Milk production in Ethiopia is done largely by the smallholder farmers in the high lands and in low land areas of the country. However, the Ethiopian dairy production and market systems face severe constraints like poor genetics, insufficient access to proper animal feed and poor management practices all contribute to the low productivity levels. Similarly, dairy producers and downstream actors in the value chains face many challenges in getting milk to market. Hence this study analyzes dairy products value chain.
Value chain analysis framework and financial analysis were used.
Result and conclusion
The dairy value chain is complex involving multiple actors and their interaction. The major direct actors include input suppliers, small holder farmers, village collectors, cooperatives, semi processors, hotel and cafés and consumers. Besides indirect actors such as supportive and regulatory service providers are also involved. Though all actors have positive profit margin, the largest share goes to hotel and cafés. The financial analysis along the entire value chain shows that Producing and marketing of dairy products is profitable and creates higher value added. Concerned body should improve access to services and collective actions to enhance local value additions and Smallholder milk producers must be organized into dairy cooperative groups and subsequently into dairy unions.