Through the grants, thousands of smallholder farmers will have access to reliable buyers, and tens of thousands of consumers will gain access to formally processed dairy products.

The equipment included dairy packing machines, milk pumps, milk cooling tanks, milk pasteurizers and boilers, milk transportation trucks and milk testing equipment.

The equipment represents part of $1.9m in USAID grants to the 24 grantees, which the grantees matched with their own investments of $4.2m.

A USAID official told DairyReporter the grantees are commercial farmers (4), privately owned companies (12), and cooperatives (8). Seven of the companies/commercial farms are women owned. Nineteen of the grantees are in the dairy industry.

The spokesperson said the majority of the equipment is dairy cooling equipment that will be placed around dairy processing facilities to allow smallholder farmers to sell their milk to these facilities making use of chilled collection-centers.

“These tanks are placed in the vicinity of the producers, so that farmers have easier access to an outlet, allowing processors to collect evening milk and keep it cool until morning collection. ​

“The processing plants also introduce quality control and in some cases introduce quality based payment, allowing farmers to invest further in the quality of their milk,”​ the spokesperson said.

Working together

Minister of Livestock and Fisheries Professor Fekadu Beyene and USAID mission director Leslie Reed handed over the equipment in the presence of representatives from various private sector entities, federal and regional government offices, development partners, sector related associations and cooperatives.

Reed urged the Ministry of Livestock and Fisheries and private-sector stakeholders, including the grantees, to work together to make the livestock industry safer and more profitable to improve lives and sustainably strengthen the Ethiopian economy.

The grant recipients included cooperatives and private businesses that produce, collect, process and sell dairy products.

The USAID spokesperson said the 24 grantees are all locally-owned businesses and cooperatives.

“Foreign companies/investors are involved in the dairy sector, but still on a rather limited scale and mainly around the capital Addis Ababa,” ​he said.

“The USAID-provided grants support the expansion of dairy processing plants in the Addis area, but also in other urban centers of Ethiopia where formal dairy processing was basically non-existent to date (Bahir Dar, Mekelle, Adama, Awassa, Gondar).”​

Other challenges

The Ethiopian dairy sector’s main challenge is the informality of the sector (92-95% of the milk produced in Ethiopia is consumed at household level or sold informally), making it difficult for farmers to invest in their dairy production and productivity, the spokesperson said.

“There is also no quality control on milk in the informal market system,”​ he added.

The spokesperson added Ethiopia’s dairy consumption is highly influenced by the fasting culture (the Ethiopian Orthodox Church designates 180 days per year as obligatory fasting days), reducing milk demand by an estimated 30% to 70%, depending on the region, for periods of up to two months.

During fasting season, businesses continue to buy milk from smallholder farmers, which they process into cheeses, butter, yogurt and long shelf life milk, which is their way to overcome the demand fluctuation.

Also, companies can reach urban center markets where the influence of the fasting season is less noticeable than in rural areas.

Five-year initiative

USAID’s Livestock Market Development is a five-year activity implemented as part of the US Government’s Feed the Future initiative, with the goal to improve smallholder incomes and nutritional status in four regions of Ethiopia.