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Irish Aid in collaboration with USAID announced it will provide 10 million birr in funding to assist the development and adaptation of technologies and business models required to transform the dairy sector in Ethiopia.
At the announcement event held on Wednesday July 9th, it was stated that the Dairy Innovation Fund will be used for the design, demonstration and field testing of technologies and business models that can demonstrate high potential for increased commercialization of milk products.
“Milk is an important product as it contains numerous nutrients that make a significant contribution to meeting the body’s needs. According to the Food and Agriculture Organization, there are positive associations between milk consumption and growth in preschool children. Therefore, it is imperative that young Ethiopians drink plenty of milk in their growing years to reduce the nations stunting rate,” said U.S Ambassador to Ethiopia Patricia Haslach who was present at the event.
With the largest number of milking cows in Africa, Ethiopia’s potential for dairy development is considerable. However, productivity and consumption remains low. Ethiopians currently consume 19 liters of milk per year; this is just 10 percent of Sudan’s consumption and 20 percent that of Kenya.
Among some of the challenges holding the sector back, feed supply availability, lack of genetic improvement of native dairy cows and low milk consumption are mentioned as the main ones.
“The fact that 98.8 percent of the female cattle herds in Ethiopia are indigenous, meaning a low-yield breed, which produces an average of 1.5 to 2 liters of milk per day, is a major constraints. In addition, quality feed is not accessible and extremely expensive,” stated Gebreegziabher G/ Yohaness, state minster of Agriculture.
He also said that the cost of feed can currently account up to 70 percent of the cost of production. The result of that is that the price of processed milk is high and unaffordable for the majority of the people in the country.
Demand is affected by, seasonal fluctuations in milk consumption during fasting periods when many abstain from consuming all kinds of animal food according to a statement made at the event. During such periods, smallholder produces are finding ways to convert the milk into long shelf life dairy products using local technologies.
Some processors are also using relatively advanced technologies to convert the products into cheese and butter. But still more innovation and strategic interventions are needed to create a more robust market demand with enough incentives to entice more smallholder farmers’ participation in the collection and processing of milk business.
If milk consumption in Ethiopia were to approach Kenya’s per capita level by the year 2020 for example, the market would need to supply over 10 billion liters of milk a year. This can be a major opportunity for job creation and economic development for the nation as well as a lucrative business opportunity for investors.
The Irish Aid contribution of 10 million Birr will be provided through USAID’s Ethiopia Sustainable Agribusiness Incubator activity implemented by Precise Consult International and part of the U.S Feed the Future Initiative. The activity’s goal is to transform Ethiopian agriculture sector by sector by enhancing the competitiveness in the dairy, honey and sesame value chains.