· Web viewwe have realized that the company hasn’t get any financial/loan services, due...

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Dairy VC Assessment group, Task Progress for day 1 and Day 2 Day 1- 8/5/2012 Actor contacted: Iskufilan Milk Cooperative Committee members 1. Fatuma Idriss, Chair Woman 2. Fatuma Yussuf, Vice Chair woman 3. Ido Adan, Member Introduction The team has started its field duty from Mullie woreda of Shinille zone, as per its assessment schedule. After wrapping up day 1 activities it undertaken in Mieso and Mulli, the team preceded its day 2 activities in DireDawa to contact commercial dairy farms and other actors in the town. Methodology used: Very interactive discussion with less structured interview information gathered from secondary sources such as Cooperative & Agriculture offices at woreda level Overview of the Milk Value chain: This milk cooperative has 15 female members & engaged in collection and aggregation of milk.The cooperative collects milk from pastoralists around Mulli, mostly from kebeles Kulmiye, caramodobe, Kulkadobo,Jejeba, Nimcale, carmale and Tuleydi. It has made an efficient mechanism of collection in which a single member is responsible to collect the milk atleast from ten suppliers around her village. As per this arrangement, they approximately collect the product from 150 producers at a price of 7 birr/litre during the rainy season and 9 birr/lit during the dry season. The amount of milk they collect is estimated to 400 and 200 litres/day in the wet and dry season respectively. Iskufilan cooperative sells their milk to Gashew; a small milk processor in Awash who as a collection center at Mieso market. Gashew and Iskufilan cooperative have entered into written formal agreement and have been materializing the transaction since then. The cooperative has been supplying the product to Gashaw small milk processor at Mieso; his collection center as per the agreement.

Transcript of · Web viewwe have realized that the company hasn’t get any financial/loan services, due...

Dairy VC Assessment group, Task Progress for day 1 and Day 2

Day 1- 8/5/2012

Actor contacted: Iskufilan Milk Cooperative Committee members

1. Fatuma Idriss, Chair Woman

2. Fatuma Yussuf, Vice Chair woman

3. Ido Adan, Member

Introduction

The team has started its field duty from Mullie woreda of Shinille zone, as per its assessment schedule. After wrapping up day 1 activities it undertaken in Mieso and Mulli, the team preceded its day 2 activities in DireDawa to contact commercial dairy farms and other actors in the town.

Methodology used:

Very interactive discussion with less structured interview

information gathered from secondary sources such as Cooperative & Agriculture offices at woreda level

Overview of the Milk Value chain: This milk cooperative has 15 female members & engaged in collection and aggregation of milk.The cooperative collects milk from pastoralists around Mulli, mostly from kebeles Kulmiye, caramodobe, Kulkadobo,Jejeba, Nimcale, carmale and Tuleydi. It has made an efficient mechanism of collection in which a single member is responsible to collect the milk atleast from ten suppliers around her village. As per this arrangement, they approximately collect the product from 150 producers at a price of 7 birr/litre during the rainy season and 9 birr/lit during the dry season. The amount of milk they collect is estimated to 400 and 200 litres/day in the wet and dry season respectively.

Iskufilan cooperative sells their milk to Gashew; a small milk processor in Awash who as a collection center at Mieso market. Gashew and Iskufilan cooperative have entered into written formal agreement and have been materializing the transaction since then. The cooperative has been supplying the product to Gashaw small milk processor at Mieso; his collection center as per the agreement.

The team realized that Iskufilan Coop transports the milk by isuzu to Mieso( a car which comes often to the area for another purposes) and Gashew transport it from Mieso to Awash where he processes the milk.

Thecommittee members mentioned that price is determined by the processor and currently there is a misunderstanding between the two parties on this, because the effect of price fluctuation solely harms the cooperative, due to the fact that producers periodically adjust price to the changing costs, which is not possible for the cooperative to do , because the business deal would become delicate once they become stringent to their only client, Gashaw. Though the cooperative has tried to bargain on the price fixation issue several times, especially during the dry season when producers increase price, the counterpart refused to accept it. From the phrases of the Iskufilan milk cooperative committee members, we understood that there is no genuine partnership between the contracting parties due to low bargaining capacity of the cooperative.

Challenges Encountered by the Cooperative

low productivity because of low and unpredictable rainfall

Poor infrastructure and inaccessibility of roads during/after heavy rainfall/ flooding

poor market integration between the actors and lack of market information

Quality problem- hygiene and sanitation is very poor while collecting milk from primary villages/producers

In appropriate use of milk containers; most o f the equipments are not easily portable by human labor

Lack of appropriate means of transportation- forces them to use the Jerkins because the transportation they are using is ordinary car (which the merchants use for multi-purpose transportation), & is unfavorable to transport milk with Aluminum containers

Lack of utilities such electricity at the collection centre

Lack of skills to negotiate/bargain among the cooperative management

Day 2: 9/5/2013

Location: Diredawa

Firm i: Handayle dairy farm.

Person contacted: Dimraile Hamdayle- 0923202377

General Overview and assessment

The farm was established before 20 years, with 50 Holliston Frisian( breed) cows which gradually grown to 400 cows of the same breed.The product produced at the farm includes pasteurized milk, yoghurt, butter, ice cream and cheese.

The farms scale of operation was very big with an intention of covering the milk demand of Diredawa town and gradually expands to other markets such as Addis Ababa and Djibouti.The farm had demonstrated the capacity of covering the market dd in Dire Dawa and start new market in Addis but unable to do the second because of difficulty in the transportation cost. Due to the aforementioned challenge it decided to limit its operation in Diredawa & continued production and distribution of the products in different forms. But it had been operating in lose Since the last six years due to the fact that it was operating under economy of scale.

The company reported that productivity of the first 50 cows was exceptionally high; which is about 70 litres/day & after inbreeding was practiced among the existing and newly born off-springs, gradual productivity reduction was observed; to 20 litres per day and then 7-10 litre/day. Decline in productivity together with high feed cost brought serious challenge to the farm to continue as a profitable plant. The farm as a pioneer commercial dairy farm in DireDawa, it used to take the by-product of Diredawa food complex with out any competitor, but lateron obligued to be exposed to tough competition when newly established dairy farms enter into the market as food complex started to bid out the feed through its formal bureaucratic procedure.

The manager of this company is expressing the comparison analysis of feed cost in a parallel way with that of sales price per liter of milk as follows:

Year Feed cost Sales /litre

1993 40 ETB/Q 3 ETB/Lit

2008 190 ETB/Q 7ETB/Litre

2012 >400 ETB/Q 14 ETB/Litre

Change over the period > 10 * 5 *

To cope up feed shortage problem and tough feed price competition, Hamdayle dairy farm had started its own feed farm which was developed under mixed mechanism of sprinkled irrigation and rain fed . Due to Erratic rain fall & irregularity of water availability, the farm had experienced repeated feed crop failure/damaged.

Though the company has tried several mechanisms to rescue the farm, it was ended up its operation with lose until the last six months & finally opted to shut down the firm to avoid unnecessary overhead costs. Now the farm has switched its business to poultry & Gibson, panting factory since November 2012.

Challenges encountered & factors led the farm to shut down

High temperatures and erratic rain fall hindering feed production at own farm & local level

Slow pace of Milk consumption habit among the HHs to develop the mkt

Low availability and high price of commercial feed

Low selling price of pasteurized milk( 3birr/ at the beginning, and then 7 birr and now 14 birr- however these price doesnt compensate the cost of production)

Less accessibility to improved Breed

Low managerial and entrepreneurial capacity to product devt , positioning and marketing strategies( self estimation of the team)

Dairy Farm ii. Hafkath Dairy Farm

Contacted person: Yismashewa ZemedAgenehu, Manager

Mobile: 0915-015-600

It was established before 19 years with few fresian breeds and gradually grown to 61 cows currently. Its products are mainly sold to HHs on contractual basis solely fresh milk and in certain cases Yoghurt. Th e manager has expressed that demand is ever growing from the HH, retailers and caf/restaurant.During the rainy season a cow in the farm produces 20 litres of milk / day which reduces to 14-16 lit/day in the dry season. Though the demand is sharply growing, the company is being challenged by feed price fluctuation as there is no traceable feed supplier in the area. To cope up with this, the company has started production of alpha alpha and elephant grass on its own plot of land, using well constructed in the farm. However the farm is trying to solve feed availability problem in such a way, it still negatively affects profitability of the enterprise, as it boost up operation cost due the labor cost incurred in the feed production.

As the other coping mechanism the company is using diversification of business ( construction ) with in the same farm such as machinery rental and construction businesses to augment the least profitable businesses, like the dairy farm in this case.

Recommendation from Hafkath Dairy farm manager

Government and other stakeholders should engage to promotion of feed business development, through motivating new businesses to enter the feed business

Government should encourage privatization of Vet services

Dairy farmers should find their own feed production to cope up with the shortage.

Encourage stakeholder platform and nurture dialogues among different actors(PP)

Government Subsidy and tax exemption as a motivating factor for new entrants to the feed business

Challenges

Tough and uncalculated feed price Competition among actors

Feed shortage/ inconsistency in the supply

Airy Farm iii. DPRIMO Dairy farm:

Ato Menelik Owner and General Manager, M- 0911603096