
from the districts to Hargeissa market.
Processors
There is no active milk processing factory in RAIN operational area. Hamdayl milk
processing factory operates in Dire Dawa, which is the closest processor to the
production area. It has own dairy farm with 250 cows, which produces its own milk
supply. So far, Hamdayl factory doesn’t buy milk from outside suppliers. However, the
19
factory has never reached its full production capacity due to lack of milk supply. They
find the milk supply from the small producers as unreliable, costly and poor in quality. In
case RAIN project organizes the producers and supply side, Hamdayl would be interested
in being linked to the producer groups. There are number of milk processors around the
highland area of Ethiopia. From their experience, milk is purchased by factory with 4 birr
per litr from the producers, and adding its transportation and processing cost, and its
profit, the factories sell the pasteuralised milk with 10 birr per litr. Comparing to the price
the factories buy from the producers, producers in project target districts sell milk with
better price to the local consumers and traders.
In addition, there is a women cooperative for whom milk processing plant is to be
established at Haramaya with 10% their contribution, 20% support from local
government and 70% from JICA. The processing plant is more than 75% complete and
expected to start processing soon. the cooperative will have milk processing equipment
from JICA. In Gursum, Somali, there is individual investor who is interested and has
plans to establish small scale milk processing factory. However, this investor is ready to
cover 60% of all the required capital to establish processing plant but requires 40%
support. These initiatives can be supported through RAIN project and the processors can
linked to the producers.
End market and Demand
As Somalians like the camel milk a lot due to its high nutritious value, the camel milk has
been demanded highly in Somali region, Jijiga and Hargeissa. The licensed milk traders
told us that there is a surplus demand, and they can sell more milk, if they can collect it
from local producers. Milk is sold 10 birr per litr during the rainy season, and 12 birr per
litr during the rainy season at Jijiga market. An anecdotal price which Kebribayar
officials told us is camel milk is sold at Hargeissa market with 7 USD per litr. There
might be an opportunity to link the camel milk traders and cooperatives to the Addis
Ababa market, considering the big Somalian population living in Bole Rwanda area. In
the long run, if the supply side can be organized into better form, the milk processing
factories such as Hamdayl and new plants to be established at Haramaya and Gursum
would be an opportunity for producers for marketing of their milk.
Support sector
Various support service providers are available as you see from the value chain map. As a
financial service provider, OCSSCO is available in East Hararghe, while there is no
financial service provider available in Somali region. CAHWs and pharmacies, veterinary
posts are available to the livestock producers. Each kebele in East Hararghe has FTC,
while the most of the kebeles in Somali region doesn’t have PTC due to lack of capacity.
Both FTC and PTC are limited in their capacity to provide technical assistance on milk
and forage production. SORPARI, Ethiopian Meat and Dairy Technology Institute, and
Holata Agriculture Research Centers are doing researched on milk and forage production.
AI technicians are locally available in East Hararghe. Crossbreed providers and dairy
equipment providers are available from Addis Ababa. However, the producers and
20
traders are almost completely unaware of these providers and opportunities to get service
from these suppliers.
Enabling environment
Any of the national dairy farm improvement projects wasn’t implemented in these areas,
which made the farmers in this area to be remained far back from the dairy farm
development going on at the other areas of Ethiopia. However, the local government has
noticed the need for improvong milk sector in the region, and supportive for the
initiatives. The regional government implemented improved forage production project in
collaboration with SORPARI. The customs office has a proper regulation to deal with
milk export, eventhough big margin of the milk export is done unofficially. The is more
need of support from the regional government on imrpoving milk testing facililities,
organizing and registration of milk producers into groups, and build capacity of its AI
technicians, and give attention to imrpving breed of dairy animals.
21
Local Consumers,
restaurants, hotels in Jijiga
Hargeissa, Somaliland
New processing
initiatives in
Haramaya and
Gursum, Somali
Processors
Traders/
Cooperatives
District level
market
Producers
Enabling environment, government policy and support
End
market
Milk Value Chain Map
One milk
cooperative in
Gursum,
Somali
Two licensed
traders and
number of
informal
traders
Sold at local
markets, used
for household
consumption,
produced butter
during the
surplus season.
Addis
Ababa
Hamdayl
cattle milk
processor in
Dire Dawa
Harar and
Dire Dawa
market
Sold at district
level market
place, used for
household
consumption and
small amount goes
to JJ.
Mostly for
household
consumption. Sold
to district level
cafes, restaurants.
No milk market at
district level.
Babilie, Gursum Oromiya
and Gursum, Kebribayah
Somali
Degehabour,
Degemado, and
Gunagado
Aware,
Gashamo and
Midegatola
High potential
Medium potential
Low potential
Support Sector
1. Finance- OCSSCO, no MFI
and financial services are
available in Somali region
2. Training providers- FTC, and
PTC, but very limited
capacity
3. Animal health- Limited
public and private services
available: CAHWs,
pharmacies
4. Research InstitutesSORPARI did some trial on
dairy cattle farm, Ethiopian
Meat and Dairy Technology
Institute(EMDTI) in
Debrezeit, Holata Agriculture
Research Center
5. AI and crossbreed providersNational AI center in Addis
Ababa, Liquid Nitrogen Plant
in Harar. Crossbreeds are
available from individuals.
6. Milk equipment providersNumber of them available in
Addis Ababa.
7. Fodder providers- No
commercial fodder provider
identified. But
agropastoralists use their crop
residue.
8. Transportation- Truck
providers available.
9. No quality testing facility is
available,
go
22
Table 4. Milk production in RAIN area
Name
of
Zone/District
1
2
3
4
5
6
7
8
9
1
0
Gursum(Somali
)
Aware
Gashamo
Babile(Oromia)
Midhaga
Gursum(Oromi
a)
Human
Populatio
n
Averag
e
HH
Size
Number of HH’s
Holding
Cattle
Camel
Average
HH
production
of
cow milk/Day (in
litrs)
Wet
Dry
Seaso
Seaso
n
n
Average
HH
production
of
camel milk/Day
(in litrs)
Wet
Dry
Seaso
Seaso
n
n
27 400
95 994
95 150
77 304
75 804
6,7
6,7
6,7
5
5
4 090
14 327
14 201
15 461
15 161
2 453
9 313
9 231
9 276
9 096
4,8
4,8
4,8
4,8
4,8
2,37
2,37
2,37
2,37
2,37
13,19
13,19
13,19
13,19
13,19
7,63
7,63
7,63
7,63
7,63
154 853
5
30 971
18 582
4,8
2,37
13,19
7,63
Kebri-Beyah
Degehabur
Degehamedow
165 422
115 353
58 409
6,7
6,7
6,7
24 690
17 217
8 718
14 814
11 191
5 667
4,8
4,8
4,8
2,37
2,37
2,37
13,19
13,19
13,19
7,63
7,63
7,63
Gunagado
112 861
6,7
2,37
13,19
7,63
978 550
10 949
100
572
4,8
Total
16 845
161
680
For sales 50%
Total
HH
production of cow
milk/Day (litrs)
Total
HH
production of camel
milk/Day (litrs)
Wet
Season
Dry
Season
Wet
Season
Dry
Season
19 632
68 770
68 165
74 213
72 773
148
659
118
512
82 641
41 845
9 693
33 955
33 656
36 643
35 932
32 355
122 838
121 757
122 350
119 976
73 400
245 097
58 515
40 804
20 661
195 397
147 609
74 748
18 716
71 058
70 433
70 776
69 402
141
781
113
031
85 387
43 239
80 856
776
065
388
032
39 922
383
182
191
591
144 417
1
326
545
663 272
83 541
767
364
383
682
Source: ILRI xxxxxxxxxxxxxx
Number of households holding cattle and camel, and household’s average production of milk per pay is taken from ILRI study.
23
24
3.2 Constraints, Opportunities, Solutions and Recommended
Interventions
Constraint 1. Poor milk market Causes of the constraint:
development due to lack of Producers are not organized. There is almost no milk
linkages.
producer groups exist, except a few informal women
groups in East Hararge.
 Producers
lack
market
The producers sell only morning milk to the local
options.
 On the other hand, traders, consumers and traders who come to the milk selling
cooperatives and processors point which are close to their production side.
lack supply of milk and they Traders come to the kebeles, close to the main road.
find that there is an excess
Pastoralists living further from the main road are
demand for the milk.
fully excluded from market opportunities.
Even for those who are close to the market, only
morning milk is sold due to lack of cooling
equipments for both producers and traders.
Eigther of producers and traders don’t linkage to the
Hamdayil milk processing factory in dire Dawa.
Opportunities
Milk collection points - In high potential areas for the milk production, there are some
milk collection points operating at public places, where producers bring milk in the
mornings from the neighbouring kebeles and sell to the local consumers and traders.
There are six milk collection point around Fafen area of Gursum Somali, and a few in
Gursum and Babile of Oromiya region.
Huge milk production potential and high market demand- The table … shows the
production figure of the milk. There is a potential to produce 380,000- 770,000 litrs of
cow milk and 760,000-1,300,000 litrs of camel milk production in a day in 10 districts of
RAIN project operation. If we assume 50% of the milk is used for household
consumption, remaining 50% is potential for sales, if there is a market for milk. On the
other hand, there is high unmet demand for both cattle and camel milk locally and
internationally.
Upcoming milk processing plants- There is a plan to establish a small scale milk
processing plant in Fafen, Gursum, and Haramaya by women cooperatives. The factory
building in Haramaya is under construction. The Somali regional government plans to
support one milk processing factory to be established in Jijiga. Hamdayl milk processing
factory in Dire Dawa never reached it full production capacity due to lack of supply.
25
Existence of small traders and a few cooperatives- There are two licensed milk traders
who export milk to Hargeissa. Plus, number of small traders who trades milk to both
local and international market. There is a milk trading cooperative in Gursum, Somali.
Milk equipment suppliers- There are number of companies in Addis Ababa who
supplies basic milk processing equipments such as a cream separator, cans and cooler. In
terms of cooling technology applicable for no electricity area could be a cooler working
with solar panels, clay pot, and cooling in the well.
Solutions
Organize milk producers and establish milk collection sites- Organize milk producers
into groups, so that they can share they can sell milk together and will improve their
negotiating power, and can decrease some of the costs. Milk collection points should be
established in among neighbouring kebeles. The local governments and buyers of the
milk need to plan on how, where to establish milk collection sites together in order to
ensure the sustainability of the solution.
Potential points for milk collection sites in Gursum, Oromiya
Potential of milk supply and collection sites are discussed with Livestock Agency of the
Gursum district.xxxx
Market linkages to the buyers- Once the producer groups are organized, there is an
opportunity to link them to the traders who exports milk. If the supply is still excessive,
then linking to the processors would be possible. Since exporters pay higher price to the
producers comparing the price the processors can offer, producers will prefer to sell to
the traders and exporters. There is a market opportunity to the Muslim population in
Addis Ababa, which needs to be studied in depth. Traders and processors will play an
important role in this solution.
Support processing initiatives and producer groups- Upcoming processing initiatives
in Fafen, Haramaya and Jijiga needs to be supported, since the processing adds value and
will create market opportunity for the producers. Once the producer groups are organized,
facilitation of technical assistance, small cooling and processing equipments, linking
them to the market will improve their capacity and sustainability.
Recommended project interventions
26



Support the producer group development, milk collection sites establishment, and
provide technical and financial support to producer groups and processing
initiatives in collaboration with local government
Facilitate a stakeholders’ workshop, in order to promote market linkages among
the value chain actors.
Organize an experience exchange trip to highland area to learn from existing milk
collection points and producer groups.
Constraint 2. Milk quality
problem
causes
marketing
constraints,
as
well
as
deteriorates consumer health.
Causes of the constraint:
The producers add water to the milk to increase the
amount, and add medicines such as tetracycline in
order to prolong the preservation period.
Poor handling and inhygiene milking practice causes
infection of bacteria to the milk, which reduces the
milk preservation period, and produces harmful
effect on human health of consumers.
Consuming milk without boiling it causes serious
health problems for the consumers due to
transmission of brucellosis and tuberculosis. The
worst thing is that consumers are not aware of this
problem.
The plastic containers (jerrycans), which are widely
used by producers and traders so far, are not suitable
for the milk preservation due to its sensitiveness to
the heat and also potential for infection.
There is no testing facility even from local
veterinary laboratory. Therefore, consumers and
traders do tasting the raw milk in order test it.
Opportunities
Simple care such as washing hands, milk container, and milking area of the animals can
prevent from bacteria infection. Boiling milk before consumption prevents from
transmission of brucellosis and tuberculosis.
Aluminum can, which is the most suitable container for the milk, is available from
suppliers in Addis Ababa. A number of studies and training manuals are developed by
different projects on this milk quality subject.
Solutions
27
Increase awareness of hygienity and milk safety issues among producers, consumers
and traders – A public campaign to increase awareness of the outcomes of all these
improper milk handling practices, and how it effects on the consumer health, eventually
how to prevent from these problems can be designed and conducted.
Promote linkages of the producer groups and traders to the equipment suppliers in
Addis Ababa.- Producer groups and traders needs to be linked to the potential suppliers
of aluminum can and coolers, which will assist them to keep the quality of the milk.
Improve the capacity of testing facility of the veterinary laboratory and traders. –
Available simple milk testing equipments needs to be searched and suppliers need to be
linked to the local laboratory and traders. If veterinary laboratory tests the milks sold at
the markets and provide certificate for it, the consumers will no longer need to taste the
raw milk in order to test it. The traders will be able to test the milk collected from the
producers, and reject the poor quality milk, which will be an economic pressure for the
producers to improve their milk handling practices.
Recommended project interventions
 Design and conduct the public campaign to improve the awareness of milk safety
issues in collaboration with local government and veterinary laboratories
 Facilitate the linkages of producer groups and traders to the aluminum can and
cooler suppliers
 Search about the available simple milk testing facilities.
Constraint 3. Milk production Causes of the constraint:
yield has been very low due to
lack of fodder and only local Fodder- Due to the recurrent drought and lack of
rainfall, livestock body condition deteriorated, and
breed availability
the pastures are overgrazed, which influences on
milk yield severely. Absence of fodder production
especially in pastoralist area.
Breed- Only local breed of cow is available in all
districts. Local breed produces maximum 3,6 litrs of
milk in a day with the best care, which is very low.
Cross breed is not available in the target area.
Opportunities
Area enclosure – In Aware and Gashamo, which are the worst area for grazing land,
there are some practices that individuals close the area in order to improve the pasture,
which can be popularized and applicable for the pastoralist area. Another component of
NRM mapping can assist the local community to plan which areas can be enclosed for
the future use.
28
Crop residue- Agro-pastoralists in Babile, Gursum, Gursum and Kebribayar use their
crop residue as a fodder for their dairy animals. However, they are not aware of the
potential improvement of nutritional value of the crop residue through adding uria
molasses treatment block, and production of silage by adding cactus which is available
everywhere.
Fodder production potential- SORPARI successfully tried to production of improved
perennial forages such as grass and legumes with two cooperatives in Gursum, Somali.
The perennial forage gives 8 harvest in case watering system is available. These two
cooperatives now can provide forage seeds to other interested producers. SORPARI has
all the technology for forage production and tried the same technology in Jijiga and Gode
zones. Somali regional government plans to use Gode for forgae production, and
establish a forage bank in Gode. High milk potential district officials told us that they
have extra land available for the forage production, and would support the forage
production. Training materials on dairy farm management and fodder production was
developed by Land O’Lakes and available for RAIN project.
Breed improvement- There are crossbreed cows available from the individual providers
at highland areas. This crossbreeds produce 15 liters of milk, with proper care, which is
five times higher than local breed. There are also Borena breed available in Borena area
which produces 3-4 liters of milk in a day, and used for dual purpose of milk and meat.
Agro-pastoralist areas may have good opportunity to improve the cow breed by
crossbreed, since the weather is more pleasant, and forage production is possible. A
crossbreed cow is sold with around 12,000 birr from the supplier. In the long term,
producers can improve the cow breed through AI services. There are around six AI
technicians in East Hararghe, and a liquid nitrogen plant in Harar, which is close to the
production area. The district level technicians need AI equipments. National AI center
has a plan to order more improved seeds, and improve AI services. Improving the breed
will need longer period of intervention, however would bring higher impact to the
producers.
Solutions
Improve fodder availability- Popularize the fodder production, silage production, and
rangeland management practices. Implement the demonstration trials in each kebele.
Support fodder/forage producing businesses. Link forage producers to the two
cooperatives in Gursum, Somali for seed supply. Promote the milk producers groups to
produce own fodder by themselves. Support commercial fodder producers, and link them
to the milk producers. Local government and SORPARI would play important role in
fodder solution.
Link producers to crossbreed and AI service providers- Once the producer groups are
organized, assist the interested groups to improve their breed through linking them to
cross breed providers and AI service providers. Provide technical advises and trainings
on cross breed proper care.
29
Recommended project interventions
 Partner with SORPARI on popularizing forage production in agropastoralist area
and rangeland improvement in pastoralist area for demonstration
 Support the producer groups who wants to improve the cow breed through
technical assistance, training, loan facilitation, and linkage to the suppliers
 Support forage producing groups and businesses
 Organize a experience exchange trip to dairy farms at highland area to see the
cross breed care and production, as well as fodder production at farmer level
 Build capacity of local AI technicians and local officials on breed improvement
30
4. HIDE AND SKIN VALUE CHAIN
Ethiopia has a large livestock population, which has served a resource base for meat and
its by-product hide and skin. Ethiopia exports and earns quite substantial amount of
foreign exchange by exporting leather and leather products. Tannery products and leather
goods are the major outputs of the Ethiopian leather products industry (LLPI). Both the
quantity and the good fiber structure of highland sheepskins or goatskins of Ethiopia have
gained high acceptability on the world leather market.
Accordingly, Somali region and East-Hararghe zone of Oromiya region of Ethiopia are
known for their huge livestock resource ownerships. Thus, this assessment focuses on
hide and skin marketing and value chains in RAIN project areas (districts) of Somali and
Oromiya regions of Ethiopia. The following table summarizes the livestock ownerships
and hides and skin production potentialities of RAIN project area.
Table 5. Hides and Skin Production
Livestock Population
by Species
1
2
3
4
5
6
7
8
9
Name
of
Districts
Gursum(Somali)
Aware
Gashamo
Babile(Oromia)
Midhaga
Gursum(Oromia)
Kebri-Beyah
D/bur
D/hamedow
G/Gado
Totals
Total Production(%)
Offered for sale
Locally Consumed
Cattle
Shoats
Hides
(6.99%)
Skin
(37%)
Hides
(26%)
Skin
(65%)
Hides
(74%)
Skin
(35%)
59 986
80 360
68 880
36 337
75 000
69 776
66 665
83 230
226 874
311 360
266 880
23 877
73 151
85 365
254 094
322 480
4 193
5 617
4 815
2 540
5 243
4 877
4 660
5 818
83 943
115 203
98 746
8 834
27 066
31 585
94 015
119 318
1 090
1 460
1 252
660
1 363
1 268
1 212
1 513
54 563
74 882
64 185
5 742
17 593
20 530
61 110
77 556
3 103
4 157
3 563
1 880
3 879
3 609
3 448
4 305
29 380
40 321
34 561
3 092
9 473
11 055
32 905
41 761
54 530
594 764
211 530
1 775 611
3 812
41 574
78 266
656 976
991
10 809
50 873
427 034
2 821
30 765
27 393
229 942
&
31
Figure 5. HIDE AND SKIN VALUE CHAIN MAP
Process
ors
Wholesa
lers
Traders/Co
operative
Producers
Enabling Environments, Government Policy & Regulation Support
End Market
Consumption by local shoe
factories in the country
Exported to England,
China, Italy and India.
Somali land and punt
land

There are about 23 tannaries
in Ethiopia who process and
export processed HS and
finished product to abroad
2 trader at JJ (Siyat &
Ziad ) who collect HS
and sells to Tannaries
There are:
 2 traders at Gur.SR.
 3 traders at Gur.Or.
 2 trader at Babile
 1 trader at K/beyah
 3 trader coop. at D/b
These traders sell HS to
Wholesalers at Jijiga &
AA
Support Sector
1Wholesaler at AA
(Badhadha)

Hide and Skin is used at
household level in
making traditional
materials like Garbota,
Robe, Matts, etc

There are 3 (Farah kalif at
Aware) and (Saynab &
Muuse at Gashamo) local
traders who collect HS
from producers and export
to Somaliland and puntlad.


2Gursum, Babile,
K/Beyah & D/Bur
Midegatolla
Aware and Gashamo
There are 2 financial
service providers at
Gursum Oromia (Walco
& German Microfinance).apart from this,
no other financial service
providers in other study
areas.
Training providers: there
are no well functioning
training service providers
in most study areas, but,
there are some FTC/PTC.
There are limited public
and private health service
providers (CAHWs,
Private Pharmacies and
Animal Health posts)
There is no as such market
information system but
transportation service
providers also bring
market information.
Tannaries (Awash
Tannary) used to provide
salt for drying HS to local
traders.
32
4.1 VALUE CHAIN ACTORS, LINKAGES AND MARKETING
CHANNELS
Value chain Actors
In RAIN project areas, the main actors identified to be involved in hide and skin value
chains in this study are producer, local traders who are mainly hotel owners and
collectors, wholesalers and tanneries/exporters in the central market. The market actors
and their linkages are discussed as follows:
Producers
The main hide and skin producers identified in the RAIN project area of Somali and
Oromiya (east-hararghe) regions of Ethiopia are butcheries and hotels/restaurants. There
are no slaughters houses at most of the study area except East Hararghe and Degehabur
which has 7 slaughter houses. Pastoralists and agro-pastoralists in the other study area
produce hide and skin during specified periods of the year (I.e. during the times of
holidays, funerals, etc) and they either sell hide and skin to the local collectors or use it at
household level for making Garbota, matts, robes, etc.
On the other hand, butcheries/slaughter houses at Gursum-oromiya dry the hide and skin
they produce with salt, collects them for some time and sells them to local traders or
wholesalers/exporters. Most of trade goes with the skins rather than hides and producers
sell raw skin to local traders and collector/hotel owners with a price of 3 birr/skin.
Nevertheless, in Midegatola, hide and skin marketing is not practiced, rather they use it
for household consumption in making Garbotta, matts, robes, etc. There are thousand of
dried and preserved hides and skins in RAIN study area with the local collectors and
traders and there is no market available for these producers.
Local traders/trader cooperatives
Most of the traders identified in the project area are hotel owners and local traders who
collect hides and skin from different producers at district level and after drying it with
salt, sell it to whole salers. There are about 11 local traders at Gursum Somali, Gursumoromiya, Babile and K/beyah district who collect and dry hide and skin using salt and sell
to wholesalers at Jijiga or tanneries in Addis-Ababa. There are also 3 trader cooperatives
at D/Bur district who sell their skins to both wholesalers at Jijiga and export to
Somaliland. From traders at Gursum-oromiya, we have found that hide and skin prices
and demand from tanneries is decreasing from time to time. Previously, 17kg of hide
used to cost more than 100birr where as skin price used to be 50/skin. However,
nowadays 17kg of hide is 30birr where as skin price is 4-8birr/skin. This price decrease is
mainly due to poor quality of hide and skin and decreased demand from export countries.
Traders at Aware and Gashamo who are also hotel owners and one local trader who
directly export hide and skin to Somaliland and Puntland. These traders also use salt
drying mechanisms to dry the skin.
Except traders at Gursum-Oromiya, none of the other traders and hotel owners are
licensed for hide and skin trade but, they pay taxes. For instance, at Gashamo; 0.25/skin
tax is paid by the local traders.
33
Wholesalers
There are 2 wholesalers (I.e Sayit and Ziad) at Jijiga and 1 wholesaler at Addis-ababa.
These wholesalers collect hides and skin from Jijiga, K/beyah, Gursum Somali and
Gursum-oromiya and Babile. They sell to tanneries and they also export to abroad.
Processors (Tanneries) And Exporters
There are 23 tanneries in Ethiopia that process hides and skins. Tanneries export gloves
made of skin, and supplied processed hide for shoe factories. Skins are highly demanded
in the export market than hides. This is mainly sheep skins are useful for making gloves,
garments and goat skins are used for leather jackets. While hides are locally used by local
shoe factories for making shoes. However, there is a season/time for demand of leather
and leather products. I.e. during winter period, gloves are highly demanded and during
new years there is a demand for shoes. Tanneries do not operate in their full capacity
because of limited supply & poor quality of hides and skins. 65-70% of suppliers of hide
and skin are from wholesalers at Addis-Ababa who collect hides and skins from different
parts of the country; mainly from Highland areas. The producers in Highland are
accustomed to handle hide and skin in a better way, while in eastern Ethiopia the
producers lack knowledge of slaughtering and hides and skin preservation methods,
which influences on quality of hide and skin from that regions negatively. In terms of
composition of the skin and hide, only black head sheep skin from eastern Ethiopia is
poorer that highland sheep skins. This is because black-head sheep do have lot of fatty
accumulation (adipose tissue) under its skin and after it is processed the skin becomes
very soft and not durable for further processing’s. Otherwise in terms of composition of
the skin and hide, goat skin and hides has no problem from eastern Ethiopia, Among the
supplied hide and skins to tanneries, only 10-12% fall under grade 1-3 and the rejection
percentage is 40-50%. Before 20 years this figure used to be 70% and the rejection
percentage has been 10%. To get rid of this hide and skin quality problem, Ethiopian
Tannery Association are making some research in collaboration with Ethiopian Institute
of Agricultural Research (EIAR-Debreziet) regarding animal health care (parasite control
through spraying) to produce good quality hide and skin from the off-springs. They have
purchased 1,200 sheep and plan to demonstrate and share this with producers so that they
learn from it.
END MARKETS
Generally demand for hides and skin from Ethiopia is falling from time to time at export
level. This is mainly due to quality degradation in Ethiopia the economic crisis that
affected most of European countries. However, there are 3 main end markets for hides
and skins produced at RAIN project areas and these are:
Somali land and Puntland
 Skins from Aware and Gashamo are directly exported to Somaliland (Hargaisa)
and Puntland (bur’o). Skin price in Hargaysa is currently 10-12birr/skin where it
used to be previously 15 Birr per skin. Hide and skin marketing to Somaliland is
seasonal and there is no market from June-August because of sea close. In
Somaliland market, there is hide and skin quality grading and the payment is also
different with the quality. I.e. good quality hides & skin reach up to 3USD.
34
Traders from Aware and Gashamo transport their skin to Hargaisa and
transportation cost from Gashamo to Hargaisa is 0.50/skin
 Skins produced at D/bur district is also exported to Somaliland by both local
traders and traders who come from Somaliland.
England, china, Italy and India
 Tanneries export finished products (gloves, garments and shoes) and sometimes
processed skins to this markets. Most of the time sheep skin do have high demand
but, black-head Somali sheep breeds are not preferred due to their fatty
accumulation under their skin. The qualities required for export is not most of the
times fulfilled by the tanneries. This is because of poor quality skin supplied to
them and this poor quality can not be identified in the first inspection unless the
hair is removed.
Local consumption by shoe factories
 Most of hides are used locally by shoe/footwear factories and tanneries do not
export hides for their poor quality.
SUPPORT SECTOR
There are limited support service providers in the study area. There are 2 financial service
provided in gursum oromiya where as there are no other financial service providers in
other parts of the study area. The animal health service providers (CAHWs, AHP and Vet
pharmacies) are not sufficient enough. Training service providers (FTC) are limited and
in some places they are not functional at all. No market information service providers.
Generally the support sector is not enough for the RAIN project area
4.2 Constraints, Solutions, Opportunities and Proposed Project
Interventions
Constraint 1.
Causes of constraint
Deterioration of hide and skin quality from  Animal health problems (parasitic &
time to time which decreased the
skin diseases)
production and supply of good quality  Recurrent droughts and rangeland
hides and skin.
degradations deteriorates the livestock
body condition and health
 Utilization of hides and skins for
traditional household items (I.e. matts,
robe, Garbotta, etc)
 Absence of slaughtering facilities
especially in Somali region. Due to this
problem, livestocks are slaughtered at
the backyard and improper slaughtering
practices breaks the quality of hides and
skin.
 Less knowledge and skills of
slaughterhouses, hotels, and local
35

traders in slaughtering and hide and
skin preservations
Absence of quality standard controls
and incentives for good quality
products. The tanneries offer the same
price without any differentiation for the
quality.
Opportunities
 The government has given due consideration to overcome this animal health
problems and starting to implement demonstrations.
 The tanneries are very willing to get hides and skin from Somali and eastHararghe zone of Oromiya if they are supplying a good quality hides and skin.
 Fintrac, a USAID funded sub contractor has various training manuals for the
hides/skin handling, slaughtering, which is available for RAIN project.
Solutions
 Improve animal health practices as a means of producing quality hide and skin and
demonstrate animal health care influence on hides and skin quality in pastoral areas.
 Improve feed availability during severe times of the draught and build the feeding and
feed utilization capacity of pastoralists. This is mainly to improve the body condition
of the animals to produce quality hide and skin.
 Improve slaughtering facilities in the area and build the knowledge and skill of
slaughterhouses, hotels and local traders in terms of hide and skin management and
preservation.
 Develop and implement quality standards control system and incentive provision for
good quality hide and skin at tannery level.
Recommended project interventions
 Improve the awareness of producers through demonstration project to improve quality
of hides and skin by applying proper animal health care of spraying and parasite
control mechanisms in selected kebeles. These pilot kebeles will be linked to the
tanneries who can offer premium price for the better quality hides and skin.
 Build the capacity of producers through training on modern animal husbandry,
feeding and management techniques, while improve capacity of slaughterhouses,
hotels and local traders in proper slaughtering, and hides and skin preservation
techniques.
 Support establishment of private or government slaughter houses and slaughtering
facilities in the project area, especially in Somali region.
 Reduce backyard livestock slaughtering practices through awareness creation among
producers.
Solution providers
 Government
 NGOs
36


Tannaries
Community
Constraint 2.
Causes of constraint
Poor vertical market linkages between the  Absence of business linkages between
local traders and tanneries of hide and skin.
slaughterhouses, hotels and local
Due to poor linkages, supporting
traders from these regions to the
mechanism to each other is missing. The
tanneries at central markets. The traders
quality requirements from tanneries is not
lack the different market options and
clearly demonstrated, and local traders lack
alternatives. There is no agreement or
the market options.
preferred buyer. The traders sometimes
bring the skins and hides to the
tanneries, and it is rejected from the
tanneries,
 On the other hand, 23 tanneries in
Ethiopia have huge capacity to process
hides and skin, and they never reached
their full capacity due to lack of quality
supply.
 Existence of cross border illicit trade of
hide and skin.
 Poor access of the producers and local
traders in market information, not only
the price but also requirements from the
tanneries and end market.

Opportunities
 Tanneries at central markets are willing to procure from these areas in a sustainable
way and they are ready to do any facilitations required.
 These areas do have the capacity to supply good hide and skin amount to the
tanneries. Especially goat skin is very much demanded from the tanneries from this
area.
 The Somali regional government has a plan to establish a regional market information
system
Solutions
 Linking local traders to the tanneries, and create market linkages and partnership.
(For example, the local traders will participate in the All African Leather Fair on 2022 January in Addis Ababa to meet with the tanneries and international buyers.)
 Conduct multi-stakeholder platforms to openly discuss the interests of different
actors. The projects which reflects to the mutual interest of the hides and skin sector
stakeholders will be discussed during the platform.
37


Improve basic infrastructure facilities such as storage facilities, transportation
facilities of the local traders to ensure the sustainable supply of products.
Establish a market information system
Project interventions
 Facilitate linkage between local traders and central markets.
 Facilitate multi-stakeholder platforms among the actors to openly discuss their
interests.
 Build capacity of local traders, hotel, slaughterhouse owners.
 Support the regional market information system
5. Enabling environment
National government has supportive policies such as The Federal Food Security Strategy,
The Rural Development Policies and Strategies 2002, The Plan for Accelerated and
Sustained Development to End Poverty (PADEP 2006-2010). Somali regional and East
Hararghe zonal policies also give special attention to livestock production, since livestock
the one of the main income source and moving power of the local economy. The local
governments support and regulate livestock sector through their tax policies, export
regulations, government owned market places, its extension offices, animal health
service, veterinary laboratory, and market information system.
5.1 Tax Policy
The tax system was the most variable system for the livestock production and trade.
There is no tax for livestock production, and livstock are never counted, and the local
government doesn’t have exact statistics on livestock and livestock products production.
However, when livestock is traded, there is a tax incurred from the sales.
In Oromiya region, there is a turnover tax for the registered livestock traders. The trader
pays 2% of his total sales income as a tax to the region, and it allows the trader to do
trade in nationwide without paying any extra taxes.
In Somali region, there are market place taxes:
1. Tax collected by Revenue office at the sales of the livestock on exit of market
place
2. Tax collected by Municipality when livestock entered in the market place.
In addition, every districts in Somali region also charges different rates of “Huf” tax,
which is for foot of animal or for going through the district. This tax is collected at the
entrance of the roads to the districts, which might be very unofficial. In Aware, even each
kebele has its own tax. In general, in Somali region there is a need for restructuring the
tax system, and apply integrated tax policy. Experience sharing between Oromiya and
Somali region on tax policy might be helpful.
38
5.2 Export regulations
There is a customs office in Jijiga, who deals with all the livestock products export. There
is no export tax. Since 2004, the livestock trade has been legalized, and regulation on
livestock trade has been developed and followed, the governments of Ethiopia and
Somaliland signed agreement on livestock trade. Regulation requires the exporter to be
licensed, and deposit certain amount of hard currency in the bank, and bring veterinary
certificate of for the livestock.
Bank deposit requirements are 420 USD per cattle, 416 USD per camel, 40-45 USD per
shoat and 0,87-0,88 USD per one liter of milk as a hard currency exchange to be
deposited by trader. This deposit has been paid back to the exporter in ETB by the
government, once export is done. The livestock traders find this bank deposit requirement
very high and difficult to meet. Usually livestock traders sell livestock in ETB or
Somaliland shelling, and have to buy USD from black market in order to meet hard
currency bank deposit requirement. This high requirement of the bank deposit, also may
burden more traders to be legalized.
Veterinary laboratory in Jijiga doesn’t have own quarantine place, therefore the
technician comes to the trader’s place and test and vaccinate the livestock and provides
veterinary certificate. This service is available only for those livestock going through
Jijiga. This certificate is easy for the trader to get, but valid only within Ethiopia. In
Somaliland, they require to test the livestock again. In Aware and Gashamo, there is no
custom, certification and quarantine service is available. Sometimes, especially in Aware
and Gahsamo, the livestock can be rejected by Somaliland buyer due to poor health,
which could have been detected in Ethiopia, if the quarantine service was available. The
federal government has a plan to establish five quarantine centers in Somali region
(Jijiga, Degehabour, Gode, Kebridahar). One of the quarantine place has been built, but
still not functional.
Illegal trade of livestock and milk
There are six licensed livestock traders and two licensed milk traders in Somali region.
However, the majority of livestock and milk trade have been done unofficially or
illegally. There are number of traders come from Somaliland, and have agency in
Ethiopia, and buy livestock through their agencies. Plus local traders also trek and
transport the animals through the closest border points to the oversea markets. This is bad
for the local economy in terms of loosing hard currency and produces unfair competition
for the licensed traders. These illegal traders offer higher price than legal traders and
abattoirs, so it is difficult to say that illegal trade has produced bad effect on producers.
Lack of legal system, custom services and quarantine service close to the production and
marketing areas could be one of reasons for the illegal trade.
5.3 Market places
The market places are operated by the local governments nationwide. There are fenced
market places in Aware, Gursum, Somali and Babile and Gursum, Oromiya, while in
39
there is an open air market places in Gashamo, Degehabour and Midegatola. In Babile,
there is a big market separated for cattle and camel. The most market places need some
more improvement in terms of having separation between the animal types, and to have
separate tax collection, watering, holding space, animal health service, fodder availability
or closed rangeland improved areas availability.
5.4 Market information system (MIS)
Traders of livestock products are very close the current market information. They call on
the phone their friends from Wochalle, Hargeissa, and different markets and can know
the latest market prices. On the other hand, the producers don’t have much access in
market information. They sell their products with whatever price the broker and trader
offers. Therefore, there is a need for improving market information to the producers.
Oromiya Market Development Agency (OMDA) has own MIS system, which collects
information from the main markets and disseminated through local radio and TV. OMDA
has a plan to include livestock information in their MIS and information dissemination.
OMDA agreed to share information with Somali regional MIS, in order to benefit from
market information from Jijiga, since the majority of livestock from East Hararghe are
traded in Jijiga.
Somali regional government, marketing department is under process to establish a
regional MIS. They started to collect information from five main markets: Jijiga,
Degehabour, Gursum, Aware and Kebribayar, and signed memorandum of understanding
with Radio Fana to disseminate livestock price information. Marketing department also
plans to disseminate information through website and newsletters. They have some
limitation on cost of information dissemination, which needs external support. There is a
need to support these two MIS, plus facilitate the coordination among these two regional
MIS’s.
On the other hand, there is a strong traditional way of pastoralists to share information.
When one of them goes to the main market, he brings all the market information and
shares with all other members of the community. These is some cases that
community/clan send one the most market knowledgable person to the market to collect
information. The producers listen to different radio channels including not only local
channels, but get some international market information from Somali BBC and Voice of
America.
5.6 Financial services
Demand of financial services is huge in the area, while financial service suppliers are not
available in Somali region and outreach is very limited in East Hararghe zone. Amount of
loan needed among the target groups is very different. The producer groups need smaller
amount of loan in order to improve their production site, while traders and processors
will need bigger amount of loan. Producer groups of the livestock value chain will need
financial resource in order to improve their husbandry and production technology, fodder
40
production, breed improvement, establishment of milk collection points and practices.
On the other hand, the traders, slaughterhouses, and milk processors will need financial
resources for improving their processing technology, equipment, facilities, transportation,
and working capital etc. So, the project needs to take different approaches for the
different needs of its target groups.
Commercial Banks
Commercial bank of Ethiopia (CBE) has branches East Hararghe, which provides loan to:
 Priority sectors including manufacturing, agro-processing and export oriented
production, with 100% collateral from the borrower
 Non-priority sectors- with 125% of collateral from the borrower
The loan size is 3-20 million Birr1, loan terms are 8,5% p.a. interest rate and 10-15 years
of period. CBE is interested to provide loan to processing factories and MFI’s and
SACCO’s, who could be the RAIN beneficiaries. The process of loan approval takes long
since loan is mostly approved in Addis Ababa, and CBE faces with constraints of lack of
fixed collateral. CEB is not interested in lending to small farmers.
In Somali region, CBE has branches in Jijiga, Degehabour, Kebridehar, Gode and
Dawale towns. Their main services are loan provision, savings mobilization, and local
and international money transfer. Jijiga branch provides guarantee letter as a product of
islamic banking, instead of loan. Degehabour branch doesn’t provide any loan, due to
700,000 birr of overdue loans which are not repaid back. The bank branch said they will
not provide loan until the community pays back this overdue loans. In general
outstanding loan amount at CBE has been decreased down over last years, and CBE
doesn’t provide Islamic banking loans, which also doesn’t meet need of the Somalian
population.
MFI’s
Oromiya Credit and Savings Shared Company (OCSSCO) is the only MFI presents in
Babile and Gursum districts of East Hararghe zone. OCSSCO is one of the four big
MFI’s in Ethiopia, who has total outstanding clients of 360,000. Though, their outreach is
very much limited when comparing to Oramiya region has total population of 27 million.
OCSSCO provides solidarity group loans of up to 12000birr to group of 4-6 people. They
also provide MSE loans. Interest rate for the micro loan is 10,5-12,5% p.a. OCSSCO has
compulsory and volunteer savings products, whose rate is 5% p.a. The main constraint of
the OCSSCO is lack of lending capital, and lack of infrastructure such as staffs and
vehicles.
In Somali region, there is no formal MFI’s except Dire MFI plans to open a cranch in
Jijiga town. Dire MFI has an agreement with Transportation/ Trade/ Communication and
Industry bureau, that Dire MFI will provide administrative service, while Somali regional
government will provide financial resources for its operation. Dire MFI is waiting for the
Somali regional government to transfer their budget for the first year operation.
1
Current exchange rate: 1 USD= 12.3 Ethiopian Birr
41
Somali regional government, Transportation/ Trade/ Communication and Industry bureau
has established a working committee with five officials, to work on establishing a
regional government owned MFI. The regional government has a plan and budget for this
initiative.
NGO’s
Mercy Corps provides loan to livestock traders for de-stocking purpose in Somali region.
MC RAIN project also provide loan guarantee on behalf of its beneficiaries when they
get micro loan from OCSSCO. Menshen fur Menshen provides technical assistance and
loan fund to SACCO’s in Babile, East Hararghe. UNICEF has plans to intervene in
microfinance sector in Somali region. ACDI/VOCA provided loans to the cooperatives
for re-stocking purpose after droughts season. USAID/PSNP+ provides loan guarantee on
behalf of MFI’s, SACCO’s, and medium size businesses when they get loan from the
banks. But this project doesn’t operate in Somali region.
Recommendations:
 To provide technical assistance to Somali regional government on establishing
new MFI
 To link the producer groups to MFI’s(OCCSCO, potentially Dire MFI and new
MFO to be established by Somali regional government)
 To link the bigger business such as traders, slaughterhouses, milk processors to
the bank loan, and search about expansion potential of the USAID bank loan
guarantee for medium level businesses in Somali region. Provide the commercial
banks in Somali region on Islamic banking practices.
5.7 Other livestock sector support
There is FTC’s in each kebele of Oromiya, and some PTC’s in some areas of Somali
region, as an extension service for the producers. These extension services provide
services on agriculture, livestock and natural resource management. However, their
capacity is limited. Somali region has 186 animal health posts, 8 veterinary clinics, and
27 veterinary pharmacies to provide animal health service to the producers. There is no
testing facility for the milk quality.
Insecure and unstable environment and
inaccessibility in some areas discourages private investment in some of areas.
The local government can to promote enabling environment for the livestock sector
through improving its transparent tax policy, promotions and incentives for the exporters
and processors.
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6. Conclusion and Recommendations
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Annex 1
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