Assessment of Livestock Value Chain/Market Systems

ASSESSME NT OF LIVESTOCK

VALUE CHAIN/MARKET SYSTEMS

Final Report

2018

Contents Pages

Acronyms/Abbreviations ______iv Acknowledgement ______i Executive Summary ______ii 1. Introduction ______8 2. Methodology and Approaches ______11 2.1 Approaches and Tools of Data Collection ______11 2.2 Methods of Data Processing and Analysis ______13 3. FINDINGS AND DISCUSSION ______13 3.1. Overview of Livestock Sub-sector Dynamics______13 3.2. An Update of the Livestock Resource Base for the GRAD Project ______14 3.3 Identification, Prioritization and Selection of Livestock VCs ______18 3.4. Livestock Value Chain Mapping and Market Structures ______20 3.5 Value Chain and Market Systems Analyses of Selected Livestock Commodities ______22 3.5.1 Value Chain Analysis of Sheep and Goat Rearing and Fattening ______22 3.5.2. Value Chain and Market Analysis of Small-Scale Beef (Cattle fattening) ______32 3.5.3. Value Chain and Market Systems Analysis of Poultry Production ______45 3.6. Livestock Value Chain Supporters and Facilitators ______56 3.7 Market Demand and Price Variations and Seasonality ______58 3.8 Competitiveness and Economic gains ______59 3.9 Value addition, price build-ups and profitability ______59 4. Critical Success Factors in Livestock VC and Market Development ______61 5. Conclusion and Recommendations ______63 5.1. Conclusion ______63 5.2. Recommendations ______65 6. References ______69 Appendix A: Model Business Plan for Priority Livestock Value Chains ______70 ANNEXES ______82

List of Tables Table 1: Study sites and proposed number of respondents ______11 Table 2: Livestock population in LRO’s intervention woredas in West Arsi ______15 Table 3: Trends in major livestock population in Shala and Arsi Negele (2010/11 and 2016/17) ______15 Table 4: Livestock population in LRO intervention zones ______16 Table 5: Livestock sales, slaughter, death and gifts as percentage of total population, by zones in 2016/17 _ 18 Table 6: Summary of list of potential livestock VCs identified and prioritized using prioritization matrix and criteria ______19 Table 7: Summary prioritized and selected livestock VCs for West Arsi woredas ______19 Table 8: Summary of prioritized and selected livestock VCs for East Shoa and Arsi woredas ______20 Table 9: Investment cost of innovative small goat and sheep fattening ______28 Table 10: Total expenditure for 20 sheep and goat fattening per annum at HH level ______29 Table 11: Revenue, operating costs and net margins in the goats and sheep fattening with 20 animals/HH/year ______29 Table 12: Investment capital required for establishment of a small-scale cattle-fattening farm ______41 Table 13: Annual operating expenses and other assumptions ______41 Table-14: Revenues, operating costs and net margins in the fattening of 4 oxen/hh/yr ______42 Table 15: Investment and working capital for 50 heads of chickens’ farm______40 Table 16: Operating Costs or Costs of productionper year ______52 Table 17: Gross Revenue, Profit and margin from village poultry farm/year ______53

Figures Figure 1: Geographic Location of LRO Project Woredas ______Error! Bookmark not defined. Figure 2: Fattened sheep and goats as offered in markets______15 Figure 3: Small ruminants (sheep and goats) marketing channel ______25 Figure 4: Value chain map of sheep and goat rearing and fattening ______28 Figure 5: Small-scale cattle fattening schemes, trekking and marketing in some of the LRO study woredas _ 34 Figure 6: Cattle (beef) marketing channels in nine LRO study woredas ______38 Figure 7: Feed (forage) and feed transportation for cattle in fattening schemes in some of the LRO study woredas ______39 Figure 8: Typical VC map with core stages, functions and actors in cattle-fattening and live animal trade, in LRO woredas ______40 Figure 9: Poultry marketing channels in the nine LRO study woredas ______47 Figure 10: Improved small-scale poultry business operation by women and men ______48 Figure 11: Special and target-specific commercial poultry feeds (for pullets, broilers and layers) ______49 Figure-12: Typical poultry value chain map in the nine LRO study woredas ______50

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Acronyms/Abbreviations AA Addis Ababa ADG Average Daily Gain ARARI Amhara Region Agriculture Research Institute ASF Animal Source Foods ATJK Adami Tullu Jido Kombolcha CBPP Contagious Bovine Pluro Pneumonia CCPP Contagious Caprine Pluro Pneumonia CIF Cost, Insurance and Freight CRS Catholic Relief Services CSA Central Statistical Agency DA Development Agent EAFIA Ethiopian Animal Feed Industry Association ELTA Ethiopian Society of Animal Production, Livestock Traders Association EMPEA Ethiopian Meat Producers-Exporters Association ESA Ethiopian Standards Agency ETB Ethiopian birr FMD Foot and Mouth Disease GRAD Graduation with Resilience to Achieve Sustainable Development IGA Income-Generating Activity ILRI International Livestock Research Institute LG Livelihood Group LRO Livelihoods for Resilience – Oromia LSD Lumpy Skin Disease MCS Meki Catholic Secretariat MFI Microfinance Institutions MoAL Ministry of Agriculture and Livestock MoARD Ministry of Agriculture and Rural Development MoFED Ministry of Finance and Economy Development NGO Nongovernmental Organization P2P Pathway to Prosperity PSNP Productive Safety Net Programme SNNPR Southern Nations, Nationalities and Peoples’ Region UN United Nations VDAFACA Veterinary Drug and Animal Feed Administration and Control Authority VESA Village Level Economic and Social Association WASH Water, Sanitation and Hygiene YLG Youth Livelihood Group

Acknowledgement

The authors would like to thank the CRS country office, which commissioned this study. Particularly, we are grateful to Ato Haile Dolango, the program manager for market systems, value chain and livelihoods, and other CRS technical staff who contributed and gave technical feedback throughout the course of the study.

We are also grateful for CRS’ and Meki Catholic Secretariat’s field office coordination and project officers in all LRO project woredas, who gave generously of their time and considerable insights by facilitating and organizing community, woreda and zone experts, market actors and other stakeholders during field work and data collection. We also acknowledge the several key informants and senior experts in various zone and woreda government offices and regional offices, as well as the communities of the project areas for their willingness to participate in the study and share valuable information and experiences.

Finally, the research team members—Nigatu Alemayehu (PhD), Ato Zewdu Ayele and Ato Shirega Minuye— deserve particular thanks for their direct contribution of their time and expertise to this study.

FSiAbd Consult Executive Director

Executive Summary

1. Introduction

CRS Ethiopia has been working in Ethiopia since 1958. It has projects focusing on relief assistance and emergency response, household and community resilience building, microfinance, agriculture, natural resources management and health—including nutrition and water, sanitation and hygiene (WASH). In line with its development focus, CRS Ethiopia has implemented the Feed the Future Ethiopia Livelihoods for Resilience – Oromia activity in nine woredas in three zones (East Shoa, West Arsi, Arsi) in Oromia regional state. Livelihoods for Resilience – Oromia (LRO) is a household and community resilience-building activity implemented by CRS and Meki Catholic Secretariat (MCS), which runs from February 1, 2017 through January 31, 2022. LRO will enable sustained food security for Productive Safety Net Programme (PSNP) beneficiaries through market-oriented livestock development. The LRO target woredas covered in this study are Adami Tullu Jido Kombolcha (ATJK), Boset, Arsi Negele, Shala, Heben Arsi, Siraro, Ziway Dugda, Dodota and Sire. The activity will assist 24,500 PSNP households with a goal of successfully graduating 18,375 of them. As part of its effective project implementation, CRS Ethiopia commissioned external consultant FSiAbd Consult to produce a livestock value chain/market system analysis for LRO. 2. Objectives

The general objective of the livestock value chain/market systems analysis is to provide the LRO with a road map to guide implementation of the livestock value chain/market systems development in the target areas of Oromia region. 3. Methodological Approach

The project kebeles in the given woredas were purposively stratified/categorized based on livestock population and potential for livestock products as major livelihood options, using the data available in the respective woredas. Then, after stratification, up to three kebeles were selected, based on high and medium livestock population and the number of PSNP households. According to an Oromia region DRM & FS report of 2010, all woredas in the Rift Valley are drought-prone and challenged by recurrent drought. In relation to livestock resources, cattle, sheep and goats are dominant. Considering the homogeneity of the livelihoods, the number of PSNP kebeles and the total PSNP population, including or covering 10% of the project kebeles from each woreda was considered sufficient for a minimum acceptable sample of kebeles, except for Heben Arsi and Boset woredas.1 Accordingly, 14 kebeles were selected. Qualitative methods using focus group discussions were facilitated, where a total of 28 FGDs, at least two FGDs in each sample kebele (one mixed group and one women’s group) were conducted. Key informant interviews, document review, observation and formatted quantitative data from desk reviews were used as tools for data collection.

The participatory value chain assessment and market systems analysis was adapted, and the study guided by the four steps of CRS’ Value Chain Box Project Cycle. The value chain analysis was employed systematically to understand the markets, their relationships, the participation of the different actors, and their critical constraints and opportunities, and the possible interventions. CRS’ value chain tools/value chain toolkit roadmap and CRS’ Pathway to Prosperity (P2P) model was also consulted to meet the specific objectives of the assessment. Rapid market appraisal and visual market observation were also conducted to

1 One sample kebele was taken from Heben Arsi and Boset woredas; although the ratio is far below 0.5, it is rounded up.

ii gain an insight into the livestock value chain/market systems in the envisaged study areas and to triangulate the information obtained using other means.

4. Summary of Major Findings

The findings of this assessment show that livestock is the major livelihood, complementing crop production in the selected LRO woredas. Cattle are the dominant livestock both in terms of population and source of livelihood, followed by small ruminants, mainly goats. Household ownership of livestock in the LRO intervention woredas is better than the national average. But, cattle species owned by smallholders are indigenous Arsi breeds/types. In these woredas, livestock are primarily kept for safeguarding against food insecurity during the critical lean season. They are also kept for cash, and considered an asset and means of traditional insurance. On the other hand, the sales rate of sheep and goats is higher than the national average in these woredas, where one out of three is removed from the flock, putting the off-take rate in the three zones at 32.0%, and reaching 41% in East Shoa. The off-take rate of poultry ranges from 33 to 51%. The high off- take rate in the LRO activity zone is an indicator of market-oriented development potential and intervention.

Shrinkage of grazing lands due to the expansion of farming causes critical feed shortages in terms of quality and accessibility across the seasons. As a result, crop residue becomes the main feed source (with minimum supplementary feed) especially during the long dry season (December to June). Improved fodder production and concentrated feed supplementation are not common in these woredas. Disease is the major cause of livestock death and loss. The highest mortality is among chickens in the range 72 to 88% for the initial flock, while for other livestock mortality is 12 to 19% for goats, 7 to 15% for sheep and 5 to 8% for cattle (CSA 2017).

In prioritizing and selecting livestock value chain interventions in project kebeles, the consulting team followed the CRS value chain prioritization filter toolkit and criteria, as well as the roadmap to conduct assessment of factors in livestock production. The team also used participatory community consultation, and discussions with woreda-level experts and market actors to prioritize and select the three most feasible livestock commodities for each project woreda. Women- and youth-friendliness, comparative advantage and competitiveness were taken into consideration during prioritization and selection. Hence, it is believed CRS Ethiopia and other implementing partners could made practical interventions in the form of piloting each of the three commodities in each project areas.

The following three livestock value chains were prioritized and selected as feasible options for LRO project woredas: 1) Sheep and goat rearing and fattening 2) Small-scale cattle fattening 3) Poultry production

These small-scale business ventures generate income mainly to supplement the livelihoods of PSNP families. The gross profit accrued from all the selected livestock value chain activities was found to be positive, with a minimum financial profitability even when taking into account the opportunity cost of considering own labor, interest rates and depreciation. Thus, the economic benefit to the participants was encouraging for involvement of both women and youth. If the family considered their labor as a self‑employed person who earns their “wages” at the market price, the selected VC would generate an assertive profit, implying the sustainability of these interventions.

1. Sheep and Goat Rearing and Fattening

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• Sheep and goat fattening is not a new business in the Rift Valley, where large number of households in rural areas are engaged in traditional sheep and goat rearing. It is most important and easily adaptable and implemented by women and youth groups in the project sites. Goat rearing and fattening was prioritized and selected, with the highest rank across all the rural kebeles in the project woredas. This business is women- and youth-friendly, and more feasible and sustainable if it is started on a small scale with a capacity of 5 to 10 sheep and goats at a time (per cycle) twice a year.

• Regarding profitability and marketing, the aim is to fatten the animals by targeting a season with peak market prices and high consumer demand. High-income groups demand fattened ram and bucks, during public holidays such as New Year, Meskel, Christmas, Easter and Muslim holidays. The envisaged fattening farm will have a capacity of 10 heads of sheep or goats per batch and the objective is to fatten two batches per year with a 3-month feeding period per batch, making the annual capacity of the business 20 sheep and goats.

• In this small-scale fattening scheme, a household would fatten 20 small stock per year, with the total investment cost and expenditure of approximately 49,225 birr (Tables 10 and 11 below), while the gross revenue accrued would be about 60,000 birr, given a net profit of 10,775. The net profit gain would increase to 23,800 birr per year if we consider the cost of families’ own labor of 9,125 birr, interest of 2,700 birr and depreciation of 1,200 birr, which slims down the net margin.

2. Small-scale cattle fattening • Small-scale cattle fattening was prioritized and selected as the second most important business intervention across all the rural kebeles in the project woredas. The establishment of small-scale cattle fattening businesses by PSNP households (women and youth) is assumed to be started with a capacity of two oxen per cycle at three times per year. The size of cattle fattening business should increase in the second and third years to generate more profit through economies of scale. • Other important factors in the fattening business are targeting customer demand and peak market prices. Customers of high-income groups demand fattened oxen around public holidays such as New Year, Meskel, Christmas, Easter and Muslim holidays. The process of fattening begins with the construction of a shelter with feed and water, and the purchase of the animals. • The total investment and operating expenses required for establishing a farm with a capacity to fatten two oxen per cycle and six oxen per year is estimated to be 107,103 birr, while the gross margin accrued is about 120,000 birr, for a net profit of 12,897 birr. The net profit would increase to 30,360 birr per year if we consider the costs of labour at self-employed wages, interest rates and depreciation. Even with conservative profits, a small-scale cattle fatting is viable, showing optimum profitability and business stability with more than a 12 percent of cost-benefit ratio. 3. Poultry production • Poultry production remains the most important source of income and food for the community in the project areas, complementing household income accrued from the sale of crops and livestock production. A small-scale family poultry business would need innovative approaches using improved poultry breeds, and the initial flock size which could be 50 chickens /HH/year. For the initial flock, the household would need an investment of 38,125 birr, of which 6,500 birr is for investment in shelter and materials, while the remaining 31,625 birr is for operational costs for the first year. The credit amount and loan agreement are to be further discussed with MFI during the pilot intervention. The model business plan (Appendix A) describes the details of project appraisal and financial feasibility for a 3-year project.

• The investment capital would be 6,500 birr for shelter, 4,000 birr for pullet purchase, 1,200 for one quintal of feed (lasting two weeks), and 250 birr for vaccine and drugs. If the farm operates smoothly with the feed and watering etc., properly in place, the poultry farms would start to cover their feed expenses with egg sales after 2 weeks. As discussed above and indicated in Tables 14 to 16 below, revenue per annum was estimated at 49,275 birr. Likewise, the overall cost was found to be 44,501 birr. Thus, the gross profit was calculated at 9,724 birr, with a cost-benefit ratio of 22%. The major iv

source of gross revenue would be from egg sales of 49,275 birr and from the sales of culled hens 4,950 birr.

5. Recommendations

1. Small-Scale Beef/Cattle, and Sheep and Goat Fattening

Recommendation and Key areas of interventions in Beef and Sheep and Goats

Improve feed quality and feeding • Provide support to private feed dealers • Facilitate woreda-level commercial feed production businesses • Facilitate/support linkages between producers and input suppliers • Supply foundation fodder planting materials • Promote improved feeding system, facilitate access to alternative feed resources, and improve feed handling, bulking and storage. • Support village-level fodder planting material services • Explore means for private sector to get finance to run quality and standard feed businesses • Support privately run feed storage and quality improvement businesses • Introduce in-built feed quality control system • Support the promotion of village-based input supply business (of groups and/or privately operated) Improve the access to quality veterinary services • Provide logistical support (Provide support to public vet system • Lobby public office to give more support to private drug vender business and service providers Improve extension services • Introduce forage development programs • Facilitate improved livestock production system • Introduce initiatives to build capacity of public extension system • Support FTC to improve documentation and learning by deploying ICT at FTC level • Promote vigorously market-oriented extension approaches • Introduce short-cycle and demand-driven livestock production Improve market participation • Facilitate market group formation and Support existing YMGs/WMGs • Facilitate market linkages and Provide market information • Establish multi-stakeholder marketing platforms • Facilitate relevant training (entrepreneurial, negotiation, conflict management, business strategy, bookkeeping, procurement and material management, leadership, cooperative management, branding, etc.) • Support product diversification and market segmentation • Facilitate linkages with export abattoirs • Facilitate product promotion programs • Facilitate concrete networking among all actors and development facilitators • Support the developments of marketing infrastructure • Support and promote the introduction of weight-based sales of live animals (at least sheep and goats) • Facilitate the introduction of out-grower schemes (particularly for sheep and goats) Improve access to financial sources • Introduce flexible and actionable modalities • Introduce seed/start-up funding system • Promote lobbying v

• Organize the WMG and YMG to seek for alternative finical support with low concession interest rate and relatively longer maturity period. • Create incentive system to top loan payers • Enter collateral system Introduce certification • Introduce quality production • Get engagement agreement with relevant regional regulatory body • Create linkages with niche markets • Facilitate recognition as reward • Facilitate market bargaining to earn rewarding price Integrate fattening or livestock production to NRM • Integrate activities for watershed management and supply fodder planting materials to those groups who engaged in cattle and small stock fattening • Introduce incentive system and give recognition or rewards for successful and environmental friendly production system, • Support FTC, Arrange experience-sharing visits and documented /distribute best practices • Facilitate the promotion of NRM with LVC and beekeeping

2. Poultry Production Intervention

Recommendation and Key areas of interventions in Poultry Value Chain

Improve access to input supply • Facilitate linkages to input suppliers • Support community-based input supply services • Build capacity of input suppliers • Allocate fund to support the expansion of input supply system • Support private drug vendor shops to promote expansion of drug distribution • Deploy strong follow up and inspection system Improve production and productivity • Introduce various appropriate technologies for poultry production • Facilitate and support actors to enter downstream poultry value chain business • Facilitate and organize skill and capacity enhancing training on poultry production for all groups • Facilitate regular follow up and inspection support on production process • Improve management of local breeds, day–old chick production, pullet-based producers, meat breed producers, hybrid producers. • Build capacity of producers to formulate alternative additional feed supplement • Deploy strong disease control and management system • Train women poultry health managers via para-vet training and support system • Create awareness among producers to generate income from poultry litter sale and/or own use for SR/LR production Improve market participation of WMG and YMG • Facilitate entrepreneurial trainings and create market linkages for producers • Support various capacity-building initiatives, facilitate skills that promote collective marketing • Support traceable quality production and facilitate local demand creation • Market promotion: support horizontal integration with other WMG and YMG • Support local level youth/women market intermediaries

• Introduce modern and affordable egg and chicken carriage or way of moving • Provide market information on poultry business to WMG and YMG on regularly Improve access to financial services • Facilitate financial source availability to women and youth in business • Provide finical support with low concession interest rate and relatively longer maturity period. Promote local consumption • Awareness creation and facilitate various nutritional training, introduce improved stoves, facilitate experience-sharing, support school projects. • Create awareness through posters, nutrition days, nutrition clubs, drama clubs, school-parent nutrition activities, mini media, competitions and rewards Improve BDS • Support BDS through training, logistics, experience-sharing, documentation and provide demonstration materials to FTC, facilitate woreda-based nutrition day, provide electricity access

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1. Introduction

1.1 Background

The goal of this assessment report is to produce a livestock value chain/market systems analysis for Feed the Future Ethiopia Livelihoods for Resilience – Oromia that will enable sustained food security for PSNP beneficiaries through market-oriented livestock development. The activity is trying to meet its goals through four strategic pathways:

• Increased income and diversification through on-farm opportunities • Increased income and diversification of off-farm livelihood options • Increased income from gainful employment • Increased innovation, scaling, and sustainability of livelihood pathways

The main purpose of the livestock value chain/market systems analysis is to provide a road map to implementation of the livestock value chains/market systems development in target areas of Oromia region. A livestock and livestock products upgrading strategy tailored to the needs of a large segment of the population (i.e. women, men and youth) for creation of employment as well as increased income will contribute to alleviation/reduction of poverty and ensure sustainable incomes for the aforementioned beneficiaries.

This report outlines the methodologies used to collect data, as well as how the consultants approached various actors (smallholders, government, NGOs, market actors and development partners etc.,) on selection and prioritization of livestock commodities. The assessment also identifies three major livestock commodities for intervention, namely large ruminants or beef, small ruminants and poultry, with opportunities and key intervention areas to be considered to achieve the key objectives of Livelihoods for Resilience-Oromia activity, which intends to contribute to sustainable development for women, youth and men in project woredas

Finally, the livestock value chain/market systems analysis report identified those livestock commodities suitable for future interventions, mapped out the linkages to value chain actors and supporters, analyzed the effectiveness and functionality of actors and support systems, listed constraints and opportunities, and recommended future strategic intervention areas for identified livestock value chains. This assessment is organized in to seven sections. Section I includes the introduction and objectives, Section II the methodology and approaches used in the assessment, Section III the findings and results discussion, Section IV the livestock value chain constraints, opportunities and critical success factors, Section V the livestock value chain development and upgrading strategies, Section VI the conclusion and Section VII the recommendations.

1.2 Brief Profile of the Study Woredas

Livelihoods of Resilience Oromia (LRO) is implemented in nine woredas from three zones of East Shoa, West Arsi and Arsi) in Oromia regional state. The target woredas are Adami Tullu Jido Kombolcha (ATJK), Boset, Arsi Negele, Shala, Heben Arsi, Siraro, Ziway Dugda, Dodota and Sire.

To promote the achievement of the key objectives of the LRO which intends to contribute to the inclusive sustainable development of women, youth and men in project woredas, CRS commissioned this livestock value chain/market system analysis in all its intervention woredas. 1.3 Objectives

The general objective of the livestock value chain/market systems analysis is to provide the LRO with a road map to guide implementation of the livestock value chains/market systems development in target areas of Oromia region. The livestock value chain development and upgrading strategy will enable livelihood groups, youth livelihood groups, and income- generating activity groups to play a leading role in inclusive, competitive and resilient livestock value chain development (gender- and youth- sensitive as well as nutrient-rich value chains).

LRO project activities include capacity building, facilitation of business and financial linkages, increased service efficiency of support institutions and increased market linkages between value chain actors and service providers. Figure 1 Geographic Location of LRO Project Woredas

1.4 Scope and major tasks of the assessment

1. Update the GRAD project livestock value chain study for ATJK, Shala, Ziway Dugda, Heben Arsi and Arsi Negele woredas. After reviewing the livestock value chain study for the GRAD project, necessary updating, revision and compilation will be made, supported by the existing relevant information, but if the suggestion and data in the GRAD are found to be no longer

reflecting the existing reality and situations, new available and relevant/prioritized livestock and/or livestock products will be considered for livestock value chain/market systems. 2. Identify potential livestock value chains suitable for project beneficiaries (especially women and youth). 3. Map out the flow of demand and supply of livestock products, which should include live animals, meat, milk products, hides, skins and any other products. 4. Assess the availability and effectiveness of inputs and support services such as appropriate feed, animal health extension services, finance, transport, etc. 5. Collect and analyze relevant primary and secondary data on identified livestock value chains that will include opportunities and challenges, quantities, revenues, prices, as well as key market actors, stakeholders and support institutions. 6. Provide a detailed analysis of market opportunities for various livestock products in the national and regional markets, including linkages with local and external markets, main competitors, barriers to competitiveness, quality management and marketing associations, etc. 7. Identify and analyse value-addition opportunities in the selected livestock value chains as well as constraints/bottlenecks and potential opportunities to engage youth and women project clients. 8. Identify capacity gaps limiting the competitiveness of market actors, service providers and support services. 9. Analyse the political, economic, social, technological, legal and environmental issues at the national and Oromia regional levels, issues that can positively or negatively impact livestock value chain development and growth of the sector. 10. Recommend developing/upgrading strategies for the selected livestock value chains, outlining future strategic intervention areas to help the project engage more women and youth.

1.5 Limitations of the Study

The study faces some limitations. Some of the issues encountered in the field include: • Lack of basic data and information related to livestock markets and prices at all levels. • Some of the value chain segments, such as brokers and traders, play dual purposes and thus are difficult to categorize. • The livestock value chain in Ethiopia is very complex and difficult to map particularly the destination markets, either domestic or export market. The same animal appears several times on the same market or in different market centers from primary to secondary market centers and then back and forth. Similarly, it is difficult to categorize traders (administratively or by volume of transactions) due to their high mobility and for their participation in different scope of trading).

2. Methodology and Approaches

2.1 Approaches and Tools of Data Collection

A qualitative data collection approach was used for this study. Qualitative data was collected using standardized and approved checklists, guides and questionnaires. Quantitative data, figures and numeric facts for the study kebeles, woredas, zones and regions were also gathered based on the secondary sources or document review. The participatory value chain and market systems analysis was carried out guided by the four steps CRS Value Chain Project Cycle. CRS value chain tools/value chain toolkit roadmap and CRS’ Pathway to Prosperity (P2P) model was also consulted to meet the specific objectives of the assessment. Rapid market appraisal and visual market observation were conducted to gain an insight into the livestock value chain/market systems in the envisaged study areas and to triangulate the information obtained by other means.

The value chain analysis was employed systematically to understand the markets, their relationships, the participation of different actors, and their critical constraints and opportunities, and the possible interventions. In this assessment, the consulting team tried to assess the livestock value chain/market systems from the perspective of empowerment (i.e. access to basic production inputs, credit, capacity building, market-related information, etc.), enabling environment (policies/strategies, technology/innovation, market infrastructure, etc.) and equity issues (market distortions, chain actors’ relationships, institutional/organization capacity, etc.).

2.1.1 Sampling and Selection of Study Areas

The project kebeles in the given woredas were purposively stratified/categorized based on livestock population and livestock products as major sources of livelihood, using the data available in the respective woredas. Then, after stratification, up to three kebeles were selected based on high and medium livestock population and the number of PSNP households. Almost all woredas in the Rift Valley are drought-prone, and recurrent drought is a common challenge in the area. In relation to livestock resources, cattle, sheep and goats are dominant. Considering the homogeneity of the livelihood, the number of PSNP kebeles and total PSNP population, including 10% of the project kebeles from each woreda may be sufficient for a representative study population. Accordingly, the following table presents the project woredas with the proposed number of kebeles for the study:

Similarly, major markets for livestock and livestock products were selected based on information and observation of the magnitude of trade (size and value), the number of actors, market infrastructure, and the volume of supply, the concentration of buyers and the intensity of linkages to other markets within the woreda and outside the woreda. In addition, the key informants, such as livestock traders, collectors and woreda-level livestock offices were consulted to identify markets for observation. Accordingly, selected livestock markets were observed from each woreda.

Table 1: Study sites and proposed number of respondents

Zone Project Number of Total PSNP Number of No of FGDs woredas PSNP kebeles population proposed kebeles (1 general and 1 for the study women) West Arsi Shala 31 30,829 3 6 Siraro 19 21,707 2 4 Heben Arsi 4 5,155 1 2 Arsi Negele 14 26,330 1 2 East Shoa ATJK 26 23,759 2 4 Boset 3 5,077 1 2 Arsi Sire 13 12,243 1 2 Dodota 12 11,441 1 2 Ziway Dugda 21 9,329 2 4 Total 9 143 145,870 14 28 Note: One sample kebele was taken from Heben Arsi and Boset woredas. Although the ratio is far below 0.5, it has been rounded up.

2.1.2 Field Work Process and Data Collection Tools

Livestock sector mapping was conducted for all selected potential value chains in respective woreda/kebele. Once the potential VC was identified by active participation of FGDs at each kebele, the selection of viable livestock VC or commodity for detailed chain/market analysis was done based on the CRS value chain prioritization tool or CRS value chain prioritization filter matrix. Commodities were identified by community members of the study kebeles and the top three selected. These selected commodities were triangulated and verified through consultation with relevant woreda level experts.

The CRS value chain prioritization filter matrix and value chain toolkit together with other tools and approaches were used to develop key informant interview checklists and focus group discussion tools for use to assess the livestock value chain/market systems. It aimed to include all relevant stakeholders (upstream and downstream actors) of the livestock value chain/market systems. The following describes the major data collection tools used with the number of respondents.

1. Focus Group Discussions Three focus group discussions were held in each study site/kebele. Each included 10 to 12 participants. The FGDs included all livelihood groups, youth groups and women groups. Thus, a maximum of 28 FGDs (at least two from each selected kebele) was carried out. This included one mixed group comprising all livelihood group members, youth and women, as well as one women’s group in each kebele. As a result, up to 250 respondents took part in discussions for this assignment at the producers’ level through FGDs in each kebele. In this process, care was taken that the FGD should address all livelihoods and social groups including women’s and youth groups, livelihood groups and men’s groups in each FGD session. Besides, to understand any particular situation of each group, mixed and/or independent discussion was held.

2. Key Informant Interviews In-depth interviews were carried out with key individuals and organizations (i.e. value chain actors, supporters, influencers, product organizations, relevant public and private institutions such as financial institutions; business development services, cooperatives/unions; agricultural offices; labor and social affairs offices; women, youth and children affairs; small and micro enterprises development offices;

other relevant nongovernmental organizations; private traders, processors and producers; and other relevant sources) using an approved semi-structured questionnaire.

We conducted key informant interviews at four layers of the administration structure: regional, zonal, woreda and kebele level. The relevant staff included subject matter specialists, development agents, and animal health services specialists at the woreda and kebele levels.

3. Desk Review of Relevant Documents The livestock value chain and marketing in Ethiopia has been the subject of extensive investigation. The consultant team conducted a thorough review of published and unpublished work, providing a starting point for their work e.g. Livestock Master Plan of Ethiopia (Shapiro et al., 2015), GTP II and government policies and strategies on livestock, such as live animal marketing proclamation No 819 (2014). Further, an analysis of international cases provided a context within which to understand the enabling factors in other economies for successful interventions e.g. livestock export from pastoralist areas: economic benefit and policy implication (Aklilu and Catley, 2010)

4. Market Observation

Market facilities, market support organizations and other sources of economic potential related to livestock and livestock products in the study areas were carefully observed using an observation checklist.

2.2 Methods of Data Processing and Analysis

Data analysis is a multi-stage process that occurs from the time of data collection to the compilation of the final report. Within each stage of analysis, the study team members performed analysis.

The data analysis involved discussing findings from focus group discussions, interviews and other participatory methods with a multi-disciplinary perspective to ascertain community demographics, context, status of input use and provision, etc. Apart from these, the participatory value chain/market systems analysis was carried out using CRS value chain tools. The assessment of livestock value chains / market systems followed four steps as guided by the CRS value chain box project cycle. The data analysis also used descriptive and triangulation systems. Collected information was organized and analyzed using standard techniques.

3. FINDINGS AND DISCUSSION

3.1. Overview of Livestock Sub-sector Dynamics

Ethiopia has a vast livestock population of about 59 million head of cattle, 60 million sheep and goats, 54 million chickens and 11 million equines (CSA, 2017) widely distributed across its different agro-

ecological zones. Livestock are largely owned by smallholder farmers as an integral part of the agricultural production system, and contribute to crop production in terms of draught power, and transportation of agricultural goods and commodities. Livestock also serve for both household consumption and cash income generation (Shapiro et al. 2015).

The contribution of livestock in Rift Valley is similar to that at the country level, but has the particular feature in rural livelihoods as being a key asset of food and financial security. Livestock are kept to allay food insecurity during June to August when there is shortage of food; and also used to cover expenses such as school fees and uniforms, medication, tax, and any other social activities expenditure including weddings, social celebrations, religious and cultural ceremonies, and memorial services.

Livestock production in Ethiopia predominates and is characterized by a traditional, subsistence, low- input-output system of production. In the past few decades, very few market-oriented livestock businesses were concentrated around urban areas like Adama, Shashamane, Arsi Negele and Batu, mainly focusing in dairy, poultry and beef fattening. Currently, due to the government’s strategy toward commercialization of the livestock sector and through interventions of livestock projects led by NGOs, livestock value chain development has started to receive the close attention of stakeholders.

The major livestock types kept in the study districts are cattle, sheep, goats and poultry. In terms of breed, all livestock owned by smallholders are indigenous types identified as Arsi type. The Arsi type cattle are characterized by small body size with low feed conversion efficiency compared to the local Boran cattle breed. This characteristic means Arsi cattle are unfavorable for feedlot operators and the least chosen for fattening. The low average daily gain (ADG) of Arsi type affects their competitiveness in the market; however, proper ration formulation using locally available feed ingredients can improve their economic viability.

Crop residue is the main feed source for livestock during the long dry season from December to June. Communal and private grazing land is the second feed source from July to end of November; mainly livestock graze on roadsides, hillsides and within public places like schools, mosques and churches. It was reported by FGD and KII participants that the size of grazing land is shrinking due to expansion of farm lands for cereal crop production. Improved fodder production is not common because of a shortage of land and the lack of improved forage seeds and planting materials. Concentrated feed supplementation is uncommon, but few farmers near major towns like Arsi Negele, Meki, Batu, Adjie, etc. supplement with atela, a brewery by-product of local liquor called areke.

Apart from the poor genetic potential of Arsi cattle and goats, the poor livestock feed condition has contributed to low production and reproduction performance of local animals. In addition, low performance of the livestock sector is attributed to a combination of various technical, institutional, cultural and policy-related factors. Also, drought induced by climate change has resulted in asset depletion of the majority of livestock producers. This situation has inflicted an irreversible impact on the livelihood of the poorest segment of the community. 3.2. An Update of the Livestock Resource Base for the GRAD Project

After reviewing the existing relevant information at the woreda level, the study team tried to update some of basic livestock resource data and the livestock value chain information for GRAD project woredas.

According to the survey, woreda livestock and fishery offices, some under the GRAD project, the current ruminant livestock (cattle, sheep and goats) population is 1,247,081. The largest proportion of cattle is in Sirarao woreda, for sheep Shala woreda and for goats Arsi Negele woreda. Heben Arsi has the lowest population for all classes of livestock due to lower household number. In all the study woredas, cattle were the most dominant in terms of population. The proportion of cattle among ruminants was about 52.8% in Arsi Negele to 74.5% in Shala. Goats are the second-largest livestock category in number: 30.5% in Arsi Negele, 21.9% in Heben Arsi and 18.5% in Siraro. Among all woredas, sheep had the largest proportion in Shala, accounting for 20.3% of the ruminant population. (See Table 2 for details). Table 2: Livestock population in LRO’s intervention woredas in West Arsi s/n Type of Name of woreda livestock Arsi Negele Hebaen Arsi Shala Siraro Total 1 Cattle 258,125 44051 223,767 264,110 790,053 2 Sheep 81,352 7967 61082 55670 206,071 3 Goats 148,621 14623 15342 72371 250,957 4 Camels 15 - 90 - 105 5 Equines 69,756 9515 23,243 54269 156,783 6 Poultry 104,756 23891 97,270 110202 336,119 Source: Woreda Agriculture Offices, 2017

Comparing the current livestock population with that of the GRAD project value chain analysis report (Pro Act Business and Development Enterprise, 2012) for the year 2010/11, it was found that the livestock population in 2016/17 increased in Arsi Negele and Shala for all categories, except for a decline in goats in Shala for unspecified reasons. The growing livestock population plays crucial role in income-generating activities and as a source of draught power for farm operation, as well as a promising sector for development intervention. However, the FGD participants mentioned the following constraints that hinder the potential of livestock holding per head of smallholder farmers:

• Shortage of feed due to shrinkage of communal grazing lands and recurrent drought. • Death due to inadequate animal health services and facilities, and subsequent disease outbreaks (particularly among sheep and goats) • Poor marketing and absence of linkage to major market centres, coupled with disproportionate terms of trade (TOT) incidence for increased off-take rate to purchase food for household consumption during peak cropping season (May-September) and at time of recurrent drought.

The woreda livestock experts said that although there was a declining trend in livestock holdings per household, there was a general increase in the livestock population for total households as the number of newly formed households per year increases.

Table 3: Trends in major livestock population in Shala and Arsi Negele (2010/11 and 2016/17)

Distric Cattle Sheep Goat t 2016/1 2010/1 % 2016/1 2010/1 % 2016/1 2010/ 1 %Declin 7 1 Decline 7 1 Decline 7 1 e Shala 223,76 198,32 /+12.8% 61,082 16,097 /+279.5 15,342 56,196 /- 72.7% Arsi 258,127 234,578 +10.0%Increas 81,352 64,239 +26.6%Incre% as 148,62 98,850 +50.5%Increase e e SNouregcelee: For 52016/17 data5 of respective woreda agriculture office and 2011 GRAD Project 1Value Chain Analysis, ProAct Business &Development Enterprise, 2012

Household ownership of livestock in the LRO woredas is better than the national average. According to CSA (2017), at the national level, the number of households who did not have cattle in the 2016/17 production season was about 22.7%. In current LRO intervention zones, the number of households without cattle was 17% in Arsi, 20% West Arsi and 28% in East Shoa. Except for East Shoa, the zones had more cattle ownership than the national average. Arsi had the highest herd size ownership, where 61% of the households had more than 2 cattle, compared to the national average of 48.5%of the households own more than 2 cattle.

According to the CSA (2017) report, at the national level, about 65.85 percent and 73.36 percent reported no sheep and no goats, respectively. Nationally, the percent of household with 1-4 sheep and goats in 2016/17 was 21 percent and 15.4 percent, respectively. In LRO project intervention zones, Arsi and West Arsi had better goat holdings than the national average (see Table 4 below).

According to CSA (2017), in the case of small ruminant ownership, the proportions of households with more than 4 head of sheep and goats were higher in the three zones 10.2 to 20.1 % for sheep and 7.0 to 13.5 % for goats, than the national average of 13% for sheep and 11% for goats. These figures justify the livestock resource endowment of LRO beneficiaries and validate the need to strengthen commercialization of livestock particularly goat production.

The sales of sheep are the highest in the three zones compared to the national average that ranges between 20-30% of the flock. East Shoa sales account for 35% of the total flock owned, 24% in Arsi and 23% in West Arsi. Goats sales ranged from 16% in West Arsi to 23% in Arsi. Cattle sales ranged from 9 to 11% of the total ownership (Table 5). The highest small ruminant sales were attributed to market-oriented small ruminant rearing to meet the immediate cash needs of owners. The lower sales rate for cattle was accredited to oxen power used for draught purposes and cattle being mainly sold for replacement when they were old, infertile and during drought. Poultry sales accounted for 26 to 28 % of a flock, mainly sold to meet the daily financial needs of a household to buy cooking oil, fuel, salt, sugar, etc. In general, farmers in the LRO project intervention zones are more experienced in commercialization of small ruminant and poultry for income generation to improve their livelihoods than the national livestock holders.

Table 4: Livestock population in LRO intervention zones LRO Livestock types and their respective population* Zones Cattle Sheep Goats Horses Donkeys Mules Camels Poultry

East 1,031,652 320,326 475,393 14,861 255,548 5,338 * 962,232 Shoa Arsi 2,455,313 1,371,246 696,053 225,664 356,047 22,936 * 1,877,288

West Arsi 1,026,637 171,945 325,768 27,335 2,147 126,203 266 407,341 Source: CSA 2017 Note: Population of West Arsi is only for sample woredas

Animal slaughter is geared to one of the LRO objectives for improving the nutritional status of project beneficiaries. From household stock, the highest slaughter is among chickens: 6.5 % in West Arsi to 23 % in Arsi. After chickens, the predominantly slaughtered animals were goats and sheep in the range of 2.6 to 6.3% of the stock. Less than 1% of cattle were slaughtered, since the carcass yield of cattle is a big stock for a household consumption. Milk and butter production are too small for consumption and marketing, but goat’s milk is often consumed by children in Siraro and Shala. It is also customary to drink boiled coffee mixed with goat’s milk during a coffee ceremony.

In the LRO activity zones, poultry contributes more to improving household nutrition in the form of meat and eggs than other livestock categories, but the highest mortality is recorded for chickens, in the range of 72 to 88% at the beginning of the flock. The major reasons for a high poultry mortality rate are disease outbreak and predators. Other livestock mortality is 12-19% for goats, 7.6-15% for sheep and 5-8% for cattle. Ruminants’ mortality is mainly caused by disease and malnutrition. The high livestock death rate indicates limited health services provided, the poor-quality drugs and vaccines available in the market, and weak drug and health service control. Therefore, it is important to build and strengthen animal health regulatory capacity and encourage the private sector for vaccination service and provision of quality veterinary drugs.

Livestock are given as gifts to relatives, friends, or community members for social and religious reasons. Traditionally, parents offer livestock to brides and grooms to help them establish their own stock and assets. In the CSA (2017) study, the proportion of livestock gifts to total holding was less than 1% for all categories of livestock.

Although its definitions vary, off-take is generally taken to represent the proportion of animals annually leaving the total herd/flock due to slaughter, sales or other transactions e.g. exchange, gifts, loans (MoARD, 2007). Deaths within a herd/flock, which are termed as mortality, are thus not included in off-take rates. Accordingly, the off-take rates for cattle in each zone of the LRO intervention zones calculated according to the recent CSA 2017 sample survey were found to range from 10 to 12%, with the regional average being 9.1%.

In the case of sheep, one third are removed from the flock, putting the off-take rate in the three zones at 32.0%, although there were significant differences between administrative zones: 26% for Western Arsi, 29% for Arsi and 41% for East Shoa. Likewise, the goat population of Arsi registered a higher off-take rate of 29%, while East Shoa was 27% and West Arsi, 19%. The off-take rate for poultry ranged from 33 to 51%. The high off-take rate in the LRO activity zone is an indicator of the market- oriented development potential of livestock and poultry in LRO intervention woredas. The details of livestock sales, slaughter, death and gifts are indicated in Table 5 below.

Table 5: Livestock sales, slaughter, death and gifts as percentage of total population, by zones in 2016/17

Project Zone Type of livestock Sales and other activities East Shoa Arsi West Arsi Cattle Sales 9.0 11.0 11.0 Slaughter (%) 0.9 0.7 Death (%) 5.0 5.0 8.0 Gifts (%) 0.7 0.7 0.2 Goats Sales 21.0 23.0 16.0 Slaughter (%) 5.9 5.9 3.3 Death (%) 12.0 19.0 12.0 Gifts (%) 0.3 1.0 - Sheep Sales 35.0 24.0 23.0 Slaughter (%) 6.3 3.9 2.6

Death (%) 15.0 7.6 12.0 Gifts (%) - 0.5 - Poultry Sales 26.0 28.0 26.0 Slaughter (%) 20.0 23.0 6.5 Death (%) 88.0 72.0 80.0 Source: CSA, 2016/17

3.3 Identification, Prioritization and Selection of Livestock VCs

Due consideration was given to identifying and examining the various socioeconomic and development issues for prioritization of potential livestock value chains in the study areas. Past community experience in production/husbandry, commodity development and marketing of livestock was considered and weighted for the livestock value chain. The study also gave due emphasis to the inclusion and feasibility of women and youths in the prioritization and selection of potential livestock VCs in each sample area. In addition, FGDs and opinions of the relevant woreda experts (key informants) were given weight in the prioritization process. CRS prioritization and feasibility criteria were utilized for prioritization of livestock value chains in LRO project intervention woredas.

According to the FGDs with the community, livestock and livestock products were important sources of food and income for the community, complementing crop-production activities, although large number were forced to search for alternative off-farm income-generating livelihood options.

Ranking and prioritization of potential livestock value chains started during FGDs in each sample kebele and were further verified during woreda-level KIIs with relevant experts in support institutions such as the livestock and fisheries development office, the co-operative promotion office and the trade and industry office. The weighted value of each chain was made up of the sum of scores given to each value chain criteria in consultation with woreda livestock and fisheries office and a focal person from MCS. Prior to scoring each entry, a thorough discussion was held, and common understanding was reached on the attributes of the criteria set for prioritization of the value chain.

In the process of identification and selection of principal women- or/and youth-friendly livestock VCs/enterprises, the community men, women and youth socioeconomic groups actively participated in kebele-level FGDs. Then the consultants and woreda-level experts tried to ascertain what the community believed to be the key VCs, based on their knowledge/experience and familiarity with the identified enterprises, in addition to criteria given in CRS VC prioritization tool/ filter matrix. Owing to these filter criteria; the communities involved in FGDs had extensive discussions to reach a consensus on selection of viable potential and inclusive livestock VCs.

As indicated in the following tables, the assessment team conducted various processes to identify potential livestock VC prioritization, and selection of viable VCs through a multi-stage screening process and steps, which involved:

Step 1: Established a list of livestock VCs (by FGD participants at the kebele level), based on availability and potential market options, with VC prioritization by setting score and rank (Table 7 for all woredas),

Table 6: Summary of list of potential livestock VCs identified and prioritized using prioritization matrix and criteria VALUE PRIORITIZATION CRITERIA CHAIN Nutrition Profit Climate Market Small- Youth Gender Employm Influence Food Upgrading Scalability SCORE RANK potential Smart / Demand holder Friendly Friendly ent Security potential Resilience friendly Shoat 3.0 5.0 4.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 4.0 5.0 56.0 Fattening/L 1 Shot trade Cattle 2.0 4.0 3.0 5.0 4.0 3.0 3.0 5.0 4.0 4.0 5.0 5.0 47.0 fattening 3 /Trade Poultry 4.0 4.0 4.0 4.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 4.0 55.0 2

Dairy (Milk 5.0 3.0 3.0 3.0 2.0 3.0 5.0 4.0 5.0 5.0 4.0 3.0 45.0 & products) 4 Bee keeping 2.0 2.0 3.0 2.0 3.0 3.0 3.0 4.0 3.0 4.0 3.0 35.0 5

Step 2: Verification or validation was done using the long list of VCs at the woreda level (by experts) and other stakeholders. Final selection and prioritization was made to determine up to three potential VCs for each woreda (the result is summarized in Tables 8 and 9 for all woredas). Table 7: Summary prioritized and selected livestock VCs for West Arsi woredas No Name of VC West Arsi Zone woredas* Weight (Sum of Score) Rank 1 Goat value chain and trading 56 1st 2 Poultry value chain 55 2nd

3 Cattle/beef value chain and live animal trade 47 3rd

Note: *West Arsi woredas are Arsi Negele, Heben Arsi, Shala and Siraro.

Accordingly, based on the given CRS criteria matrix, the factors in livestock production, community consultation (FGD), woreda-level meetings with relevant experts, and the consultants eliminated a

number of VCs from the list and come up with three preferred VCs ranked from 1 to 3 for each project woreda. The comparative advantage and competitiveness were assessed between each VC in each woreda. Hence, the client (CRS) and other implementing partners could make practical interventions in the form of pilot projects for each of the three commodities in each project area. Tables 8 and 9 are a summary of the final three livestock value chains that were prioritized and selected in all LRO project woredas of the three zones.

Table 8: Summary of prioritized and selected livestock VCs for East Shoa and Arsi woredas No Name of VC East Shoa and Arsi Zone woredas* Weight (sum of score) Rank 1 Goat value chain and trading 54 1st

2 Cattle/beef value chain and live animal trade 52 2nd 3 Poultry value chain 46 3rd Note: East Shoa and Arsi woredas: ATJK, Boset, Ziway Dugda, Dodota and Sire

The main reasons why sheep and goats were selected as the first priority commodity in all project woredas and kebeles were: 1) The feeding habits of small ruminants i.e. goats are browsers and highly selective feeders, enabling them to thrive even when feed resources scare, because they rely on bushes and shrubs; 2) The commodity requires a small initial investment; 3) Goat and sheep are restored more rapidly after drought or disaster because of their swift reproductive rates that quickly reestablish flock numbers; 4) The high off-take rate due their short breeding interval and high incidence of multiple births allows farmers/ producers a quick interval for selling part of their flock and generating cash income; and 5) They are easily managed by women and youth. Beekeeping was the least prioritized commodity because of the water shortage in the Rift Valley woredas, expanding pesticide spray and the diminishing bee forage due to vegetation clearing for agricultural activities and forest cutting for firewood.

3.4. Livestock Value Chain Mapping and Market Structures

The first step in the livestock value chain promotion is the identification of a livestock value chain to be promoted, followed by value chain analysis and the formulation of a chain-upgrading strategy per the prioritized and selected livestock value chains. Value chain mapping is the core of VC analysis. It serves both an analytical purpose and a communication purpose, as chain maps reduce the complexity of the economic reality with its diverse functions, multiple stakeholders, interdependencies and relationships to a comprehensible visual model. Chain maps can look quite different depending on their “scale” and the particular aspect of the chain structure they show (ValueLinks, 2013).

The market system analysis another basic approach used to identify and prioritize the commodity to be studied, the product flow channels, and various actors and supporters. It starts by understanding of structural characteristics such as market concentration, industry maturity, government participation, and barriers to entry. Essential market structure characteristics include the number and size distribution of the sellers and buyers, the type of product offered for sale, barriers to entry, and whether any asymmetry of information exists between buyers and sellers

The livestock marketing system in the study area is fairly similar to those in other parts of the country. Therefore, livestock markets function at three levels, consisting of primary, secondary, and terminal

20 markets. Live animals trade in the study area generally starts with the collection of animals from farm gates and village markets (i.e. primary or collection markets), moving on to secondary or regrouping markets (markets in fairly large towns), where animals are sorted into different classes based on condition, sex and age, and then on to terminal markets in the larger urban cities including Addis Ababa.

Primary Markets, identified as village-level markets, are found in almost all woredas of the LRO project. The figure shows the farm gate and surrounding villages are at the apex of the channel. Such markets are where primary producers sell small numbers of animals to small traders, other farmers (replacement animals), farmer-traders, and in some cases to local consumers. Thus, at the primary or collection markets, smallholder farmers have two options for selling their animals, namely; i) to the smaller livestock traders in such markets, and ii) directly to the larger secondary markets. The flow of animals to the collection and secondary markets is not strictly in one direction as farmers also buy animals for breeding, fattening and traction from these markets. Sheep and goats are the dominant animals marketed here. Such markets are not fenced, have no scales, and no feed and watering facilities. Purchasing is done through ‘eye ball’ negotiations.

Secondary Markets, on the other hand, (such as those found in most woreda capital towns, except Dhera town in Dodota, which is known to be secondary market) are larger markets that serve as the next or final destination for most animals traded in the abovementioned primary markets. Such secondary markets are made up mainly of traders and to some extent butchers, with larger volumes traded per week.

These markets are usually located in large towns such as Shashamane, Arsi Negele, Adama, Batu and Meki, and the type of animals are finished cattle, breeding and draught cattle stocks. Such markets serve the local consumers to some extent, but mainly feed the terminal markets. These markets also supply beef cattle to live animal exporters and meat processors. Other towns with large live animal markets such as Shala, Ajaie, Bulbula and Dhera, are also examples of secondary markets with relatively few facilities and little infrastructure. Small traders and market agents of large traders dominate these markets to supply beef cattle to live animal (cattle) exporters, and butcheries and hotels in cities and large towns. Dhera market is unique for its convergence of lowland cattle like the Boran breed coming from Bale, Borena and Guji zone. The cattle from Dhera market are purchased for large- scale fattening by feedlot operators and small fatteners.

Terminal Markets serve as the live animal trade centers of the region and are usually located in large urban centers, such as Adama, Hawassa, Shashamane and Addis Ababa. Medium- to large-scale traders and butchers dominate these markets. The average volume of cattle brought to these markets may exceed over 1,000 head per week.

The future market structure seems promising, as there are growing pull factors as new end market (export market) agents, such as meat processing plants like Alana and Verde Beef located in ATJK, have entered the business recently. As the study team learned from a factory visit, Alana has an installed capacity of 2,000 head/day for slaughter of cattle. It became operational 4 months ago, but has not begun to slaughter cattle. Another company, Verde Beef, has an installed capacity of 1,500-

2000 heads/day of cattle for slaughtering. This firm has already established linkages with various small and big traders around Bulbula area (in ATJK woreda).

Another potential market supply chain is the government allocation of huge funds to youth groups in rural areas and towns so that they can become engaged in livestock businesses (one of them is modern cattle-fattening), which is an important input for increased beef and quality hide production.

3.5 Value Chain and Market Systems Analyses of Selected Livestock Commodities

This section provides detailed value chain and marketing systems analyses of the selected livestock commodities in the nine LRO target woredas, in terms of their cost, revenue, gross profit and gross margin. For each of the selected livestock commodities, opportunities and challenges were identified, and upgrading and intervention strategies proposed. Because of the nature of the activities and common characteristics of the socioeconomic circumstances, the livestock value chains shared common opportunities and challenges, and hence similar strategic interventions were recommended.

3.5.1 Value Chain Analysis of Sheep and Goat Rearing and Fattening

Sheep and goat rearing and fattening is divided into two: traditional/subsistence and entrepreneurial/innovative. Still, the majority of sheep and goat rearing and fattening activities are under the traditional/subsistence system. Its feature is low input-output. Producers themselves (farmers and urban business operators) undertake the practice throughout the year. Whenever household cash demand arises, they are forced to sell and, as a result, they do not make the profits they anticipate. This is because the producers pursue production in a more or less arbitrary way. They are “price-takers” rather than “price-makers.” They use the extra money to pay various household and social dues, taxes and school fees. Traditional/subsistence operations are major features among the rural farming community. On the contrary, improved or commercial sheep and goat rearing and fattening activities are characterized by a high input-output system, and are market-oriented and more efficient in their operation. Business operators range from small urban operators, farmers in peri-urban and rural areas, and various market groups (YMG and WMG). In most cases, these business operators use local sheep and goats. The following paragraphs discuss the details of various components of small-scale sheep and goat rearing and fattening business.

1. Market Actors, Consumers and Market Channels a) Market Actors of Sheep and Goats Producers sell their sheep and goats to anyone who pays an acceptable price, and the buyers are mainly other farmers, fatteners in towns, YMG, WMG, rural and travelling collectors, market groups, traders, agents, hotels/restaurants/butcheries, and institutional and individual consumers. In most cases, the producers decide to sell their sheep and goats when they are in need of cash. The demand and supply of sheep and goats vary with seasons, and the incidence of natural and manmade disasters.

Traders: Sheep and goat producing smallholders sell their animals to collectors and local traders in the nearby markets. The traders buy the animals from primary or secondary markets, and assemble and transport them to terminal markets. Animals pass through a minimum of four traders’ hands before reaching the final market agent or processors. Based on their scale of operation, operating patterns in a given market and capital availability, traders can be village-level collectors to large traders and suppliers.

Village-level collectors: These groups of traders collect the sheep and goats from villages, and feed and water them for a short period then supply them to village markets at a profit. They are farmers themselves and engaged in livestock trading on a part-time basis. On-market traders: These are largely part-time traders living in towns. They usually buy sheep on market days and sell them on the same day to travelling traders at a small profit. District-level traders: These market agents usually operate in the primary livestock markets, buy up to 10-50 sheep and goats on a given market day using their own capital or large traders’ money, and have trade ties with affiliated large traders. These traders have detailed knowledge of the production system and related environs in cases where disputes arise with regard to transactions. They favour trade ties with the large traders for three reasons: (1) They make use of the large traders’ capital, which they take in advance without any bureaucratic arrangement and free of interest. (2) They benefit from swift transactions of animals. (3) They benefit from receiving prior market information from large traders that protects them from unforeseen bankruptcy and enables them to have confidence in their transactions. Thus, small traders benefit both in terms of forecasted market information and advance payments. Large traders: These market agents usually operate in the secondary and tertiary livestock markets. They mostly procure animals from small traders, from individuals with well-fed and fattened male (sometimes castrated) sheep and goats who have been conditioning them for domestic markets. In most cases, fattened male sheep and goats (mostly castrates) are supplied to butcheries, whereas smaller and intact male sheep and goats with weight (live weight) ranges of 13 to 28kg are supplied to export abattoirs. Youth market groups and women’s market groups: There are several youth market groups (YMG) and women’s market groups (WMG) that buy and supply sheep and goats to export abattoirs in Modjo and Bishoftu. These groups have been revitalized by government interest in and commitment to engaging them in innovative livestock value chain development (including sheep and goat value chains). For example, four specialized youth market groups in Boset woreda supply as many as 1,500 sheep and goats to Modjo export abattoirs on a weekly basis. Similarly, two to three women’s market groups in Sire and Dodota woredas have established linkages to the Modjo export abattoirs and have begun supplying about 100 to 120 sheep and goats per market group every week.

gap between buyers and sellers (producers) and arbitrate them in the way they like. The problem is very serious for buyers and sellers who do not have much experience of such markets. Therefore, brokers are considered as market barriers both by the buyers and sellers. Hotels and individual consumers: These are the final actors in the value chain. Hotels are supplied with carcasses by butchers as per their specific requirements, while individual consumers buy directly from any butcher shop that satisfies their needs. During certain holidays, groups of individual consumers come together and buy beef cattle to slaughter and share the meat.

Figure 2: Fattened sheep and goats as offered in markets.

b) Sheep and Goat Market Channels The distribution of marketing costs and margins can be shown by tracking some major marketing channels linking producers with end users. These identified channels represent the full range of available outlets through which sheep move from the different collection points in production areas to the terminal markets to meet end-user needs. There are four major market channels for sheep (Figure 3).

Figure 3: Small ruminants (sheep and goats) marketing channel

Channel 1: Producers Producers

Channel 2: Producers Collectors Hotel/restaurant Consumers

Channel 3: Producers Collectors/small Butchers/supermarkets Consumers traders

Channel 4: Small traders Export abattoirs Producers Consumers

Live animal exporter Abroad

Channel 1: Sheep and goats purchased by farmers for breeding purposes Sheep and goat producers buy replacement breeding stock and for fattening. Mostly they buy such animals from known sources such as a neighbour and/or traders on an appointment basis during the good season when feed is available. The origin of animals for breeding purposes should be known, and it should have a good physical appearance and good health. The important sellers and buyers for this channel are farmers. However, village collectors also collect animals of the required quality during the pre-season expecting a rise in demand for replacement stock during the buying season.

Channel 2: Sheep and goats purchased by hotels and individual consumers

Hotels in Adama, Shashamane, Arsi Negele, Hawassa, Batu and other district towns usually buy mature female sheep and goats. They prefer females to males because they perceive that females have better meat yield and fat cover. Hotels slaughter males rarely. They buy either from their nearby markets or from surrounding markets through collectors that hand over up to 10 to 15 animals on weekly basis. Collectors can get a profit margin of 50 to 100 birr per animal from such transactions.

Individual consumers (residents) buy animals for slaughter mainly during religious festivals such as Ethiopian New Year, Meskel,2 Christmas, Easter and Muslim festival days (Arefa). They prefer fattened mature male animal. Since such consumers pay better prices compared to buyers for export abattoirs and hotels, producers prefer selling to them. Fattened male animals that weigh about 35 to 50 kg can be sold for as much as 4,500 birr (around 100 birr/kg live weight) during the holidays and 3,500 to 4,000 birr (around 90 birr/ kg live weight) during normal times. Individual consumers buy mostly from producers, brokers, collectors, or small traders.

2 Ethiopian holiday on September 27 marking the finding of the true cross.

Channel 3: Sheep and goats transported to Addis Ababa and butchers, supermarkets and consumer markets in major towns

Small traders collect fattened mature male (mukit) and fattened sterile female (mesina) from the study districts and transport them to the Addis Ababa, Adama, Hawasa and Shashamane markets, especially for religious holidays.

In addition to individual consumers, these animals are sold to butchers and meat supermarkets. The butchers, hotels and supermarkets have permanent suppliers for live animal supply. Some hotels and restaurants in Hawassa, Shashamane, Adama and Addis Ababa specialized in goat meat selling only. Traders transporting goat to the final consumer markets to major towns have agents that retail animals in the market. The agents have the responsibility to feed these animals only for maintenance purposes until they are sold.

Channel 4: Sheep and goats slaughtered at export abattoirs and live exported

This channel is the largest consumer of young, uncastrated male sheep and goats with in a weight range of 22 to 30 kg. The export abattoir agents buy animals from the study area and transport them to abattoirs mainly located in Modjo town. Most of the abattoirs are working under their capacity due to a shortage of animals that meet their standard. They slaughter 1,000 to 2,000 sheep and goats every day and export chilled carcasses to the Gulf States, mainly Saudi Arabia and the United Arab Emirates. Sheep and goats from the study districts are purchased by the agents of large traders and handed over to the export abattoirs and live animal exporters through the large traders. Live animal exporters sometimes buy through their agents and small traders. The major challenge for this channel is getting the required number of animals to meet the export market demand and standard.

2. Input Suppliers

This segment of the sheep and goat value chain consists of the actors that provide the starting materials for the proper functioning of the subsequent sheep and goat value chain. The actors include: animal suppliers (farmers, pastoralists, agro-pastoralists, and a few research centres); feed manufacturers and suppliers (e.g. animal feed retailers, sugar factories, cereal grain mills, animal feed processing unions, cooperatives, private companies, cereal mills and oil extracting factories; veterinary drug providers (Ministry of Agriculture animal health clinics, private drug shops, National Veterinary Institute, etc.).

The smallholder producers are the major suppliers of genetic material for rearing and fattening. Adami Tulu research centre, NGOs and government agents distribute improved sheep and goat breeds for demonstration purposes, which do not have a significant effect on the overall sheep and goat value chain. Agro-input dealers located in large and small towns sell veterinary drugs, concentrated feed, and feed ingredients. Petty traders also sell animal feed as a side business. Illegal veterinary drug sellers have been reported on market days.

3. Value Chain Map of Sheep and Goat Fattening

The key actors in the sheep and goat value chain include input suppliers, producers, collectors, traders/brokers, transporters, agents for processors, processors themselves (both domestic and export), retailers and consumers (Figure 3).

In all visited woredas, the sheep and goats value chain was more or less similar, extended and accompanied by value addition at each stage. A brief description is given below of some of the value chain actors not discussed elsewhere in this document. These include:

Producers: The major producers of sheep and goats are smallholder farmers and agro-pastoralists.

Municipal slaughterhouse: Domestic slaughterhouses that are administered by the local municipalities provide formal slaughter services to butchers and the general public. The number of slaughterhouses and their capacity varies from town to town. It is illegal to slaughter outside these premises. However, except for butchers, the majority of the people use backyard slaughter especially for special occasions.

Export abattoirs: The export abattoirs involved in the processing component of the value chain are located in Ziway (Alana and Verde Beef), Modjo and Bishoftu towns. They buy mainly sheep and goats (and beef cattle) mostly at their factory gate and slaughter them for their domestic and export consumers based on the agreed price between these abattoirs and their consumers. Local markets for sheep and goats are supermarkets, hotels, universities and institutes found in Addis Ababa, Adama, Bishoftu, Hawasa and Shashamane.

Butchers and supermarkets: There are over 130 butchers in Adama, 11 in Modjo, 13 in Bishoftu, 12 in Dukem, and over 12 in Arsi Negele and Shashamane. There are two or three butcher shops in each woreda of the LRO project. Butcher shops sell on a retail basis but also serve meat on their premises as raw goat meat (kurt) as well as roasted products. Supermarkets mainly sell raw as well as processed beef and by-products directly to consumers for home consumption. Mutton retailing supermarkets are found only in the central sub-cities of Addis Ababa. Some procure animals by directly buying sheep and goats and agreeing a slaughter service with municipal abattoirs; others are supplied by their sheep and goat suppliers on prior agreement; still others source their products from export abattoirs (found in Bishoftu and Modjo towns). Supermarkets undertake further processing and packing activities at their premises. Since such processing and packing requires special competency, they also hire skilled persons (in processing and packing meat for retail outlets) and have them trained. For this reason, they have proper cold rooms, processing and packing facilities.

Figure 4: Value chain map of sheep and goat rearing and fattening

PROCESSING & DOMESTIC Consumer INPUT SHOATS AGGREGATION & VALUE & EXPORT SUPPLY TRANSPORT

PRODUCTION ADDITION MARKET

VC STAGES STAGES VC

Animals Feeding Wholesaling Slaughtering Logistics Vet. Care & Collection Cutting Retailing Bulking Medicines Management Packing Export Local

Feeds Medication Transporting International

FUNCTIONS

Butcheries

Local ACTORS Pastoralists Producers/ Whole sellers Domestic Agro pastoralists Fatteners Abattoirs & Farmers WMG Export market Sheep & Goats YMG’s/ Export

Abattoirs

MICRO LEVEL MICRO Transporters

MOT MOT MOT

MOAL Municipality Custom office

NGO’s

level Actors or Actors level MOI - Cooperative (COCDP) Associations

support providers support Brokers MOA Meso

EMDDI EMDDI

4. Initial Investment Cost

Sheep and goat rearing and fattening small businesses require significant financial resources to be more profitable and sustainable. The amount of initial or start–up capital depends on the number of animals and feeding magnitude per cycle. In these small-scale sheep- and goat-fattening schemes, a household would fatten 20 small stocks per year in appropriately two cycles of fattening. The total investment cost and total expenditure for 20 sheep and goats per annum at the HH level is approximately 49,225 birr (Tables 9 and 11).

Table 9: Investment cost of innovative small goat and sheep fattening No Investment item Unit Quantity Unit Total price cost A. Fixed investment 1. Shed construction No 1 3,000 3,000 2. Feeder trough No 1 1,000 1,000 3. Drinker No 1 1,000 1,000 4. Water butt or Barrel No 1 1,000 1,000 Subtotal 6,000 B. Working capital 1 For purchase of sheep and goats (two Head 20 1200 24,000 2 Feecyclde sfor) 20 sheep and goats 20 kg/day for KG 1,800 6 10,800 3 V90acc daiynse and treatment (lump sum: 60 birr/ Head 20 60 1200 head) Subtotal 36,000 Total initial investment cost 42,000

5. Revenue, Gross Profit and Gross Margin

A value chain incorporates productive transformation and value addition at each stage. At each stage, the product changes hands through chain actors, transactions are affected and costs incurred, and some form of value is created. Thus, value addition in the sheep and goat value chain (live sheep and goats, mutton, skin and manure) results from diverse transformational and marketing functions including production, collection/aggregation, transporting, processing, packaging, distribution and marketing. Thus, an example of gross profit for a sheep and goat value chain would be 10,775 birr (60,000 birr gross income minus 49,225 operating expenses) (Table 10 & 11).

Table 10: Total expenditure for 20 sheep and goat fattening per annum at HH level No Type of expenses and assumptions Base year 1 Cost of sheep and goats @ 1,200 birr/head 24,000.0

2 Feed (1 kg/head/day for 90 days @ 6 birr/kg) 10,800.0

3 Vaccines and treatment (lump sum– 60 birr/head) 1,200.0

4 Transport and other marketing expenses Birr10 per 2,00.00 5 Labourhead cost (1 person 25% of person day @ 100 9,125.0 6 birr/Inte rdayest (18%@ 365 of days) the in itial investment per year) 2,700.0 7 Depreciation (20% of fixed capital per year) 1,200.0 Total expenses 49,225.0

Table 11: Revenue, operating costs and net margins in the goats and sheep fattening with 20 animals/HH/year Description Base year (current status)(birr)

Gross Sales/Revenue (20 Sheep and goats*3,000) 60,000 Operating costs (Cost of Goods sold) 49,225 Gross profit = Sales income - operating expenses 10,775 Percentage of Margin = Gross Profit/Revenue x100 18%

6. Opportunities and Challenges

Opportunities

• Conducive policy environment and government actions: Government policy and finance to support the engagement of youth in the livestock VC, alongside the government’s consolidated efforts to eradicate some devastating diseases (small ruminants, particularly goats) like PPR, and the expansion and development of infrastructure, such as roads, rail, communication, water and electricity, and veterinary posts, etc. • Abundance of animal feed sources: Suitable and conducive agro-ecology; availability of wasted crop residue because of poor management; sugar cane factories nearby have huge industrial by- products and cane leftovers left unattended; Centrally located to agro-industrial belt, which produces immense by-product as animal feeds and the availability of huge unused vegetable postharvest wastes. • Genetic resources: Resource base with diverse sheep and goat types/breeds (Arsi-Bale and Afar).

Challenges

Despite the huge potential, there are a number of problems and constraints to sheep and goat value chain development, particularly from the smallholders’ perspective. These can be categorized as natural, institutional, technological and infrastructure related factors: • Natural and manmade: Drought incidence; disease outbreaks/LSD/; shrinkage of grazing lands; seasonal feed shortage; recent civil strife in the past three years has led to a loss of confidence in the business. • Institutional: Meat processing plants (in most cases that destined for export market) operate far below their installed capacity; poor livestock market governance; price distortions by market intermediaries mainly brokers; poor culture of collaboration among development actors with the market intermediaries; poor linkages with livestock marketing intermediaries. • Lack of infrastructure and support institutions: Limited financial access to women and youth; poor support (public) to mid-level livestock market intermediaries; idle infrastructure/collection centres; Illegal market intermediaries; poor livestock transportation facilities; some poorly organized livestock markets unsuitable for business; lack of access to market information. • Poor access to technology: Widespread wastage of crop residue; poor management of sheep and goats; poor level of technology use.

7. Upgrading and Intervention Strategies Upgrading strategies for livestock VCs/ market systems and key areas of intervention specific to women, men and youths

1. Process upgrading

▪ Increase production efficiency ▪ Adopt strict health management practice ▪ Pursue market-oriented production by practicing 3 to 4 months of fattening, and managing 3 to 4 cycles per annum ▪ Introduce feed technologies to reduce feed expenses ▪ Improve management practices to relieve environmental stress and natural resources depletion

Getting engaged in collective livestock marketing assists not only in reducing overhead costs, but also improves economies of scale, better linkages and bargaining power, contract payrolls, and more awareness of quality requirements, and is very strategic to building the capacity of both members and groups with regard to upgrading skills in negotiation, leadership, entrepreneurship, business management, long-term business vision development, market intelligence, collective marketing, saving, business diversification, tracking pertinent and timely market information, branding and promotion, and fostering all livestock-related technical know-how.

Generally, the process upgrading strategy heightens the position of the poor in the chain by making it more efficient (decreasing costs) and effective (increasing value).

2. Product upgrading

▪ Introduce a traceability (certification) system by undertaking due diligence on sheep and goats entering/leaving the flock ▪ Develop a new brand, such as “organic,” and enter plausible niche markets ▪ Organize joint sales promotion events periodically (all actors with other similar business affiliates)

3. Functional upgrading

▪ Forage seeds/seedling production and supply ▪ Grass splits/vegetative forage or fodder cuts production and supply ▪ Animal feed mix plant operation ▪ Animal feed shops at the village level ▪ Crop residue treatment silo or bunker and dispensary ▪ Forage feed chopper services ▪ Bulking animal feed such as hay/crop residue, forages/fodders in own storage and or on rental basis ▪ Animal shelter/collection centre rental services ▪ Pursue an out-grower scheme (sheep and goats for women’s and youth groups) with private companies and/or cooperatives ▪ Specialized animal transportation services (mainly for youth groups) ▪ Links with the financial institutions

4. Chain upgrading

▪ Establishment of multi-stakeholder platforms/forums ▪ Networking and alliance ▪ Fostering linkages with processing plants and exporters ▪ Entering joint business agreements such as written contractual agreements ▪ Introduce quality/grade-based purchasing system (introduce weighing scale for sheep and goats)

The findings and analysis of the assessment identified small-scale sheep and goat production and fattening as one of feasible intervention area to increase smallholders’ (particularly women’s and

31 youth’s) income and a way to out of the poverty cycle. The vision and the specific intervention areas are as follows:

• Improve feed quality and feeding: This could be achieved by providing technical skills training; supporting private feed dealers; facilitating woreda-level commercial feed production business; facilitating linkages between producers and input suppliers; supplying foundation fodder planting materials; promoting improved feeding systems; facilitating access to alternative feed resources; improving feed handling, bulking and storage; supporting village-level fodder planting material services; exploring means for private sectors to get finance to run quality and standard feed businesses; supporting private feed storage and quality-improvement businesses; introducing inbuilt feed quality control system; supporting the promotion of village-based input supply business (of groups and/or privately operated.) • Improve the access to quality veterinary services (both preventative and curative): Provide support to public vet system; provide logistical support; lobby public office to put more support into private drug business operators. • Improve extension service: Introduce forage development programs; facilitate improved livestock production system; introduce various technologies; introduce initiatives to build capacity of the public extension system; support ‘FTC’; improve documentation and learning by deploying ICT at FTC level; support field days/exchange visits; promote vigorously market oriented extension approaches; introduce short cycle and demand driven livestock production. • Improve market participation: Facilitate market group formation; support the existing YMG/WMG; facilitate market linkages; provide market information; establish multi-stakeholder marketing platforms; facilitate relevant training (entrepreneurial, negotiation, conflict management, business strategy, bookkeeping, procurement and material management, leadership, cooperative management, branding, etc.); support product diversification and market segmentation; facilitate linkages with export abattoirs; facilitate product promotion programs; facilitate concrete networking among all actors and development facilitators; support the development of marketing infrastructures; support and promote the introduction of weight-based sale of live animals (at least to sheep and goats); facilitate the introduction of out-grower schemes (particularly for sheep and goats). • Improve financial access: Introduce flexible and actionable modalities; introduce seed/start-up funding system; promote lobbying; organize experience-sharing tours; Off incentive system to top loan payers; enter collateral system. • Increase women/youth participation: Target more women/youth; introduce various capacity- building initiatives; facilitate the formation of women’s market groups; facilitate market linkages; support existing WMG; support existing YMG.

3.5.2. Value Chain and Market Analysis of Small-Scale Beef (Cattle fattening)

Beef (cattle fattening) business operation is divided into two: smallholder producers traditional fattening and small-scale fattening. The majority of rural cattle fattening business are traditional, with low input-output systems. The farmers themselves undertake the practice mainly in the aftermath of the main cultivation season, further conditioning or fattening animals for 2 to 4 months and selling them in local markets. They use the extra money to fulfill various household and social dues, taxes and

32 school fees. On the contrary, the beef (cattle fattening) business is characterized by a high input-output system that is market-oriented and more efficient in its operation. Business operators range from feedlot operators, innovative farmers in rural areas, various market groups (YMG and cooperatives/unions) to individual fatteners residing in towns. In most cases, these business operators use Boran cattle breeds (male, young and intact).

1. Market Actors and Consumers The major marketing actors that play important roles in the cattle fattening value chain are: producers (or farmers) themselves, traders, on-market traders, district-level traders, and large traders, brokers, youth market groups (YMG), individual fatteners, feedlot operators, butcheries, export firm agents, live cattle exporters and meat exporters, and consumers. Traders: Beef-producing smallholders sell their animals to collectors and local traders in nearby markets. The traders buy the animals from primary or secondary markets, then assemble and transport them to the terminal markets. In this process, the animals pass through a minimum of four traders’ hands before reaching the final market agent or processors. Based on their scale of operation, operating patterns in a given market and capital availability, traders can be village level collectors to large traders and suppliers. On-market traders: These are largely part-time traders living in towns. They usually buy beef cattle on market days and sell them on the same day to travelling traders for a small profit. District-level traders: These market agents usually operate in the primary livestock markets, buy 5 to 8 cattle on a given marketing day using their own capital or large traders’ money, and have trade ties with affiliated large traders. These traders have detailed knowledge of the production system and related environs in cases where disputes arise with regard to transactions. From KII it was learned that these traders favor trade ties with the large traders for three important reasons. (1) To make use of the large traders’ capital, which they take in advance without any bureaucratic arrangements and free of interest. (2) To benefit from swift transactions of animals. (3) To benefit from receiving prior market information from large traders that protects them from unforeseen bankruptcy and gives them confidence in their transactions. Thus, small traders benefit both in terms of forecasted market information and advance payments. Large traders: These market agents usually operate in the secondary and tertiary livestock markets. They mostly procure cattle from small traders, from individuals having well-fed (finisher) beef cattle, and from feedlots keeping animals for domestic markets. Most of them are suppliers to abattoirs and have their own buying agents in many livestock market centers. In most cases, they have their own animal-holding grounds to collect animals from small traders as well as to manage them for a few days at their destination markets. They also have the financial power to deal with their customers (butchers, hotels, supermarkets) on a credit basis. Thus, they are not unduly affected by a fall in demand for cattle in the market. Youth market groups and women’s market groups: There are several youth market groups (YMG) and women’s market groups (WMG) that buy and fatten beef cattle and supply them to various higher- level producers (feedlot operators), market intermediaries (large traders and butcheries), and institutional consumers (such as Adama Science and Technology University). They get high-level

support from government through small and medium enterprise (SME) offices both in the woredas and towns.

Brokers: These market agents serve as mediators between buyers and sellers in the livestock market. They are usually expected to link buyers with sellers and facilitate the terms of exchange. Traders at several markets basically have their own affiliated brokers who facilitate the transactions. The brokerage charge is currently 50 to 100 birr per head of cattle bought. Brokerage activities in major markets are usually abusive and buyers have to pay the minimum of 50 birr/head broker’s fee whether or not their transactions are mediated by a broker. In most cases, brokers intentionally create a communication gap between buyers and sellers (producers) and arbitrate in the way they like. The problem is very serious for buyers and sellers who do not have much experience of such markets. Therefore, brokers are considered market barriers both by the buyers and sellers. Hotels and individual consumers: These are the final actors in the value chain. Hotels are supplied with carcasses as per their specific requirements by butchers, while individual consumers buy directly from any butcher shop that satisfies their needs. During certain holidays, groups of individual consumers come together and buy beef cattle to slaughter and share the meat.

2. Beef Market or Trade Structures

Market structure is determined by the entry and exit decisions of individual producers. These decisions are driven by past profits and expectations of future profits which, in turn, depend on the nature of competition within the market. Essential market structure characteristics include the number and size of distribution of the sellers and buyers, the type of product offered for sale, barriers to entry, and whether any asymmetry of information exists between buyers and sellers.

Figure 5: Small-scale cattle fattening schemes, trekking and marketing in some of the LRO study woredas

The livestock marketing system in the study area is fairly similar to other parts of the country. Livestock markets function at three levels consisting of the primary, secondary and terminal markets. The live animal trade structure of the study area generally starts with the collection of animals from farm gates and village markets (i.e. primary or collection markets), moving on to secondary markets (usually markets in large towns), where animals are sorted into different classes based on condition, sex and age, and then on to terminal markets in the larger urban cities including Addis Ababa.

Primary markets, which have been identified as village-level markets, are found in almost all woredas of the LRO project. In such markets, primary producers sell small numbers of animals to small traders, other farmers (replacement animals), and farmer-traders and, in some cases, to local consumers. Thus,

34 at the primary or collection markets, smallholder farmers have two options for selling, namely i) to smaller livestock traders and ii) directly to the bigger secondary markets. The flow of animals to the collection and secondary markets is not strictly in one direction as farmers also buy animals for breeding, fattening and traction from these markets. Such markets are not fenced, have no scales, and no feeds and watering facilities. Purchasing is done through ‘eye ball’ negotiations.

Secondary markets, on the other hand (such as those found in most woreda capital towns, except Dhera town in Dodota woreda, known to be a secondary market), are bigger markets that serve as the next or final destination for most of the animals traded in the above mentioned primary markets. Such secondary markets are mainly traders and to some extent butcher-dominated markets, with larger volumes traded per week.

These markets are usually located in large towns such as Shashamane, Arsi Negele, Adama, Batu and Meki, and the type of animals are finished, breeding and draught cattle stocks. Such markets serve local consumers to some extent, but mainly feed the terminal markets. These markets also supply beef cattle to live animal exporters and meat processors. Other towns with large live animal markets such as Shala, Ajaie, Bulbula and Dhera can also be examples of secondary markets with relatively fewer facilities and less infrastructure. Small traders and market agents of large traders dominate these markets to supply beef cattle to live animal (cattle) exporters, butcheries and hotels in cities and large towns. Dhera market is unique for its market place for convergence of lowland cattle, such as the Boran breed from Bale, Borena and Guji zones. The cattle from Dhera market are purchased for fattening by feedlot operators and small fatteners.

Terminal markets serve as the live animal trade centers of the region and are usually located in large urban centers, such as Adama, Hawassa, Shashamane and Addis Ababa. Medium- to large-scale traders and butchers dominate these markets. The average number of cattle brought to these markets may exceed 1,000 head per week.

The future market structure seems promising as there is are growing pull factors as new end-market (export market) agents such as meat processing plants like Alana and Verde Beef in ADJK woreda entered the business quite recently. As the study team learned from factory visits, Alana has an installed capacity of 2,000 head per day for cattle slaughter. It became operational some 4 months ago but it has not begun slaughtering cattle. In addition Verde Beef has an installed capacity of 1,500 to 2,000 head per day for cattle slaughtering. This firm has already established linkages with various small and large traders around Bulbula (in ATJK woreda).

Another potential market supply chain is the government allocation of huge funds to youth groups in rural and towns to enable them to become in engaged in livestock businesses (one of them, modern cattle fattening), which is an important input for increased beef and quality hide production.

3. Market Channels for Beef Cattle

The analysis of beef cattle marketing channels provides knowledge of the flow of cattle from their production areas to final end users. Marketing of beef in the study areas starts with the collection of animals from production areas, moving on to the terminal markets. In such marketing chains, the

35 animal passes successively through a number of market actors, implying a series of links in the value chain before it reaches the end users. The main actors in the beef markets include producers, traders, butchers, supermarkets, individual consumers and live animal exporters. The number and type of market participants usually differs even among the final destination of the products. In order to depict the distribution of marketing costs and margins, some major marketing channels linking producers with end users have been identified and described. These channels represent the full range of available outlets through which the animals move from the different collection points in production areas and to the terminal markets to meet end-user needs. There are five major market channels for beef cattle produced in study area (Figure 6).

Channel 1: Beef cattle purchased for fattening and/or draught purposes by producers (farmers)

Farmers in the study area buy replacement stock (mainly draught oxen) and feeder beef cattle from district markets. They usually buy such animals after undertaking two important tasks: first, after harvesting their field crops and selling old stock, they go to buy replacement oxen because their financial position allows them to do so. Second, if they secure enough finance to buy additional oxen (or other productive cattle as part of asset building) for fattening and also have feed reserve to allow them to undertake fattening, then they buy these animals from the market. Nowadays, many farmers are undertaking such activities and fetch premium profits from this undertaking by supplying fattened beef cattle to the market all year round.

Channel 2: Cattle purchased by hotels, butchers and individual consumers in the study area

This channel consists of the flow of fattened cattle purchased by hotels, butchers and individual consumers. Towns like Adama, Shashamane and Hawassa have experienced a significant increase in population, number of hotels and trading activities and a significant number of fattened animals are slaughtered every day. Individual consumers (i.e. residents) buy and slaughter animals mainly during religious festivals such as Arefa, New Year, Easter, Meskel and Christmas. Festival consumers buy fattened cattle and slaughter them around their residence to share among group members.

Channel 3: Beef cattle purchased for fattening purposes by feedlot operators

Large feed lot operators buy beef cattle for fattening from Dera market. These animals come from the lowland areas of Bale and Borena zones. Traders of this livestock trek animals for over 2 weeks without any feed supplementation. The animals graze and water whatever they can en route. Upon arrival at the market, their body condition has deteriorated and they fetch low premium prices. Most of the cattle are Boran types with a few mixes of Arsi cattle. An average trader owns 50 to 100 head and the price is negotiated based on a group of cattle owned by each trader. Animals are not sold on an individual or weight base. The transaction can be in cash or on credit depending upon the relationship between trader and feedlot operator. The main target of these feedlot operators is the export market, focusing on lean meat production, but for the local market they produce over-fattened beef cattle with thick subcutaneous fat.

Channel 4: Beef cattle purchased by youth market groups for fattening

The Youth Market Group small scale fattening operators buy beef cattle for fattening from the surrounding local markets within the particular woredas. The Youths trek animals for not more than 2

36 days from the supply markets. These groups can able to fatten an average of 6 to 10 head of cattle by each group. The main target of these feedlot operators is either the local market or to export abattoirs and export market, focusing on lean meat production. On the other hand, if animals are over-fattened the youth group supplied to local market for butteries.

Channel 5: Beef cattle transported from study district to Modjo, Ziway, Bishoftu, Dukem and Addis Ababa markets

This channel consists of the flow of fattened beef cattle to these towns year round from Adama, Batu, Arsi Negele, Meki and Dera. These towns, including Addis Ababa city, are the major consumer markets of the country for fattened beef cattle. Traders collect animals from district market centers throughout the year and supply these towns. The majority of fattened cattle that are slaughtered year round in these towns come from the Adama livestock market.

Figure 6: Cattle (beef) marketing channels in nine LRO study woredas

4. Input Suppliers

This segment of the beef value chain consists of actors that provide the starting materials for the proper functioning of the subsequent beef value chain. The actors include animal suppliers (farmers, pastoralists, agro-pastoralists, dairy producers and a few research centers); feed manufacturers and suppliers (e.g. animal feed retailers, sugar factories, Asela malt factory, animal feed processing unions, co-operatives, private companies, cereal mills and oil extracting factories, and some meat-exporting factories that produce protein supplements); and veterinary drug providers (Ministry of Agriculture animal health clinics, private drug shops, National Veterinary Institute, etc.)

The smallholder producers are the major suppliers of genetic material for the fattening of cattle. Adami Tulu research center, NGOs and government agents distribute improved cattle breeds for demonstration purposes, which doesn’t have a significant effect on overall beef value chain. Agro- input dealers located in large and small towns sell veterinary drugs, concentrated feed and feed ingredients. Small petty traders also sell animal feed as a side business. The presence of illegal veterinary drug sellers on market days has been reported.

Figure 7: Feed (forage) and feed transportation for cattle in fattening schemes in some of the LRO study woredas

5. Value Chain Map of Small Scale Beef Fattening The key functional actors in the beef value chain include input suppliers, producers, collectors, traders/brokers, transporters, feedlot operators, agents for live animal exporters and processors, live animal exporters, processors (both domestic and export), retailers and consumers.

In all visited woredas the beef value chain is more or less similar, extended and accompanied with value addition at each stage. A brief description is given below of some of the value chain actors not discussed elsewhere in this document. These include:

Producers: The major producers of livestock are smallholder farmers and agro-pastoralists. The smallholder producers in the Adama and Boset area are the major suppliers of beef cattle for domestic consumption for the towns along the Adama-Modjo-Addis Ababa road. The smallholder feedlots of Adama and Dhera supply fattened beef cattle to the terminal markets of Addis Ababa year round. The producers in these areas have a strong tradition in which 1 or 2 head of beef cattle are tethered and managed by stall feeding. In West Arsi zone, the experience of tethering and stall feeding is not common, and cattle are sold directly to market without any value addition.

There are specialized feedlot operators around Adama and Dhera with a capacity to finish 200 to 1,500 head of cattle mainly targeting the export market. There are also small and medium enterprise feedlot operators with a capacity of 2 to 10 head, targeting butchers.

Large-scale sheep and goat fattening in a feedlot is not common but practiced by SME, with on average 2 to10 head in urban and rural areas around Meki, Batu, Arsi Negele, Shashamane and Adama, with feed supplementation of concentrated feed and residual atela from local breweries.

Municipal slaughterhouse: Domestic slaughterhouses that are administered by the local municipalities provide formal slaughter services to butchers and the general public. The number of slaughterhouses and their capacity varies from town to town. It is illegal to slaughter outside these premises. However, except the butchers, the majority of the people use backyard slaughter especially for special occasions.

Export abattoirs: The export abattoirs involved in the processing component of the value chain are located in Modjo and Bishoftu towns. They buy mainly beef cattle at their factory gate and slaughter them for their domestic and export consumers based on the agreed price between these abattoirs and their consumer. Local markets for beef are supermarkets, hotels, universities and institutes in Addis Ababa, Adama, Bishoftu, Hawasa and Shashamane.

Butchers and supermarkets (mini-markets): There are over 130 butchers in Adama, 11 in Modjo, 13 in Bishoftu, 12 in Dukem, over 12 in Arsi Negele and Shashamane. There are two or three butcher shops in each woreda of the LRO project. Butcher shops sell on a retail basis, but also serve meat on their premises as raw meat (kurt) as well as roasted products. Supermarkets mainly sell raw as well as processed beef and by-products directly to consumers for home consumption. Beef retailing supermarkets are found only in the central sub-cities of Addis Ababa. Some procure animals by directly buying cattle and agreeing a slaughter service with municipal abattoirs; others are supplied by their beef suppliers on prior agreement; still others source their products from export abattoirs (in Bishoftu and Modjo towns). Supermarkets undertake further processing and packing activities at their premises. Since such processing and packing requires special competency, they hire skilled persons (in processing and packing meat for retail outlets) and have them trained. For this reason, they have proper cold rooms, processing and packing facilities. Figure 8 indicates the typical value chain map with core stages, functions and actors in the smallholder cattle fattening value chain and live animal trade in LRO project woredas.

6. Investment and Initial Cost

Initiating a cattle fattening business is resource intensive and expensive for poor community segments, particularly women and youth. The amount of start-up capital depends on the magnitude and scale of the fattening business and whether one begins from scratch. In small-scale modern cattle-fattening schemes, where a household fattens six oxen per year, the minimum investment and operating cost is approximately 107,103 birr per year (Table12 and 13).

Figure 8: Typical VC map with core stages, functions and actors in cattle-fattening and live animal

trade, inFigure LRO- 2 woredas : Beef (cattle fattening), Sheep & Goats Value Chain Core Stages, Actors and BDS Supporters in ZD/ATJK woredas

AGGREGATIO PROCESSIN DOMESTIC INPUT LIVESTOCK N & G & VALUE & EXPORT SUPPLY PRODUCTION

TRANSPORT ADDITION MARKET

VC Stages Stages VC

Consumption

Animals Feeding Slaughtering Logistics Vet. Care & Cutting Retailing Local & Medicines Management Wholesaling Packing Export International Feeds Medication

Functions Butcheries

Producers/ Farmers/ Whole Cattle Local Agro pastoralists Fatteners Domestic Youth Sellers of Shoats & Abattoirs Export market

Actors Small traders Local Feed Local Cattle or Shoat Linked with Verde

Micro Micro Level Export Supplier Collection Centers Beef began supplying (women & youth Abattoirs groups)

Verde Beef

ers ers ALANA PLC Quarantine Quarantine

level level - Centers Centres Brokers

upport NGO’s

Meso MSE & MFI S Transporters

Cooperative (COCDP) Municipality EMDDI Custom office ers ers

level level

MOI MOAL Agricultural Research Centers

Support Macro Macro MOT MOAL

Table 12: Investment capital required for establishment of a small-scale cattle-fattening farm No Investment item Unit Quantity Unit Total

A. Fixed investment price cost 1. Shed construction No 1 3,000 3,000 2. Feeder trough No 1 1,000 1,000 3. Drinker No 1 1,000 1,000 4. Water Tanker No 1 2,000 2,000 Sub total 7,000 B. Working capital 1 For purchase of oxen (one cycle) Head 2 12,000 24,000 2 Feed for 2 oxen (4 kg @ 90 days kg 720 8 5,760 3 Vaccine and treatment (lump sum: 60 Head 2 60 120 Subirrb ptoert alhe ad) 29,880 Sub-total for 6 animals 89,640 Total initial investment cost/year 96,640 (A+B)

Annual Operating Expenses

Table 13: Annual operating expenses and other assumptions No Type of expenses and assumptions Total cost in birr / year 1 1 Cost of oxen@ 12,000 birr/ head (6 oxen in first year) 72,000 2 Feed (4 kg/head/day for 90 days @ 8 birr per kg 17,280

3 Vaccine and treatment (lump sum: 60 birr/ head) 360 4 Transport and other marketing expenses 50 birr/ head 300 Subtotal 89,640 6 Labor cost (1 person 25% of person day @ 100 birr/day@365 9,125 days) 7 Interest (18% of initial investment per year) 6,638 8 Depreciation (20% of the fixed capital per year) 1,400

Total expenses or Costs of production 107,103

7. Revenue, Gross Profit and Gross Margin

A value chain incorporates productive transformation and value addition at each stage of the value chain. At each stage of the value chain, the product changes hands through chain actors, transaction is

41 effected and costs incurred, and some form of value is created. Same holds true to beef value chains as well. Thus, value addition in the beef value chain (live animal, beef, and hide and manure) result from diverse transformational and marketing functions including production, collection /aggregation, and transporting, processing, packaging, distribution and marketing. Thus, an exemplary beef value chain revenue, gross profit and gross margin illustrated above (Table 14).

Table-14: Revenues, operating costs and net margins in the fattening of 4 oxen/hh/yr Description Base year (current status)(birr) Gross Revenue or Sales income (6 oxen each by 20,000)/year 120,000

Total Costs or Operating expenses 89,640 Gross profit (sales income - operating expenses) 30,360

Percentage of Margin = Gross Profit/Revenue x100 =30,360/120,000 = 25%

8. Opportunities and challenges

Opportunities

• Access to market: Close to cities and industries; near major export market outlets/Middle East; rapidly growing export and domestic markets; availability of processing plants with unmet demand operating at far less than their installed capacities; well-established business linkages with the famous input animal supplying areas like Borena, Guji and Bale area pastoralists and agro- pastoralists. • Conducive policy environment and government actions: The government’s conducive policy and financing to enable youth participation in the livestock industry, alongside its consolidated efforts to eradicate some devastating livestock diseases (for cattle and small ruminants particularly beef and goats) like Foot and Mouth Disease (FMD), CBPP and CCPP and other internationally banned livestock disease and the expansion and development of infrastructures /road, communication, rail, water, electric, veterinary posts, etc. • Abundance of animal feed sources: Suitable and conducive agro-ecology; availability of wasted crop residue because of poor management; sugar cane factories nearby with huge industrial by- products and cane leftovers; centrally located to agro-industrial belt, which produces immense by- products as animal feeds and the availability of huge vegetable postharvest wastes in the territory. • Genetic resources: Resource base with diverse animal types (Arsi and Kereyu cattle breeds) and species in nearby areas-Borena.

Challenges

Despite the huge potential, there are a number of problems and constraints that have a negative impact on l i v e s t o c k resource development particularly from the smallholder’s perspective. These can be categorized as natural, institutional, technological and infrastructure related factors:

• Natural and human-made: Drought incidence; disease outbreaks / FMD, CBPP; shrinkage of grazing lands; seasonal feed and water shortages; recent civil strife in the past 3 years caused several commercial livestock enterprises to go out of business. • Institutional: Meat processing plants operate far below their installed capacity; poor livestock market governance; price distortion by market intermediaries, mainly brokers; poor culture of collaboration among development actors and with market intermediaries. • Lack of infrastructure and support institutions: Limited financial access to women and youth; poor support (public) for mid-level livestock market intermediaries; Idle infrastructure/collection centers; illegally operating market intermediaries; poor livestock transportation facilities; some livestock markets are poorly organized and unsuitable for business; and a lack of access to market information. • Poor access to technology: Widespread wastage of crop residue; poor management of livestock; poor breading and genetic improvement and poor level of technology use in feeding and ration formulation as well.

9. Upgrading Strategies

Upgrading strategies for beef VCs/market systems and key areas of intervention specific to women, and youths

1. Process upgrading

▪ Increase beef production efficiency by adapting improved feeding and husbandry practice, ▪ Adopt strict health management practices through using endo-parasite and exo- parasite treatment and use of Deeping bath, vaccination and basic treatment. ▪ Pursue market-oriented beef production targeted to the sale of high demand season by practicing 3 to 4 months duration of fattening, and managing 2 to 3 cycles per annum ▪ Introduce feed technologies to reduce feed expenses and enhance expected daily live weight gain of the beef cattle, ▪ Improve management practices to relieve environmental stresses and natural resources depletion

Getting engaged in collective livestock marketing assists not only in the reduction of overheads, but also improves economies of scale, linkages and bargaining power, contract payroll, and awareness of quality requirements. It builds the capacity of both members and the groups with regard to upgrading skills in negotiation, leadership, entrepreneurship, business management, long-term business vision development, market intelligence, collective marketing, saving, business diversification, tracking timely pertinent market information, branding and promotion, and fostering all livestock-related technical knowhow.

Generally, the process upgrading strategy heightens the position of the poor in the chain by making it more efficient (decreasing costs) and effective (increasing value).

2. Product upgrading

▪ Introduce traceability (certification) system by undertaking due diligence on livestock entering and leaving the herd ▪ Develop new brand like “organic” and enter plausible local niche markets ▪ Organize joint sales promotion events periodically (all actors with similar business affiliates)

3. Functional upgrading Leverage small scale beef business

▪ Forage seeds/seedling production and supply to market and feed lots ▪ Grass splits/cuts, hay and fresh pasture production and supply to market and feed lots ▪ Animal feed mix plant operation (local feed plant that mix various feed sources and formulate ration to beef cattle) ▪ Establish Animal feed shops at village level ▪ Practice improved crop residue treatment, digester, silo or bunker, and dispensary ▪ Chopper services ▪ Silage services ▪ Bulky animal feed/hay/crop residue, forage seeds, storage on rental basis ▪ Animal shelter/collection and waiting center rental services ▪ Pursue an out-grower scheme (Beef for both women’s and youth groups, with private companies (export abattoirs) and/or cooperatives ▪ Specialized animal transportation services (mainly for youth groups) ▪ Links with the financial institutions and rural credit and saving or rural financing institutions.

4. Chain upgrading

▪ Establishment of multi-stakeholder platforms/forums ▪ Networking and alliances ▪ Fostering linkages with processing plants and exporters ▪ Entering joint business agreements with written contractual agreements ▪ Introduce quality/grade-based purchase system (introduce weighing scale for sheep and goats)

The findings and analysis of the assessment identify small-scale beef production/cattle fattening as a major feasible intervention area to increase smallholders’ income to break the cycle of poverty. The vision and the specific intervention areas are as follows: • Improve feed quality and feeding: Provide technical skills training; support private feed dealers; facilitate woreda-level commercial feed production businesses; facilitate linkages between producers and input suppliers; supply foundation fodder planting materials; promote improved feeding system; facilitate access to alternative feed resources; improve feed handling, bulking and storage; support village-level fodder planting material services; explore means for private sector to get finance to run quality and standard feed businesses; support private-run feed storage and quality improvement businesses; introduce inbuilt feed quality control system; support the promotion of village-based input supply businesses (of groups and/or privately operated.)

• Improve access to quality veterinary service (both preventative and curative): Provide support to public vet system; provide logistical support; lobby public office to give more support to private drug business operators. • Improve extension service: Introduce forage development programs; facilitate improved livestock production system; introduce various technologies; introduce initiatives to build capacity of the public extension system; support FTC; Improve documentation and learning by deploying ICT at FTC level; support field days/exchange visits; promote vigorously market- oriented extension approaches; introduce short-cycle and demand-driven livestock production. • Improve market participation: Facilitate market group formation; support the existing YMG/WMG; facilitate market linkages; provide market information; establish multi- stakeholder marketing platforms; facilitate relevant training (entrepreneurial, negotiation, conflict management, business strategy, bookkeeping, procurement and material management, leadership, cooperative management, branding, etc.); support product diversification and market segmentation; facilitate linkages with export abattoirs; facilitate product promotion programs; facilitate concrete networking among all actors and development facilitators; support the development of marketing infrastructure; support and promote the introduction of weight-based sales of live animals (at least sheep and goats); facilitate the introduction of out- grower schemes (particularly sheep and goats). • Improve financial access: Introduce flexible and actionable modalities; introduce seed start-up funding system; promote lobbying; organize experience-sharing tours; build incentive system to top loan payers; enter collateral system. • Increase women/youth participation: Target more women/youth; introduce various capacity- building initiatives; facilitate the formation of women’s market groups; facilitate market linkages; support existing WMG; Support existing YMG.

3.5.3. Value Chain and Market Systems Analysis of Poultry Production

Poultry production is one of the most important activities in the study woredas. Women in particular take advantage of it. Nearly all poultry production is traditional and characterized by a low input- output system. However, poultry rearing significantly contributes to the livelihoods of poor households economically and nutritionally; bridging gaps in food insecurity and offering socio-cultural benefits that empower women at the household level. Some of the most important constraints are either in the technical domain (disease, genetics, feed and nutrition, and management), are institutional and socio- cultural or a combination of the three factors.

Current poultry rearing is not economical and requires a full transformation. Thus, plausible remedial measures to address most of the issues discussed above could unlock the vast opportunities in the poultry sub sector. That is why poultry was prioritized as second-best economic activity for women and youth in the nine LRO study woredas.

1. Market Actors and Consumers

Poultry production is dominated by a traditional, non-market-oriented, low input-output system. Local poultry breeds are often used. Yet, this traditional, subsistence, village-level poultry rearing gives women significant opportunities to earn cash. That is why in some of the study woredas, development agents describe the benefits of village poultry keeping as “ATM” (to indicate readily available money for women with no barriers at all). It is a recent phenomenon to see more developed high input-output and market-oriented poultry production in the rural parts of LRO woredas. The poultry breeds are improved ones and outsourced mainly from private companies like Ethio-Chicken, government or NGOs.

There is a growing demand for poultry products (live birds and eggs) driven by urbanization and the expansion of catering service provision and lifestyle changes. These are fueled by raised awareness of nutrition and relative income increases (by NGOs, the media, expansion of schools and aggressive MoH efforts to deploy employees of MoAL, MoE, MoH and NGOs in rural areas). Poultry production frontiers are expanding in urban areas alongside the usual poultry production in rural areas. This will offer a competitive edge to the remote and detached rural poultry producing areas.

Live bird and egg sales take place either via village-to-village collectors or in nearby towns on market days. Thus, the main marketing actors in the poultry value chain are collectors, small and large traders, hotel/café owners, shops/kiosks, consumers and the farmers themselves. As indicated in FGDs with community groups, the best time for sales of live birds and eggs is Christians and Muslim holidays. The demand could rise 3 to 4 times over lean sale periods.

Generally rural poultry producers and the community at large are not plausible consumers of poultry products. Rural communities are identified as producers and sellers. The exception to this is observed in households that have small and school-going children that consume eggs in particular. This might be one key area to be addressed in future as part of impacting nutritional security in the rural areas of the LRO.

Village-level collectors: These are mostly women, girls and boys who often collect live birds and eggs from their local villages and neighboring sub villages/villages and feed and water them for a short period until the weekly market day of the woreda capital towns and sell them for a profit. They are farmers themselves and engaged in livestock trading on a part-time basis. On-market traders: These are largely part-time traders living in towns or retailers in the markets. They usually buy live birds and eggs on market days and sell them on the same day to small traders for small profit margins. Small traders: Poultry-producing smallholders sell their live birds and eggs to small traders as well in the nearby markets. The traders sell these in the large towns and cities. Large traders: Large traders get the live birds and eggs directly from the producers themselves or from small traders. Large traders sell the birds and eggs to cafes, hotels and institutional consumers in the nearby large towns and as far away as cities like Addis Ababa. Mobile abattoirs: These are common in woredas like ATJK and Ziway Dugda, where either youth or women’s groups who are engaged in modern poultry (mostly broiler birds) have established strong linkages with privately operating mobile abattoir business operators, and effectively manage the sale of their live broilers. The mobile abattoir operators come to the farm gates (mostly in woreda towns)

46 with their facilities and, through a prearranged agreement, slaughter the healthier birds on the spot and buy them on a carcass weight basis.

2. Market Channels for Poultry (Chickens and Eggs) Analysis of the poultry marketing channels provided a systematic overview of the flow of livestock from their production areas to final end users. Marketing of poultry and its products in the study areas starts with the collection of animals from production areas, moving then to the woreda and large towns, and finally to city markets where they reach the end users. The live birds (and/or carcasses in the case of mobile abattoirs) and eggs pass successively through a number of market actors, implying a series of links in the value chain before they reach the end users. The main actors in the poultry and products markets include producers, village-level collectors, small and large traders, mobile abattoirs, consumers and producers.

These channels represent the full range of available outlets through which live birds and eggs move from the production areas to the last destination markets to meet end users’ needs. There are six major market channels for live birds and eggs produced in the nine LRO study woredas (Figure 9).

Figure 9: Poultry marketing channels in the nine LRO study woredas

Channel 1: Producers to consumers: This is one of the most common channels. On holiday eves, follow up consumers prefer to directly deal with the producers to obtain price advantages and escape the inconvenience of middle men and various market intermediaries. Consumers might start at the farm gates as most public servants and civilians (teachers, employees of cooperatives, unions, road construction and other infrastructure developers and development agents) prefer to buy from the producers themselves.

Channel 2: Producers to village-level collectors: Village-based collectors are mostly women residing the villages and/or coming from the nearby. They generate supplemental income on a regular basis. Other actors include local youth (boys and girls). The village-level collectors sell to various buyers ranging from small traders, kiosks/shops to consumers. The chief sale points are the nearby local markets. However, they also sale at their gates and/or on the roadside on the way to markets, provided they obtain better profit margins. Channel 3: Producers to small traders: Producers also sell their poultry produce directly to small traders on market days in the nearby markets. Small traders dominate the markets especially on holiday eves. They are also believed to pay more competitive prices to producers on festive period eves. Producers sometimes have special (and strong) relationships with small traders and this social bond puts them in a position to get an advance fee (like a loan) when they experience financial needs and to repay it in kind in the form of either live birds or eggs. Channel 4: Producers to large traders: This poultry market or demand reaches its peak on holiday eves. The large traders are not regular visitors to local markets, but represent medium traders for urgent demand of poultry stock and eggs from big city. They enter in to the local markets and collect chicken and eggs from the markets using agents and benefits number of poultry dealers. This is because they buy a great deal of live birds and eggs, and pay relatively higher prices per unit of poultry and poultry products. This marketing channel is rare. Channel 5: Producers to mobile abattoirs: This serves very limited producers who are specialized in improved broiler production. The buyers are also more advanced, equipped with highly organized facilities (slaughtering facilities, cold chains and vehicles) and have well-established market outlets. The mobile abattoirs mostly go to farm gates, slaughter the broilers, clean them, and use a cold chain to transport them to their facilities, where the meat is cut into marketable parts and packaged according to their clients’ order. This market channel exists in Ziway Dugda and ATJK woredas. Channel 6: Producers to producers: This marketing channel is the oldest and earliest of all marketing channels. This is because producers often buy poultry stocks to replace withdrawn or dead birds. This buying and selling takes place in the rural areas. Some buyers obtain superior poultry breeds. In other cases, when parents want to encourage their children to earn, they invest in poultry production. At times, unspecified reasons might motivate local producers buy poultry stocks locally. Also, when producers lack access to improved exotic and/or superior local breeds of poultry they buy eggs to hatch as a shortcut to hybrid poultry ownership. Figure 10: Improved small-scale poultry business operation by women and men

3. Input suppliers In the case of improved and innovative systems of poultry production, the sources of genetic materials in most cases is Ethio-Chicken, while the rest are complemented by government-run multiplication

48 centers and outsourced to NGOs. Untraceable (improved or hybrid) poultry breeds are supplied by smallholder farmers and other poultry business operators in local markets. Government agents and NGOs also distribute day-old chicks and pullets to farmers that are produced in private and government chicken multiplication centers. Agro-input dealers located in large and small towns sell veterinary drugs, concentrated feed and feed ingredients. Petty traders also sell animal feed as a side business. Illegal veterinary drug sellers have been reported on market days. Ethio-Chicken has begun opening its own poultry feed stores in woreda towns like Dhera (in Dodota woreda) and established linkages to private animal feed suppliers and retailers, as in Wolinchite town, in Boset woreda. Specialized and target-specific poultry feeds are available in markets, mostly in woreda towns. However, the producers’ challenge is the continuous price rises in feed supply (Figure 11 indicates some of packed feeds). Studies have shown that the local chicken production system is characterized by low productivity as a result of low egg production, high losses due to mortality and predation, and slow growth rates mainly due to poor feeding, housing and management systems.

Figure 11: Special and target-specific commercial poultry feeds (for pullets, broilers and layers)

4. Value Chain of Poultry Production The poultry value chain can be defined as the range of activities required to bring poultry meat or eggs to consumers via the different phases of production, marketing and distribution. This segment of the poultry value chain consists of the actors in the value chain that provides the starting materials for the proper functioning of the subsequent poultry value chain. The actors under consideration include animal suppliers (private companies, government multiplication centers and poultry farmers themselves); poultry feed manufacturers and suppliers (specialized private companies, animal feed processing unions, co-operatives, cereal mills, oil-extracting factories, and some meat exporting factories that produce protein supplements like bone and blood meal); and veterinary drug providers (Ministry of Agriculture animal health department and clinics, private drug shops, National Veterinary Institute, etc. supplying various poultry vaccines). The poultry value chain actors include input suppliers (genetic materials, feed, vet drugs and vaccines, equipment, and other essential accessories, etc.), producers (farmers, WMG, YMG, and individuals in towns), village collectors, small traders, large traders, mobile abattoirs, kiosks, super- and mini-markets, hotels, cafes and chicken huts.

Producers: The major producers of live birds and eggs are smallholder farmers. These producers in all the nine LRO study woredas play active roles as the major suppliers of poultry meat and eggs for domestic consumption in the towns along the Adama-Modjo-Addis Ababa road. Both youth and women’s groups and individuals who have been taking part in modern and innovative poultry rearing with improved poultry breeds have had growing impact on poultry value chain development and expansion. Mobile abattoirs: This is a new phenomenon in the expanding poultry value chain, where a moving vehicle with a deep freeze buys and slaughters chickens to supply urban consumers through supermarkets and retail shops. Supermarkets and minimarkets: These service providers used to be localized in Addis Ababa only. More recently, supermarkets and minimarkets are mushrooming in major towns and along roadways. Chicken huts: These service providers are localized in Addis Ababa, Bishoftu and Adama. It is in its infancy but has significant potential. Figure-12: Typical poultry value chain map in the nine LRO study woredas

5. Initial Investment Cost Poultry production remains the most important source of income and food for communities in the project areas, complementing household income accrued from the sales of crop and livestock production. The study findings in nine LRO woredas indicate that village-level low input-output poultry production is profitable and enabled rural households to generate a cash income or gross profit of approximately 9,724 birr per household per annum. This is generated from live bird and egg sales alone, excluding the manure produced that could either be used for own use on farmland or sold.

This family poultry business would assume to adapt innovative approaches using improved poultry

50 breeds and an initial flock size of 50 chickens. The household would need an overall initial investment of 38,125 birr, of which 6,500 birr would be for the initial investment and the remaining 31,625 birr for operational costs for the first year. The credit amount and loan agreement could be further discussed with MFIs during implementation.

Table 15: Investment and working capital for 50 heads of chickens’ farm No Investment item Unit Quantity Unit Total A. Fixed investment price costs 1. Chicken house and fence No 1 3,000 3,000 Price Cost 2. Feeder No 3 300 900 3. Drinker No 3 200 600 4. Water tanker No 1 2,000 2,000 Subtotal 6,500 B. Working capital 1 For pullet purchase Head 50 80 4,000 2 Feed for 50 chicken (0.125 kg)@ 365 days kg 2281.25 12 27,375 3 Vaccine and treatment (lump sum: 5 birr per Head 50 5 250 Suhebtoad)t al 31,625 Total initial investment cost 31,625.038,125

The business plan strategy is that the households would receive a 12-month loan at an 18% interest rate from a MFI. Some 6,500 birr would be for fixed investment, 4,000 birr for pullet purchase, and 1,200 birr for a quintal of hen feed for 2 weeks, 250 birr for vaccines and drugs. The total loan fund required would be 11,950 birr. After 2 weeks of operation, the farms start to cover their feed expenses with sales of eggs.

Table- 16: Operating Costs or Costs of production per year S.N Type of expense and assumptions Costs No. of pullets 50 1 Costs of pullets @ 80 birr/head 4,000 2 Feed (0.125 kg/head /day for 365 days @ 12 27,375 birr/ kg) 3 Vaccine and treatment (lump sum: 5 birr/ 250 head) 4 Transport and other marketing expenses 50 300 birr/head 5 Labor cost (1 person 25% of person day @ 9,125 100 birr/day @ 365 days) 6 Interest (18% of initial loan per year) 2,151 7 Depreciation (20% of the fixed capital per 1,300 year) Total expenses or Operating Costs 44,501

6. Gross Revenue, Gross Profit and Gross Margin A value chain incorporates productive transformation and value addition at each stage of the value chain. At each stage of the value chain, the product changes hands through chain actors, transaction is effected and costs incurred, and some form of value is created. Thus, value addition in the poultry value chain (live birds for egg laying and meat production, day-old chicks, egg and litter as ruminant feed supplements, and manure) result from diverse transformational and marketing functions including production, collection/aggregation, and transporting, processing, packaging, distribution and marketing.

From the table below it was found out that the revenue per annum is estimated to be ETB 54,225. Likewise, the overall cost is found to be ETB 44,501. Thus, the gross profit is calculated to be ETB 9,724 with gross margin of 22%. The revenue, gross profit and gross margin of a small-scale poultry value chain are illustrated below.

Table 17: Gross Revenue, Profit and margin from village poultry farm/year Item description No

Total hen population 50 Egg-producing hens 45 Egg production (80%) per year (Egg-producing hen 13,140 Incomex 0.8 x from365 days) egg production/year x 3.75 birr 49,275 Chicken out of production - Income sales of culled chicken (chickens out of 4,950 production x 110 birr) Gross income from egg and chicken 54,225

Gross Profit 9724

Percentage of Margin = Gross Profit/Revenue =9724/54,225 = 22% x100

7. Opportunities and challenges Opportunities • Growing markets for poultry and its products: Driven by urbanization, population growth, expansion of catering services and various public institutions, income increases and lifestyle changes of population segments. • Access to improved input sources (both live poultry and feed types). • Road access for market and easy access to larger cities and towns. • Sound agro-ecology. • Number of poultry-processing units increasing (in some areas, mobile poultry processing units are very well-linked with producers). • Community’s experience in improved poultry business gaining momentum. • Increased interest of women and youth groups to engage in poultry production. • Access to veterinary and input supply services. • Relatively affordable budget to start business vis-à-vis high demand for poultry and eggs which has comparative advantage over beef, sheep and goat business. • Poultry value chain is women-, youth- and family-friendly business. • Initial capital is relatively small compared to beef, sheep and goat value chains. • There is much potential to create demand internally in the village community as parents increase their knowledge of nutrition and its holistic impact on their children.

Challenges

• Lack of improved skills, management and resources to efficiently run the poultry business • Continuous price increase of commercial poultry feeds • No other feed alternatives for improved poultry farm except the improved feed

• Poor financial capacity of women and lack of financial sources in rural areas • Various disease incidence or outbreaks and strict quarantine or regulatory control in and around poultry houses. • High morbidity and mortality incidence • Market Seasonality for live poultry related to holidays and seasons. • Inconsistent electric power supply • Sudden feed supply collapse leads to the extended collapse of production/2-3 months • Limited breed choice from the supplier • Requires strong and routine technical support

8. Upgrading Strategies Upgrading strategies for poultry value chain/market systems and key areas of intervention specific to women, and youths

1. Process upgrading ▪ Increase production efficiency through various appropriate technologies ▪ Adopt strict health management practices and sanitary, personal hygiene and quarantine measures ▪ Pursue market-oriented production by practicing one batch of pullet or dual type egg layers for one cycle per year ▪ Introduce feed technologies to improve the performance of laying pullet in terms of number and weight of egg outputs as well as reduce feed expenses ▪ Improve shelter or house management practices to relieve environmental pollution in and around the premises,

Getting engaged in poultry production and marketing not only earns lucrative income to household but also create job opportunity to women and youth groups. If this business would established with a groups of organized women and youths with a form of poultry farm clusters within similar jurisdictions it could reduce overhead costs of transportations, and also improves economies of scale through cooperative advantage and specialization, thereby increase linkages and bargaining power of the groups, create contract production for egg outputs. Another important issue in process upgrading is the awareness created on production process of quality egg and chicken meet outputs. Hence, it needs approaches capacity of both women and youth members with regard to upgrading skills in production, marketing, negotiation, leadership, entrepreneurship, business management, long-term business vision development, market intelligence, collective marketing, saving, business diversification, tracking pertinent market information on time, branding and promotion, of products. 2. Product upgrading ▪ Introduce traceability (certification) system by undertaking due diligence on entering or leaving the poultry flock ▪ Develop new brand like “organic” and enter plausible niche markets ▪ Organize joint sales promotion events periodically (all actors with similar business affiliates).

3. Functional upgrading

▪ Forage seed/seedling production and supply including vegetative feed to supplement poultry feed ▪ Animal feed mix plant operation that can use for local processing, mixing and ration formulation for various animals including poultry. ▪ Animal feed shops at village level that can supplied improved poultry and other feed inputs. ▪ Live poultry/pullets and cocks supply business ▪ Poultry housing or shelter/collection center could be availed by rental services. The group could build or prepared standard and improved houses or shelter for rental or partial uses (as own equity/collateral) with other groups who can afford financing of initial investment to start poultry business highly operational or functional. . ▪ Pursue an “out-grower” scheme (poultry and eggs) especially for women’s and youth groups) with private companies and/or cooperatives. ▪ Links groups with the rural financing such as RUSACCOs and financial institutions

4. Chain upgrading ▪ Establishment of multi-stakeholder platforms/forums locally. ▪ Networking and alliances with private companies and wholesale purchasers in nearby towns, ▪ Fostering linkages with processing plants and exporters ▪ Entering joint business agreement with written contractual agreements with companies and public institution that need bulk of poultry and eggs production.

Improve poultry productivity and production: • TOT to frontline staff on improved poultry management, disease control and business planning. • Improved production of egg and poultry meat by increasing the number of chickens/farmer and the number of farmers. • Facilitate provision of improved breeds for both egg and meat producing. Isa Brown, High Sex Brown, Leghorn, Rhode Island Red, etc. • Sensitize women to the opportunities in the sector. • Facilitate training on how to make better facilities (housing, feeder, brooder, watering can and litter). • Provide training and provision of package type materials for life-cycle management. • Diversify poultry operation into meat as well as egg production. • Establish and organize innovative farmers first to set example for others.

Improve poultry input supply and marketing: • Provision of better breeds and assessment of which breed suites specific locality. • Facilitate provision of credit services. • Train para-vets. Keep chicks for longer period and distribute after vaccination. • Use farmer cooperatives and youth for input supply services such as day-old chicks, pullets, feed, drugs, vaccines, etc. • Poultry processing and linking farmers with a marketing network for egg and meat products. • Link producers with bulk markets such as universities, military camps, hospitals etc. • Promote chicken as a food for the masses rather than a holiday-only meal. • Organize farmers into cooperatives to set up or use slaughter services, and modern storage mechanisms.

Promote local consumption

• Awareness creation • Facilitate nutritional training • Introduce improved stoves • Organized nutrition days • Facilitate experience-sharing • Support school projects through awareness creation, posters, nutrition days, nutrition clubs, drama clubs, school-parent nutrition activities, mini media and competitions/rewards.

Improve BDS

Support BDS to smallholder WPG and YPG through training, logistics support, experience sharing, documentation and knowledge management and dissemination; provide demonstration materials to FTC; facilitate woreda nutrition day and access to electricity.

3.6. Livestock Value Chain Supporters and Facilitators

The livestock value chain facilitators and supporters include the Ministry of Agriculture (MoA); Ministry of Trade; Ministry of Industry; donors and UN Agencies; NGOs; banks, insurance companies and microfinance institutions; research centers and universities; investment authority; city administration; cooperative promotion and development; Women, Youth and Children Affairs; Youth and Sport Bureaus; customs office; transporters; local/zone /regional administration; regulatory bodies; and various industry or sub-sector-based associations and alliances. The key stakeholders are discussed below.

1. Technical Support provision

Agricultural research centers: Agricultural research centers such as Adami Tulu and Melkasa Agricultural Research centers are mandated to generate livestock technologies that help to improve livestock production and productivity. The Adami Tulu center and the Abernosa ranch mainly work on livestock breeds, forage seed multiplication and adaptation, while Melkasa Research Centre works on traction and draught power improvement. The center has been testing and disseminating various technologies related to breed, forage and management practices. The center has a capacity and mandate limitation to fulfill the technology demands of farmers, and attempts were made in collaboration with development partners to reach as many farmers as possible. The major success recorded by the center is toward an attempt to organize forage seed multiplying farmers in out-grower schemes. These out-growing farmers who received parent seed and technical backstopping from the center were also linked to clients for marketing of their forage seed. This scheme has benefited both the out-growers and other farmers who demand forage seed for fodder production. The effectiveness and efficiency of the research centers highly determines the availability and accessibility of types of breed and forage that suitable the agro-ecology and the farming system. Therefore, the research centers have the power to influence the livestock value chain. The relationship of the research center with farmers is through development agents and district-level offices of livestock and fishery. The research centers also work with NGOs in capacity building, generation and distribution of technologies such as hay brooders, churners, transitional beehives, and improved donkey-drawn ploughs.

District/Woreda Livestock Development desk (MoA): This provides extension services for dairy, poultry, beef, sheep and goats, and animal feed. The office provides vaccination and treatment services to animals. FTC are used for technology demonstration and training centers. New forage varieties are demonstrated on FTC before they are distributed to farmers. Improved livestock and poultry breeds and forages are distributed through the office. Technical support and dissemination of information on production, input technology and marketing are facilitated by the district-level MOLF. Development agents (DAs) serve as a bridge to reach farmers at the kebele and village levels. DAs provide extension services and are also a key link between farmers and other development actors (NGOs, research centers, etc). District cooperative promotion offices have a mandate to organize groups into cooperatives and take action to legalize and audit cooperatives; and to build the capacity of executive members in financial management.

District SME Development Offices: These are government offices that organize, register, license, follow-up and coach SMEs, as well as facilitate credit services. The SMEs are mostly run by women and youth, including activities such as livestock production, small-scale livestock trading and fattening.

Market Regulators: The key players in this regard are Ministry of Trade, Ministry of Agriculture, the Ethiopia Revenue and Customs Authority, and the National Bank of Ethiopia. The Ministry of Trade provides trade licenses, gives pass permits at check points and controls illegal livestock trading. The Ministry of Agriculture is responsible for quarantine services for quality control and health, through the certification of livestock and meat for export. The Ethiopian Revenue and Customs Authority and the National Bank of Ethiopia also facilitate financial services for export, and legalize documents for export markets, issue border permits, and monitor the flow of products to export markets.

Professional Associations: The Ethiopian Society of Animal Production (ESAP), Livestock Traders Association (ELTA) and Ethiopian Meat Producers-Exporters Association (EMPEA), Veterinary Drug and Animal Feed Administration and Control Authority (VDAFACA); Ethiopian Standards Agency (ESA), Ethiopian Animal Feed Industry Association (EAFIA) are also major stakeholders in livestock and meat exports with roles of promoting higher quality standards and the advocacy of the establishment of efficient marketing systems. Transporters: These include private transport service providers that transport live animals from district markets to major urban centers (Addis Ababa, Modgo and Adama) as well as live animal from exporters’ ranches to ports on a fee basis. Ethiopian Airlines also plays a significant role as it transports meat from Addis Ababa to destination ports. Usually live animals and meat are sold on a CIF basis and accordingly the exporter is responsible for delivery to the port of destination. Animal transporters: Recently, rules and regulations have been enforced on animal movement in Ethiopia; animals can be transported either by trekking or trucking. Smallholder farmers usually trek their animals to market. The distance varies according to their location from the market. However, animals collected from long distance are transported to the next market place using five- tonne trucks. Some trucks used for livestock transportation are modified by local technicians to

suite animal transport, but special livestock trucks designed and manufactured for this purpose are not easily available in the country. However, transporting animals using locally modified trucks has negative impacts, especially regarding the welfare of the animals.) 2. Financial Supports: There are a number of MFIs and SACCOs that are engaged in the provision of loan services to farmers for the purchase of livestock for rearing and/or fattening. They play a critical role in the provision of credit, particularly for small ruminants in the districts, by organizing producer groups through group collateral schemes. The major MFIs are Gasha, Oromia Saving and Credit Organization, Metemamen and Busa Gonfa. Commercial Bank of Ethiopia and other private banks play an important role by providing loan services to traders and exporters.

3. Development Partners and NGOs: Some include CRS and World Vision. SNV, MCS and CRS organized LRO beneficiaries into livelihood groups (LGs). From field observation, through financial skills and capacity building, LGs increased household credit worthiness and facilitated access to finance from formal financial institutions. Using skills learned in LGs, members have formed producer groups outside the LGs to improve their links to markets. One example of a producer group linked to market was Luka Gudina sheep and goat collection co-operative in Arsi Negele woreda, established in 2013. Currently, the cooperative has 125,000 birr as capital and 31 members. The technical support and linkages created with MFIs helped beneficiaries to buy livestock for breeding and fattening, particularly small ruminants. The technical, material and capacity-building support given to government partners by NGOs also improve livestock value chain development. Brook UK, an NGO working on equines, provided capacity-building support and drugs to the LRO intervention woredas.

3.7 Market Demand and Price Variations and Seasonality

Demand for livestock and livestock products vary seasonally. In most cases, local market demand and prices spike during major Christian and Muslim holidays (Easter, Christmas, Epiphany, and New Year/Meskel, Ramadan, Id-Alfetir and Eid-al-Adaha). External factors like seasonal weather variability accompanied by drought, as well as recently witnessed furious and repetitive civil strife, invariably affect livestock marketing.

Livestock prices are at a peak during the rainy season (June to August) and fall in other months. This is because of low supply of animals to the market as farmers are usually engaged in other farming activities. Availability of good pasture is another factor contributing to low supply of animals during the rainy season. Constraints like feed and water shortages can significantly affect the supply and sale of animals. Pastoralists want to keep as many animals as possible during the rainy season, hoping that they will have animals of better condition at the end of the season. Farmers will also get ample milk to feed them during the rainy season so that they do not have to look for other food sources that necessitates the sale of their animals. However, basic household expenses including school fees and uniforms, can force farmers to sell their animals during September where terms of trade between grains and animals disfavored them. During poor rain years and drought years, farmers sell animals to meet family food needs. In general, prices depend mainly on supply and demand, which are heavily

influenced by the season and the occurrence of religious and cultural festivals on the one hand, and the occurrence of drought or other weather shocks on the other.

3.8 Competitiveness and Economic gains

According to trader respondents interviewed, one of the main factors governing the type and intensity of competition in live animal marketing is season. Thus, fattening and livestock trading activities tend to concentrate around religious festivals. These findings are consistent with common knowledge and empirical evidence that the volume of livestock sales or purchases and prices are highest during religious festivals. Therefore, the months of Meskerem (September), Tir (January), and Miazia (April) are the three most important months for cattle sales. Compared to cattle, sheep and goat marketing seems to have much smoother demand throughout the year.

Such seasonal patterns in turn cause fluctuations in the number of traders participating in livestock trading. For instance, in their studies of highland livestock traders, Benin et al. (2004) found that, on average, the number of traders increased by about 55% between peak and non-peak months, while the number of livestock transporters increased by about 22%.

There is a general tendency to consider traders as exploitative. This is especially true when traders capitalize on the market disadvantages of farmer producers. Where the institutional or infrastructure context—e.g., an absence of open auctions, poor roads that impede trader traffic, etc.—forces farmer sellers to confront a single monopolistic rural assembler or a small number of collusive buyers, traders may indeed exploit farmers, by offering them a price that significantly favors the trader. In some cases, however, the small price offered by the trader may be a function of the extremely high transport costs in the area, and exceptionally, it may be the brokers who reap the greatest economic benefits.

Accordingly, based on results of trader interviews, there appears little evidence that traders are on average able to capture “abnormally high” profits. Sometimes, however, trader capital size may impact the functioning of the market. For instance, large traders/exporters who come from as far as Mojo, Meki and Addis Ababa are so strong that they dominate the market. Traders in Shala woreda especially mention how a few export traders visiting their weekly markets can change the price structure of the market. Key informant interview of market actors and traders indicated that dominant traders through their networks( brokers and collectors) jointly fix a lower assembly price and take advantage of their better knowledge of the high price export market or lucrative local markets like Addis Ababa. In most of livestock markets, traders set lower local prices for livestock; which is improper practices affecting the local small traders and ultimately producers.

3.9 Value addition, price build-ups and profitability

A value chain incorporates productive transformation and value addition. At each stage of the chain, the product changes hands through chain actors, transaction is effected and costs incurred, and some form of value is created. Same holds true to livestock value chains as well. Thus, value addition in the livestock value chains (live animal, meat, dairy and hide/skin, and poultry, etc.) result from diverse

59 transformational and marketing functions including production, collection /aggregation, and transporting, processing, packaging, distribution and marketing. As mentioned in the earlier sections, the 3 prioritized livestock value chains identified and selected for upgrading include sheep and goat, cattle fattening and poultry value chains. For the sake of clarity effort has been made to elaborate various issues such as value addition, transaction costs, price build- ups, profitability and gross margin for all the selected value chains or commodities in in section 3.5 (value chain and marketing systems analyses for each selected livestock commodities) above and in a separate section attached to the report in the Appendix A. Costs in the livestock value chains can be categorized into operational costs (variable costs including feed, water, vet, transport, tax, labor, services like broker- ship, facilitation/rental fees and fixed costs); transaction costs (legal costs, information costs, telephone and communication costs, grading costs, etc.); regulatory costs (formal or business licensing or informal/grading) and investment costs. For example, refer to the following illustration to understand how various prices build up in the transaction of one commodity and how margin vs. mark-up computed:

A rural goat producer sells a 25 kg goat to a trader for 1,500 birr. The trader sells the goat to a butcher in an urban area for 2,000 birr. The retailer in turn sells the goat meat to his consumers for 300birr/kg. If the carcass weighs is assumed to be 50% of the live weight of the goat and the skin from goat is sold for 100 birr, then:

Local Trader Gross Profit = 2,000 – 1,500 = 500 Traders Margin = 500/2000 = 0.25 margin = 25% margin of total revenue Retailers Gross revenue = [(25kg ×( 50/100 dressing percentage) × 300] + 100 = 3,850 Retailers Gross Profit = 3,850 – 2,000 = 1,850 Retailers profit = 1850/3850 = 0.48% Percentage o f retailers margin = 0.48 x 100 = 48% margin of the gross revenue of retailers Total price spread = Traders profit + retail profit = 500 + 1,850 = 2350 Percentage margin of Trader = Traders profit / Traders buying price × 100 = (500/1,500) × 100 = 33% Retail mark-up = retail profit / retail selling price × 100 = (1,850/2,000) × 100 = 92.5%

In an efficiently operating market, the competitive environment should keep the marketing margin of each actors to a minimum. Market prices should then reflect two elements: the actual costs of marketing plus normal profit margin. At different stages of the marketing system, the product (e.g., animal or meat) is sold and bought. Normally, at each successive stage, the price per unit bought or sold is higher and we say that value has been added. At each successive stage, it can be split into two categories: the part that is reflected in the real additional costs of adding value and the part that reflects the extra profit made. Some of the additional costs incurred at each marketing stage are obvious; for example, taxes and market fees, transport costs (e.g., hiring a truck or paying trekkers to accompany the goats or sheep), feed purchases for the animals, any interest paid on a loan taken to finance the purchase, and animal upkeep.

4. Critical Success Factors in Livestock VC and Market Development

The following were found to be the key leverage points that, if addressed, can significantly enhance the economic gains of the selected livestock actors in the supply chain:

1. Access to feed, water and improved husbandry practices: The productivity, prices and profitability of livestock sales are directly related to input supply, roads and water, and other physical conditions. Poor animal husbandry practices result in low-quality products and generate very low income for farmers/producers. Grazing lands are shrinking due to expansion of cultivation and this is being implemented without giving alternatives to livestock feed sources, such as the development of improved forage and fodder, instilling the knowledge of strategic feeding of animals, crop residue conservation and efficient utilization, etc. Due to the shortage of grazing and the absence of other feed sources, animals often grow slowly, and are emaciated, stressed and exposed to disease. These may be the primary reasons for a decrease in the livestock population in some woredas such as Ziway Dugda and Shala. Access to and provision of quality water is another bottleneck for development of the livestock sector, particularly in Shala and Siraro woredas. Success can be maintained if the current feed shortage is addressed through improved feed sources (forage production and concentrates) and water shortage is alleviated by developing boreholes or deep wells including maintaining of the already constructed but non-operational water source facilities.

2. Promotion of improved private agricultural technologies and dissemination: There is a high demand among farmers/producers for improved technologies such as improved breeds, forage seeds/seedlings and fodder, feed improvers, chopper machines, drugs and modern livestock management skills. The governmental and nongovernmental institutions (agricultural research centers, professional association, NGOs etc.) that are engaged in the development and dissemination of technologies do not have the capacity to satisfy this demand. This is partly because of limited human and institutional capacities and the lack of a workable strategy to reach the farmers/producers. Accordingly, institutional capacity building for such institutions needs to be emphasized for efficient and effective service provision, but also emphasis should be given in promotion of the private sector in improved input manufacturing and dissemination. Youth and women’s groups can be organized in day-old chick supply, pullet growing and supply, concentrated feed manufacturing and distribution, forage seed multiplication, drug shop and other agricultural equipment supply. Cost-effective poultry and goat/sheep shelters can be constructed by local youth groups using local materials.

3. The Need to Strengthen LGs: In the LRO intervention woredas, livelihood groups (LGs) and farmers’ organizations are already established and most are successful in their saving and credit activities. These can be promoted into higher-level organizations such as cooperatives and unions in the value chain. Some cooperatives have already been formed by LRO, e.g.

Sheep/goat Collection Cooperative in Arsi Negele, but they were not successful due to lack of follow-up and promotion by the woreda cooperative agency. If the cooperatives and unions are functional , they could enhance production quality, improve the marketing system and increase the economic gains of farmers significantly. This calls for organization and capacity development of farmers’ organizations, both cooperatives/unions and SMEs, to effectively engage them in livestock production and marketing in the short term, and processing and exporting in the long term.

4. Creation of linkages between existing input manufacturers/suppliers and producers: Core inputs (feed, vet drugs, vaccine, and animals) should be of a high quality, accessible and made available in an affordable manner.

5. Creation of linkage between financial institutions and WMG & YMG producers: Development partners’ financial/insurance institutions need to revise/amend their loan policies to make them friendly and accessible to the neediest social segments, namely women and youth.

6. Need for strong chain actors' coordination: Several actors are involved in the livestock value chain but there is no coordination between and among them, which undermines the effectiveness of their interventions. This points to a need for an actors’ coordination platform with clear and meaningful intervention.

5. Conclusion and Recommendations

5.1. Conclusion 5.1.1 Small-Scale Sheep and Goat Fattening Development

In case of sheep and goat farmers, supply animals of varying sex, age and weight. Yearlings are the dominant class of animals to be sold to cover immediate cash needs prior to their attaining mature body weight. In most instances, farmers do not benefit much from the sale of these animals. This is mainly because of poor body condition due to feed and water shortage, disease prevalence and lack of supplementary feeding. Brokers collude with traders to keep market prices low, further decreasing the benefits going to the farmers. Farmers sell sheep/goats on market days at nearby markets and/or trek up to 20 km to find a better price. Trekking routes lack resting places for animals, and animals are sold at market centers based on eye appraisal. Investment in market infrastructure will help farmers to sell their animals at a better quality for a better price. For instance, establishment of livestock feeding and watering centers in market centers and on trekking routes will help to prevent weight loss and reduce the occurrence of diseases such as pasteurellosis and contagious caprine pleuropneumonia. Establishing weighing scales at market centers and using those for marketing will help build trust and increase fair transactions among buyers and sellers.

It is advantageous that indigenous sheep and goats have specific adaptive capacities to survive and produce under adverse local environmental conditions (climatic stress, poor quality feed, seasonal feed and water shortages, endemic disease and parasites) that make them suitable for use in the traditional, low-external-input production system that dominates Ethiopian production. With little investment in feed, health and shelter, indigenous animals quickly respond to investments made on feed and health service. Gradual indigenous breed improvement can be made through community breeding programs tested and recommended by ILRI and ICRISAT. The other advantages of sheep and goat value chain development are:

• Community has traditional knowledge and experience in the business • It requires less investment than larger livestock so credit from MFI can be accessed more easily • It involves less labor time so that farmers can work in other businesses • Sheep and goats are prolific (give birth within 5-6 months and have multiple births)

It is easy to improve the breed; for example, the community-based breeding program that was done in collaboration with ILRI with ARARI in some communities in Fogera has a success record. Farmers liked the output of the program and arranged for the separation of their own local rams from the herd. Such a community model, including the use of superior local rams may be scaled up; however, attention should be paid to a follow-up breeding strategy, with replacement rams to avoid future in- breeding.

5.1.2 Small-Scale Cattle/Beef Production

The cattle population in the LRO project woredas is relatively high compare to other non-project woredas. Milk and butter production for market is not economical due to the low level of production and productivity of cattle triggered by critical shortage of feed and water resources. However, small scale cattle fattening is a potential income-generating activity in most of LRO woredas compare to other livestock outputs. The fattening is undertaken mostly when the oxen are retired from farm work in order to replace them with younger animals. At the current market rate, an ox costs about 12,000 birr. MFI gives a premium credit amounting to 6,000 birr. It is impossible for poor farmers to access credit for cattle fattening. There is a traditional cattle-fattening arrangement in Siraro between rich and poor farmers. Rich farmers bring cattle to poor farmers’ homesteads where they are fed and finished. The finished animal is then sold and the profits shared. Therefore, cattle fattening is another feasible option for livestock value chain development in LRO intervention woredas.

5.1.3 Poultry Value Chain Development

Poultry value chain development is promising as farmers are experienced in the selling and slaughtering of chickens. Although some NGOs have participated in the distribution of improved chickens, the programs haven’t addressed full poultry value chain development and thus lost sustainability. Poultry VC development is still in its infancy, and more technological interventions will be required to make it sustainable. Studies have shown that the local chicken production system is presently characterized by low productivity as a result of low egg production, high losses due to mortality and predation, and slow growth rates due to poor feeding, housing and management systems. However, poultry has the potential for a value chain development:

• The community has experience in selling chickens and eggs, as well as using them for nutrition • It requires less investment than larger livestock cost so credit from MFIs can be more easily accessed • It needs little land, so women and youth can be involved in the business • Cash flow and return on investment are quick • It is easy to improve chicken breeds • There is a demand for eggs and chickens throughout the year

To stimulate poultry development, focus should be on the input supply systems for improved genetic materials, feed supply and disease management. It is advisable that day-old chicks are produced at the district and village levels by small-scale entrepreneurs and/or communities, but reliability of electricity supply in rural areas requires close attention for electric hatcheries.

5.2. Recommendations 5.2.1 Recommendation and Key Interventions for Small-Scale Beef, Sheep and Goat Fattening Key interventions Recommended Activities Areas

Improve feed • Provide support to private feed dealers quality and feeding • Facilitate woreda-level commercial feed production businesses • Facilitate/support linkages between producers and input suppliers • Supply foundation fodder planting materials • Promote improved feeding system, facilitate access to alternative feed resources, and improve feed handling, bulking and storage. • Support village-level fodder planting material services • Explore means for private sector to get finance to run quality and standard feed businesses • Support privately run feed storage and quality improvement businesses • Introduce in-built feed quality control system • Support the promotion of village-based input supply business (of groups and/or privately operated) Improve the access • Provide support to public vet system to quality • Provide logistical support veterinary services • Lobby public office to give more support to private drug business (both preventative operators and curative measures) Improve extension • Introduce forage development programs services • Facilitate improved livestock production system • Introduce various technologies • Introduce some initiatives to build capacity of public extension system • Support FTC to improve documentation and learning by deploying ICT at FTC level • Support field days/exchange visits • Promote vigorously market-oriented extension approaches • Introduce short-cycle and demand-driven livestock production

Improve market • Facilitate market group formation participation • Support existing YMGs/WMGs • Facilitate market linkages • Provide market information • Establish multi-stakeholder marketing platforms • Facilitate relevant training (entrepreneurial, negotiation, conflict management, business strategy, bookkeeping, procurement and material management, leadership, cooperative management, branding, etc.) • Support product diversification and market segmentation • Facilitate linkages with export abattoirs • Facilitate product promotion programs • Facilitate concrete networking among all actors and development facilitators Improve financial • IntroduceSupport the flexible developments and actionable of marketing modalities infrastructure access • IntroduceSupport and seed/start promote-up the funding introduction system of weight-based sales of live animals • Promote(at least sheep lobbying and goats) • OrganizeFacilitate the WMGintroduction and YMG of out to- growerseek for schemes alternative (particularly finical support for sheep with lowand goats)concession interest rate and relatively longer maturity period. • Create incentive system to top loan payers • Enter collateral system Introduce • Introduce quality production certification • Get engagement agreement with relevant regional regulatory body • Create linkages with niche markets • Facilitate recognition as reward • Facilitate market bargaining to earn rewarding price Integrate NRM • Integrate activities for watershed management • Supply fodder planting materials • Introduce incentive system • Organize ‘environmental field day’ • Arrange experience-sharing visits • Facilitate the promotion of NRM with LVC and beekeeping • Support FTC • Document /distribute best practices • Give recognition as rewards (successful ones) Increase • Target more women/youth women’s/youth • Introduce various capacity-building initiatives participation • Facilitate the formation of WMGs • Support existing WMGs • Facilitate linkages • Arrange experience-sharing visits • Support existing YMGs

• Introduce innovative affirmative action to promote the engagement of women/youth in downstream livestock value chain operations

5.2.2 Recommendation and Key Areas of Interventions for Poultry VC Key interventions Recommended Activities Areas

• Facilitate linkages to input suppliers Improve access to • Support community-based input supply services input supply • Build capacity of input suppliers • Allocate fund to support the expansion of input supply system • Support private drug vendor shops to promote expansion of drug distribution • Deploy strong follow up and inspection system • Introduce various appropriate technologies for poultry production Improve production • Facilitate and support actors to enter downstream poultry value chain and productivity business • Facilitate and organize skill and capacity enhancing training on poultry production for all groups • Facilitate regular follow up and inspection support on production process • Improve management of local breeds, day–old chick production, pullet-based producers, meat breed producers, hybrid producers. • Build capacity of producers to formulate alternative additional feed supplement • Deploy strong disease control and management system • Train women poultry health managers via para-vet training and support system • Create awareness among producers to generate income from poultry litter sale and/or own use for SR/LR production • Facilitate entrepreneurial trainings and create market linkages for Improve market producers participation • Support various capacity-building initiatives, facilitate skills that promote collective marketing • Support traceable quality production and facilitate local demand creation • Market promotion: support horizontal integration with other WMG and YMG • Support local level youth/women market intermediaries • Introduce modern and affordable egg and chicken carriage or way of moving

• Provide market information on poultry business to WMG and YMG on regularly Improve access to Involve women and youth in business financial services Provide finical support with low concession interest rate and relatively longer maturity period. Promote local • Awareness creation and facilitate various nutritional training, consumption introduce improved stoves, facilitate experience-sharing, support school projects. • Create awareness through posters, nutrition days, nutrition clubs, drama clubs, school-parent nutrition activities, mini media, competitions and rewards Improve BDS Support BDS through training, logistics, experience-sharing, documentation and provide demonstration materials to FTC, facilitate woreda-based nutrition day, provide electricity access

6. References

1. Campbell R., 2008, The Value Chain Framework Briefing Paper. ACDI/VOCA, United States Agency for International Development, New York 2. Central Statistical Agency (CSA), Population Projection of Ethiopia for All Regions at Woreda Level from 2014 – 20170, August 2013

3. DFID (2008): Making Value Chain Work Better for the Poor: A Tool book for Practitioners of Value Chain Analysis 4. Getting To Market: From Agriculture to Agro-Enterprise, CRS, Value Chain Prioritization Filter Matrix And Value Chain Toolkit Roadmap, 228 W. Lexington St. Baltimore MD 20201 USA.

5. MoFED (Ministry of Finance and Economic Development) 2010. Growth and Transformation Plan (GTP) 2010/11 – 2014/15. September, Addis Ababa. 6. Proact Business Development, 2012, Value Chain Analysis Report for livestock fattening, pulses, vegetables and Red Pepper Value Chains for the GRAD target woredas: Adami Tulu, Ziway, Dugda, Shala, Arsi Negele of Oromia Regional State.’

7. Shapiro, B.I; Gebru, G; Desta, S; Negassa, A; Nigussie, K; Aboset, G; and Mechal, H. 2015. Ethiopia Livestock Master Plan. ILRI PROJECT Report, Nairobi, Kenya: International Livestock Research Institute (ILRI)

8. Yacob Aklilu and Andy Catley 2010. Livestock Exports from Pastoralist Areas: An Analysis of Benefits by Wealth Group and Policy Implications. IGAD LPI Working Paper No. 01-10. 52 pp.

Appendix A: Model Business Plan for Priority Livestock Value Chains

1.1 Business Plan Model for Small Scale Sheep & Goats Fattening

Contents

1. Business Description 2. Assessment of Critical Viability Factors 3. Investment CapitalRequirement 4. Sales andIncomePlan 5. Annual Operating Expenses 6. NetProfitForecast

1. Business Description

In the process of kebele and woreda levels prioritization and selection of potential livestock VC, Shoat is the most important and easily adaptable and implemented by women and youth groups in each project sites. Shoat fattening and selling scores highest rank and among top three of the livestock value chain in order of importance across all the rural kebeles in the project woredas.

According to FGD with community and KI interviews with experts at kebele and woreda levels in project areas, the small scale Shoat business would be more feasible and sustainable if it starts by the establishment of a small scale Sheep and goats fattening farm with a capacity of 10 Sheep and goats at a time. This could be mainly recommended for women and youth groups under PSNP. Fattening mean adding meat value through improving the management of stock including selection of the right type of animals for fattening, housing, feeding based animal feed requirement, ad lib provision of water, medical care and vaccination. In case of Shoat fattening more than 50% of the production cost is feed, therefore cost effective ration formulation is very essential for profitability of Shoat fattening. The animals should also be protected from predators and theft.

The other important factors for profitability and marketing of Shoat fattening is to finish the animal targeting a season with peak market and high consumers demand. Customers’ of high income group demand fattened ram and bucks, and season of peak market demand are public holidays such as New Year, Meskel, Christmas, Easter and Moslem holidays. The process of fattening involves first to construct shelter with feeder and water, purchase of Sheep and goats aged between 2.5 to 3.5 that have completed physiological growth, store enough roughage and concentrate feeds, make sure drinking water is available to animals throughout the day, vaccinate and deworm upon arrival of the animals, continues follow up of the condition and the health of the animal. The envisaged fattening farm will have a capacity of 10 heads of Sheep and goats per batch and the objective is to fatten two batches per year with three months feeding period per batch making the annual capacity of the business 20 Sheep and goats.

2. Assessment of Critical Viability Factors

Availability of Skill, experience and Technology: Sheep and goat fattening is not a new business in the Rift Valley districts, with large number of household numbers in rural kebele are engaged in the No Investment Item Unit Quantity Unit Total Price Cost A. Fixed Investment 1. Shed construction No 1 3,000 3,000 2. Feeder trough No 1 1000 1,000 3. Drinker No 1 1000 1,000 4. Water Berry No 1 1,000 1,000 Subtotal 6,000 B. Working Capital 1 For purchase of Sheep and goats (one Head 5 1200 6,000 2 Feecyclde )for 5 Sheep and goats (1 kg)@ 90 KG 450 6 2,700 3 Vdaaccys ines& treatment(lump sum– Birr Head 5 60 300 60 per head) Subtotal 9,000 Total Initial Investment Cost 15,000 business in all LRO project areas (East Showa, Arsi and West Arsi zones). In line with this, if LRO project provide appropriate training and financial support (installment money in the form credit on revolving modality) for the targeted (women and men) community members, the Shoat fattening would be viable and profitable Income Generating activity and could accommodate large number of people as the market demand high and unsatisfied. The project should support the target groups to undertake the business with minimum training and skill on modern Sheep and goats fattening, local ration formulation and management. In fact, there is also a possibility to get technical support from respective district agriculture offices and experience exchange visit from model Shoat fatteners.

Accessibility of Inputs: The most critical inputs required for Sheep and goats fattening are the Sheep and goats itself, feed and drugs and vaccines. From off take data of the districts there are reasonable number of livestock supplied for sale to the local market. This shows that there is no Shoat supply problem for LRO project beneficiaries in each district to participate in Shoat fattening. With respect to feed, farmers can grow improved forages such as annuals like cowpea, oats and vetch and /or plant perennials forage like leucine and sesbania. Improvement of crop residue can increase feed nutritional and weight gain. Roughages like grass hay, crop residues, sugar cane top and vegetable wastes can be bought from market and used for Shoat fattening. Concentrate ingredients from flour factory and oil mill by products such as wheat short and wheat bran as well as oil seed cake are available in zonal towns and districts. Molasses and brewer by products that constitute major concentrate feed for fattening are available in West Arsi, Arsi and East Shoa. Atela local liquor by product can be used for fattening, too. Feed processing factories preparing specialized sheep and goat concentrate feed prepared by feed processing plant from Hawassa and Bishoftu have agents and distributors in major towns in LRO project intervention zones. The major activities of LRO and project partners have to be organizing fattening farmers’ group and link them to agro-input dealers. Regarding health, there are government animal health clinics in most villages and private health service providers which they can easily access provided their financial capacity is build.

Market Potential and Marketing: Demand for Sheep and goats’ meat is increasing with the growth of the population and emergence of middle class society in towns and cities in the country. In addition, there are several market channels and outlets for fattened Sheep and goats in districts towns. Besides, there are traders who came and buy in the localities from such big towns as Shashamane, Hawassa, Adama, Bishoftu and Addis Ababa providing good market opportunity for fatteners.

3. Investment Capital Requirement

The total investment required for establishing a farm that can have a capacity to fatten 10 Sheep and goats per batch is estimated to be Birr 15,000 including Birr 6,000 for capital investment and Birr 9,000 for working capital. The key assumptions made in estimating the investment requirement are the following. • PSNP household establish a micro but modern Sheep and goats fattening farm, • PSNP household access credit from MFI with project guarantee, • A PSNP household manage 5 Sheep and goats per cycle and produce four times a year • PSNP households solely depend on household labor and thus labor is not included in investment calculation, • Households are expected to use feed that may be purchased in the locality and/or nearby towns and cities on a credit basis.

4. Sales and Income Plan

Sales and income forecast is done and provided in the table below assuming that farmers sell all their Sheep and goats at once at the end of each cycle and also assuming that they increase the number of Sheep and goats they fatten over the base year (by 20 in the first year, by 22 in the second year and by 24 in the third year). It should be noted also that the current average price of fattened Sheep and goats in the localities is taken for the calculation of sales income for all the three years, which is estimated to be Birr 3,000.

5. Annual Operating Expenses

Item Year Base Year Year1 Year2 Year3 Total Production in number(head) 20 22 24 28 86

Total sales income in Birr 60,000. 0 66,800.0 72,000.0 84,000.0 225,600.0

Annual operating expenses are calculated based on the major assumptions made earlier and other assumptions as provided in the table below.

No Type of Expense and Total Cost in Birr Assumptions Base Year1 Year2 Year3 Total Year (1-3yr) 1 Costs of Sheep and goats @ 24,000.0 26,400.0 28,800.0 33,600.0 88,800.0 1200Birr per head Head 2 Feed(1 kg perheadperdayfor90 10,800.0 11,880.0 12,960.0 15,120.0 39,960.0 days @ 6Birr per kg)

3 Vaccines & treatment (lump 1,200.0 1,320.0 1,440.0 1,680.0 4,440.0 sum– Birr 60per head) 4 Transport and other marketing 2,00.00 2,20.00 2,40.00 2,80.00 7,40.00 expenses Birr10 per head 5 Labor cost (1 person 25% of 9,125.0 9,125.0 9,125.0 9,125.0 27,375.0 his/her person day @ Birr 100 6 perInt dayerest @ ( 365 18% days) of the initial 2,700.0 2,700.0 2,700.0 2,700.0 8,100.0 investment per year) 7 Depreciation (20% of the fixed 1,200.0 1,200.0 1,200.0 1,200.0 3,600.0 capital per year) Total Expenses 49,225.0 52, 845.00 56,465.0 63,705.0 173,015.0

6. Net Profit Forecast

It is observed that Sheep and goats fattening as described b e l o w is profitable b u s i n e s s from farmers’ investment perspectives. As can be seen from the table below, in this small scale initiatives and fattening schemes a household would fattens 20 small stocks per year with the total investment cost and expenditure of approximately ETB 49,225.0, while the gross revenue accrued is about ETB 60,000 given a net profit of 10, 775. The net profit gain would increase to Birr 23,800 per year if we consider the costs of families own labour Birr (9,125), interest 2,700 and depreciation of 1200 which detract the actual net margin. net profit in the first year. This is including their labor expense, which is estimated at about Birr 9,125.00. The profit they may earn is also observed to be increasing from year to year largely due to the foreseen improvement in their production efficiency and increase Shoat price.

Description Base Year1 Year2 Year3 Total Sales income in Birr Year60,000 66,800.00 72,000.00 84,000.00 222,800.00 Operating expenses in Birr 49,225 52,845.00 56,465.00 63,705.00 173,015.00 Net profit In Birr = Sales 10,775 13,955.00 15,535.00 20,295.00 49,785.00 income-operating expenses

1.2 Business Plan Model for Small Scale Beef/Cattle Fattening Contents

1. Business Description 2. Assessment ofCritical Viability Factors 3. Investment CapitalRequirement 4. Sales andIncomePlan 5. Annual Operating Expenses 6. Gross revenue and Estimate of NetMargin

1. Business Description

The establishment of a small scale cattle fattening by PSNP households (women & youth) is

73 assumed to be started with a capacity of 2 oxen per cycle/round and three times per year. The size of cattle fattening should increase in second and third year to generate profit at the economy of scale. Fattening mean adding meat value through improving the management of oxen including selection of the right type of animals for fattening, housing, feeding based animal feed requirement, adlib provision of water, medical care and vaccination. In case of cattle fattening more than 50% of the production cost is feed, therefore cost effective rational formulation is very essential for profitability of Shoat fattening. The animals should also be protected from theft; at it is one of the challenges for the development of the business.

The other important factors in fattening business are finish the animal targeting customers’ demand and season at peak market demand. Customers’ of high income group demand fattened oxen, and season of peak market are public holidays such as New Year, Meskel, Christmas, Easter and Muslim holidays. The process of fattening begins from construction of shelter with feeder and water, purchase of animals that have completed physiological growth and not too old, store enough roughage and concentrate feeds, make sure drinking water is available throughout the day, vaccinate and deworm upon arrival of the animals, continues follow up of the condition and the health of the animal. The envisaged fattening farm will have a capacity of 2 heads of oxen per batch and the objective is to fatten four batches per year with three months feeding period per batch making the annual capacity of the business 8 finished animals.

2. Assessment of Critical Viability Factors

Availability of Skill and Technology: Cattle fattening is not a new a business in all the districts, but only few numbers of people are engaged in the business in all the nine districts targeted by the project. Therefore, the targeted community members can undertake the business with minimum training and demonstrations on modern cattle fattening. There is also a possibility to get technical support from respective district agriculture offices and experience exchange visit from model cattle fatteners in the districts and beyond.

Accessibility of Inputs: The most critical inputs required for cattle fattening are the oxen itself, feed and drugs and vaccines. Cattle for fattening are available from district market in all LRO project woredas. With respect to feed, farmers can grow improved forages such as annuals like cowpea, oats and vetch and /or plant perennials forage like leucine and sesbania. Improvement of crop residue can increase feed nutritional value and enhance live weight gain. Roughages like grass hay, crop residues, sugar cane top and vegetable wastes can be bought from market and used for Shoat fattening. Concentrate ingredients from flour factory and oil mill by products such as wheat short and wheat bran as well as oil seed cake are available in zonal towns and districts. Molasses and brewer by products that constitute major concentrate feed for fattening are available in West Arsi, Arsi and East Shoa. Atela, local liquor by product can be used for fattening, too. Feed processing factories in Bishoftu and Hawassa prepare specialized cattle fattening concentrate feed have agents and distributors in major towns in LRO project intervention zones. The major activities of LRO and project partners has to be organizing fattening farmers’ group and link them to agro-input dealers found in towns. Regarding health, there are government animal health clinics in most villages and private health service providers in major towns who can provide health prevention and treatment service.

Market Potential and Marketing: Demand for Sheep and goats’ meat is increasing with the growth of the population and emergence of middle class society in towns and cities in the country. In addition, there are several market channels and outlets for fattened cattle such as hotels, restaurants and butchers in districts towns. Besides, there are traders who come and buy in the localities from such

74 big towns as Shashamane, Hawassa, Adama, Bishoftu and Addis Ababa providing good market opportunity for fatteners.

3. Investment or Capital Requirement

The total investment required for establishing a farm that can have a capacity to fatten 2 oxen per batch is estimated to be Birr 36,880 including Birr 7,000 for capital investment and Birr 29,880 for working capital. The key assumptions made in estimating the investment requirement are the following. • PSNP household establish a micro but modern Sheep and goats fattening farm • PSNP household access credit from MFI with project guarantee • A PSNP household manage 5 Sheep and goats per cycle and produce four times a year • PSNP households solely depend on household labor and thus labor is not included in investment calculation • Households are expected to use feed that may be purchased in the locality and/or nearby towns and cities on a credit basis

No Investment Item Unit Quantity Unit Total Price Cost A. Fixed Investment 1. Shed construction No 1 3,000 3,000 2. Feeder trough No 1 1000 1,000 3. Drinker No 1 1000 1,000 4. Water Tanker No 1 2,000 2,000 Sub Total 7,000 B. Working Capital 1 For purchase of oxen(on cycle) Head 2 12,000 24,000 2 Feed for 2 oxen (4 kg)@ 90 days KG 720 8 5760 3 Vaccines& treatment(lump sum– Birr Head 2 60 120 60 per head) Sub Total 29,880.000 Total Initial Investment Cost 36,880.00

4. Sales and Income Plan

Sales and income forecast is done and provided in the table below assuming that farmers sell all their fattened cattle at once at the end of each cycle and also assuming that they increase the number of cattle they fatten over the base year (a total of 6 cattle in the first year, 9 cattle in the second year and 12 cattle in the third year). It should be noted also that the current average price of fattened cattle in the localities is taken for the calculation of sales income for all the three years, which is estimated to be Birr 20,000.00.

Base Year1 Year2 Year3 Total Year Production in number 6 9 12 27 (head)

Total sales income in Birr 120,000.0 225,000.0 300,000 645,000

5. Annual Operating Expenses Annualoperatingexpensesarecalculatedbasedonthemajorassumptionsmadeearlier and other assumptions as provided in the table below.

N Type of Expense and Total Cost in Birr o Assumptions Year1 Year2 Year 3 Total (1-3yr) 1 Costs of oxen@ 12,000 Birr per head 72,000 108,000 144,000 324,000 (6 oxen on first year) 2 Feed( 4 kg per head per day for 90 17,280 25,920 34,560 77,760 days @ 8 Birr per kg) 3 Vaccines & treatment(lump sum– 360.00 540.00 720.00 1,620 Birr 60per head) 4 Transport and other marketing 300.00 450.00 600.00 1,350 expenses Birr 50per head 5 Labor cost (1 person 25%of 9,125 9,125 9,125 27,375 his/her person day @ Birr 100 per day@365 days) 6 Interest ( 18% of the initial 6,638.00 6,638.00 6,638.00 19,914 investment per year) 7 Depreciation (20% of the fixed 1,400.00 1,400.00 1,400.00 4,200 capital per year) Total Expenses 107,103 152,073 197,043 456,219

6. Gross revenue and Estimate of Net Margin

It is observed that Sheep and goats fattening as described below is profitable business from farmers’ investment perspectives. As can be seen from the table below, farmers may earn Birr 13 thousands net profit in the first year. This is including their labor expense, which is estimated at about Birr 9,125.00. The rate return per unit of investment is lower for cattle than Shoat fattening. The economy of scale for cattle fattening is attained in the second year and when oxen size reaches 9 heads. The profit they may earn is also observed to be increasing starting from second year and beyond. The major benefit from cattle fattening is the employment opportunity created for a house hold during the project life.

Description Year 1 Year 2 Year 3 Total Sales income in Birr 120,000.0 225,000.0 300,000.0 645,000.0 Operating expenses in Birr 107,103.0 152,073.0 197,043.0 456,219.0 Net Profit= Sales income- 12,897.0 72,927.0 102,957.0 188,781.0 operating expenses

1.3 Business Plan Template for Poultry Production (Typical Model)

Contents 1. Description Production and Services 2. Financing the Project 3. ObjectiveBusiness 4. Management and Labor 5. Sales of chicken and egg 6. Annual Operating Expenses 7. Net Earnings Forecast

1. Description Production and Services

Poultry production remain most important sources of income and food for community in the project areas complementing household income accrued from the sale of crop and livestock production . In the process of Kebele and woreda levels prioritization and selection of livestock VC, poultry is the second most important, easily adaptable and implemented by women and youths groups in each project sites. Poultry scores second rank next to Sheep and goats in order of importance across all the rural kebeles in the project woredas.

The primary income of the household would be generated from the sale of poultry (selling chickens and eggs). The farm anticipates that each chicken will generate approximately Birr 985.50 of income per head from the sale of eggs for the household. Additional sources of income will include poultry litter that can be used as ruminant feed and soil fertilization.

2. Financing the Project

An assumption made by experts indicates that for sustainable and viable poultry business, the household has to start the poultry production with 50 chickens (optimum) in first year, then to 100 chickens in second year and 150 chickens in third year. For the starting flock the household is seeking an investment of Birr 38,125.00 of which Birr 6,500 is for investment and the remaining 31,625 is for operational cost for the first one year. The credit amount and loan agreement are to be further discussed during discussion with MFI. The business plan strategy is that the households will receive a 12 month loan with an1 8% interest rate from MFI. The loan detail is that Birr 6500.00 for fixed investment, Birr 4000.00 for pullet purchase, Birr 1200 for purchase of 1 quintal hen’s feed that can serve for two weeks, Birr 250 for vaccines and drugs. The total loan fund required will be Birr 11,950.00. After two weeks of farm operation the poultry farms start to cover their feed expense from own sales of egg.

No Investment Item Unit Quantity Unit Total Price Cost A. Fixed Investment 1. Chicken house and fence No 1 3,000.0 3,000.0 2. Feeder No 3 300.0 9,00 3. Drinker No 3 200.0 6,00

4. Water Tanker No 1 2,000.0 2,000.0 Subtotal 6,500.0 B. Working Capital 1 For pullet purchase Head 50 80.0 4,000.0 2 Feed for 50 chicken (0.125 kg)@ 365 days KG 2281.25 12.0 273,750.0 3 Vaccines& treatment(lump sum– Birr Head 50 5.0 250.0 5 per head) Subtotal Total Initial Investment Cost 38,125.031,625.0

3. Objective of the Business The Chicken Farms’ mission is to become an income generating activity for PSNP beneficiaries under LRO project focusing for income from poultry and egg.

4. Management and Labor

Chicken farm are primarily to be run by women and youth family members investing their labor and time and financial resources. LRO project staff and Woreda Livestock and fishery office and DAs will give training on poultry keeping and management. Follow up and mentoring will be carried out by these institutions, too. Supply of pullets will be arranged through linkage created between pullet producing companies in Bishoftu and any accessible markets, groups and individuals in B2B linkage model. Feed and vaccines/drugs supply will be arranged through B2B model.

5. Sales of chicken and egg The primary income stream for the farm will come from the selling of egg and chicken to consumers, traders and hotels. As stated in the introductory part, the anticipated income generated from each chicken is Birr 800. Sales and income forecast is done and provided in the table below assuming that farmers sell all their egg produced every day. It is assumed that egg laying hen number increase every year a total of 50 first year, 100 second year and 150 in the third year). Egg production is assumed that 80% of hens population lays at the beginning and end of a batch exit 90 of the hen population sold for meat. It should be noted also that the current average price of egg is Birr 3.75 and for a chicken Birr 110.00. The price for egg is set based on average current price of egg Birr 3.50/ piece and the anticipated egg price in year three to be Birr 4.00, then average the two egg price extremes is calculated Birr 3.75 per piece. Chicken price Birr 110 per bird is estimated based on FGD price estimation for chicken.

Item Description Year Year1 Year2 Year3 Total Total hen Population 50 100 150 300 Egg producing Hen 45 90 135 270 Egg production (80%) per year (Egg 13,140 26280 39420 78,840 producing hen x0 .8x 365 days) Income from egg production/yr x Birr 3.75 49,275.0 98,550.0 147,825.0 295,650.0

Chicken out of production 40.0 80.0 120 Income for sales of culled chicken( 4950.0 4,400.0 8,800.0 13,200.0 Chicken out of production x Birr 110)

Gross income from egg and chicken 54,225 102,950.0 156, 625.00 308,850.0

6. Annual Operating Expenses Annual operating expenses are calculated based on the major assumptions made earlier and other assumptions as provided in the table below.

No Type of Expense and Assumptions Total Cost in Birr Year1 Year2 Year3 Total No. of pullets 50 100 150 1 Cost of pullets@ 80 Birr per head 4,000.00 8,000.0 12,000.0 24,000.00 0 0 2 Feed( 0.125 kg per head per day for 365 27,375.0 54,750. 82,125.0 164, 250.00 days @ 12 birr per kg) 0 00 0 3 Vaccines and treatment (lump sum – 5 250.00 500.00 750.00 1,500.00 birr per head) 4 Transport and other marketing 300.00 600.00 900.00 1,800.00 expenses Birr 50per head 5 Labor cost (1 person 25%of his/ her 9,125.00 9,125.0 9,125.00 27,375.00 person day @ Birr 100 per day@365 days) 0 6 Interest ( 18% of the initial loan per 2,151.00 4,302.0 6,453.00 12,906.00 7 Dyeeapr)r eciation (20% of the fixed capital per 1,300.00 1,300.00 1,300.00 3,900.00 year) 0 Total Expenses 44,501.0 78,577. 112,653. 235,731.0 0 0

7. Net earnings forecast

It is observed that poultry as described below is a profitable business from farmers’ investment perspectives starting from year two. As can be seen from the table below, farmers may earn 4,000 birr gross earnings in the second year. This is including their labor costs, estimated at about 9,125 birr. The economy of scale for poultry starts in the second year and when the number reaches 100 heads. Income increases from the second year. In the third year, gross earnings double over the second year. The major benefit from poultry rearing is the employment opportunity created. It was found out that revenue per annum is estimated at 54,225 birr. Likewise, the overall cost was 44,501 birr. Thus the gross profit is calculated at 9,724 birr with a cost-benefit- ratio of 22%.

Description Year 1 Year 2 Year 3 Total Sales income in birr 49,275.0 102,950.0 156, 308,850.0 Operating expenses in birr 44,501.0 78,577.0 112,653.0625.0 235,731.0 Net earnings in birr = sales income-operating 4,774.0 24,373.0 43,972.0 73,119.0 expenses

Data Assumptions Result Number of chickens 50 Gram/day/chicken 125 Kilogram a day in total Price of the food 1200 for 100kg

Price per kilogram 12 Total costs a day Number of chickens 50 50 chickens Gram/day/chicken 125 125 gram Kilogram a day in total 50 chickens x 125 gram 6,250 gram. 6,250/ 1,000= 6.25kg Price of the feed 1,200 birr/100kg 1 ,200 birr for100kg Price per kilogram 1,200 birr/100kg = 12 birr 12 birr a kilogram Total costs a day 6.25 kg x12 birr = 75 birr 75 birr a day

Data Assumptions Result Age of arriving 20 wks 20weeks Age of leaving 90wks 90weeks Total of week sat the farm 90weeks-20weeks =70 70weeks Total of days at the farm 70weeks x7 days=490 490days Total of gram a chicken 490daysx125gramaday 61,250gramor61.25 Kilogram Total of costs a chicken(70wks) 61.25kgx 12birr 735 birr Total cost 365 days 45.625 x 12 547.50 Total cost for 50 chickens per year 547.50 x 50 27,375.00 Total of costs for 50chickens(70wks) 735 birr x 50chickens 36,750 birr

Egg production and income earned per day

Data Assumptions Result Number of egg-laying chickens 45 45 chickens N umber of eggs a day 45 x 0.8 36 eggs A verage number of eggs sold a 36 36 eggs day(personal contacts, market, own Pshoricpe) o f an egg 3 birr 3 birr Income a day 36 eggs x 3 birr 108 birr Income a week ( 7 days) 108 birr x 7 days 756 birr Income a month (30 days) 108 birr x 30 days 3,240 birr Income a year ( 365 days) 108 birr x 365 days 39,420 birr

Chicken Culled Out Of Production

Number of non-producing chicken 40 40chickens Price of achicken 110 110 birr Afford 40 4400 birr chickensx110birr

ANNEXES 1. List of people contacted in the study woredas People met in Assessment woredas

No Woreda Name Sex Remark Ato Yasin Hussein M Woreda OoA 1 AtoNura Kedir M Woreda OoA/SME 2 AtoTilahun Bekele M Woreda OoWYCA 3 W/o Neima Usman F Woreda OoWYCA 4 W/o ZebibaAhimed F Woreda OoWYCA 5 W/o Workinesh Sisay F Woreda OoWYCA 6 W/o ZaharaAliyii F Woreda OoWYCA 7 Ato Amano Lencho M Trekker 8 AtoTsegaye Mamo M Input supplier, Dhera town 9 AtoMidhekisoShume M Dodotaalem kebele

10 Dodota Ato Hussein Mohammed M Trader, Dhera town 11 HajjiiQassoUmer M Feedlot, outskirt of Dhera town 12 AtoAhimedUmer M Feedlot, outskirt of Dhera town 13 Ato Lemma Negash M OoCDP 14 W/o GileneshBelete M OoCDP 15 AtoDeyasGemechu M OoT 16 Ato Sultan Mohammed M OoT 17 AtoShewangizawDemisse M OoT 18 AtoMustefaAhimed M OoT 19 W/o Hawa Tuna F Consumer 20 W/o ShittoHirpo F Consumer 21 Ato Kedir HajiiAhimed M Butchery 22 Ato Jemal aliyi M OCSSCO

No kebele FGD Participants Residents of the kebele 1 AtoTobsashibiru M Residents of the kebele 2 Hajii Mohammed M Residents of the kebele 3 Ato Muhammed hajo M Residents of the kebele 4 W/o Ayuture F Residents of the kebele 5 W/o Sadiya Abebe F Residents of the kebele

6 Dodotaalem W/o Dame Dube F Residents of the kebele 7 Ato Kedir Feyiso M Residents of the kebele 8 AtoSuleeJarra M Residents of the kebele 9 AtoKelilUmer M Residents of the kebele 10 W/o Geno Hussein F Residents of the kebele 11 W/o Shito Legesse F Residents of the kebele 12 W/o FungaDhadacha F Residents of the kebele 13 W/o DaduTujara F 14 AtoJambo Dessie M 15 Jemal Haji Aman M 16 ShewayeBedhaso F

No Woreda Name SEX Remark

Si 1 re Getahun M CRS STAFF

2 BenolGurane M CRS STAFF

3 Yusuf Id’aa M CRS STAFF 4 Amana tulageleto M SME 5 DemisseLemu M OoA 6 Dinku Debebe M OoA 7 Daniel Tadesse M OoA 8 Mihirid Abdo M OoA 9 AgansNegash M OoA 10 Wegen Abebe Aklil M Butchery 11 Elfinesh Alemu F Hotel 12 Anisa Abdo F Consumer 13 AbdellaAdem M Trekker 14 Hussein Sheik Jibril M Trekker 15 Kedir Ibsa M Trekker 16 AliyiIbro M Trekker 17 Kemal Hussein M Trekker 18 AwelTewekel M YMG 19 Sule Jarso M Trader 20 Birhanu Feyisa M OoWCYA 21 HawaAbduselam F OoWCYA 22 Desalegn Gemechis M OoWCYA 23 Getahun Dechasa M OoWCYA 24 Kedir Hjii M OoTI

No Kebele FGD 1 Tehahamda M 2 Abdurehmanahimed M

3 AleluGesella Redwansefu M 4 Nureaman M 5 GorfeBeliste F 6 AbejeAdem M 7 Abduselamhajii M 8 Nuri tuna M

9 Amina tusa F 10 Tuba mohammed F 11 Zeyenebabatu F

No Woreda Name SEX Remark 1 Lemakebebe M SME

2 Boset Aman Hussein M Ooa 3 Asnakeadugna M Ooa 4 Meskeremaschenaki F Ooa 5 Ashenafirayoo M Ooa 6 Ketema Tadsse M Ooa

7 Daniel Tadesse M Ooa 8 Mamush Teshome M Ooa 9 Mengisteurgie M Butchery 10 Adugnalakew F Hotel 11 Tesemaaddisu F Hotel 12 Woyinieshet Bekele F Consumer 13 Chaladegefu M CRS/LCF 14 ANBESE GUTA M CRS/CA 15 Ashebirbirhanu M CRS/Supervisor 16 Urgessamelka M CRS/FA 17 Debelajufar M CRS/LCF 18 Gezahegneamenu M Ooti 19 Solomon Tolosa M Ooti 20 Hussenaman M Ooti 21 Solomon Shiferaw M Ooti 22 Gutema Biftu M Oocdp 23 Dagimlenchisa M Oocdp 24 MULU WORKU F Oowcya 25 ZEBIBA ADEM F Oowcya 26 Antenehfeleke M YMG 27 Ditafekadu M Trader 28 Geleto Bulcha M Trader

No Kebele FGD Sex Remark 1 Desituhawii F Kebele resident 2 Beyene Tola M 3 Kombegugsa Shibiruregassa M 4 Gutema Rorisa M 5 Aboyekelecha M 6 Aberanegewo M 7 Nebi Mojo M 8 Tajidhadi F

9 Dinkineshdilbo F 10 Shewaye Mamo F 11 Alemu Jima M 12 Ashuwondimu M 13 Abayeneshnegash F 14 Dawibune F 15 Gemechubune F 16 Lemidhaba F 17 Negassadigu M 18 Nasha Korma M

2. List of people met at the export abattoirs visited No Location Name Remark 1 Modjo Ato Saleamlak Abnew Modjo Modern Export Abattoir • Small ruminants

2 Modjo Ato Tesfaye Organic export abattoir 1. Small ruminants 3 Modjo Ato Tesfalidet Luna export abattoir 1. Small ruminants 2. Cattle 4 Modjo Ato Kebede Melaku Alana1 (Ethiopia Rendering and Casing Industry (small and large ruminants): 1. Small ruminants 2. cattle 3. Meat/blood/bone meal 5 Ziway Dr Nanda Kumar Alana 2 1. Small ruminants 2. Cattle (future plan) 6 Ziway Ingrid van Ginkel at Verde Beef Processing Ltd (“Verde Beef”) [email protected] 1. Cattle 7 Modjo Mr Kahan (0911645893) Halal food industry 1. Small ruminants 8 Modjo Ato Balcha Yongtay Offal Processing and Casing Industry (both non-edible and partly edible offal of small and large ruminants)