Journal of Food Processing & Technology

Abstract

Dairy Value Chain Analysis in Meta District, Eastern Ethiopia

Sosina Bezie, Abay Bantihun and Mengisitu Ketema

To identify the dairy value chain map, examining the performance of intermediators in the chain and analyzing the determinants of milk market participation decision and level of milk marketed in the study area was those specific objectives. The primary data for this study were collected by the three-stage sampling technique. In the first stage from 55 kebeles, eleven kebeles were selected purposively based on production potential. In the second stage out of those selected kebeles, 4 of them were selected randomly and third stage 121 producers were randomly selected from a list of dairy producer kebeles. Meanwhile, 46 traders from different markets and 28 consumers in Dire Dawa, Harar and Meta towns were selected and interviewed. Heckman two-stage models were applied to identify determinants of milk market participation and volume of milk supply to the market. The cost margin indicates that cafes obtained 6.57 Birr/litre the highest share profit margin profit and the lowest profit goes to retailers (1.85 Birr/litre) next to producers (1.86 Birr/litre). Results of Heckman two-stage selection model shows among those 14 explanatory variables hypothesized to affect milk market participation decision, distance to the nearest market, nonfarm income, crop income, land size and age of household were found negatively and significantly affecting participation decision. Supplementary feed, hybrid dairy cows, livestock size (TLU) were significantly and positively influence the value of milk marketed. Mill’s ratio was significant at outcome equation and it indicates that there was selectivity bias between those sample dairy producer households and Heckman two-stage model was appropriate for the collected data. The value chain analysis revealed that the major value chain intermediators are input suppliers, producers, collectors, rural wholesalers, urban wholesalers, retailers, cafes and consumers. Value chain supporters are Meta Agricultural Office and Haramaya University. It is also found that milk passes through several intermediaries with value-added products (boiled milk and yoghurt) before reaching the ultimate users. Therefore, policies aiming at increasing producer’s provision of modern inputs, number of dairy cows and improving livestock production of dairy cows and change of their attitudes towards dairy production and participating to the dairy market were recommended to accelerate diary value chains development in the study area.