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Molla Ayalew, 58, lives with 12 members of his
family in a rented house in the Kirkos District. The
lone breadwinner for his family, he nurtured nine of
his offspring feeding them unprocessed milk supplied
by the nearby cattle owner with his 700 Br monthly
income.
However, the supply of milk he depended on for years
later became a memory as the nearby rancher told him
that he could no longer supply him the milk. Out of
desperation, Molla’s family started to buy the
high-priced tetra packed milk for the last year.
However, the currently witnessed notable shortage
and sky rocketing prices of industrially processed
milk in Addis Abeba has confused Molla as he is
constrained with the purchasing power of his budget.
What makes the situation even worse for him is the
birth of his last two children which necessitates
the continuation of the supply chain no matter what.
“The last option I have is to feed my children
powdered milk,” Molla told Fortune
dumbfounded.
Presently, in most of the big shops and supermarkets
of Addis Abeba, milk is in short supply and their
prices are soaring through the roof. Depending on
the types of tetra packed milk, the average price
per litre has shot up by nearly 40pc within a period
of two years. This has affected a cross section of
families at many levels of the social hierarchy in
Addis Abeba.
A study conducted by Tefera Abraha, a senior expert
in the Addis Abeba Urban Agriculture Office,
indicated that the aggregate annual supply in Addis
Abeba is 64.5 million litres per year while the
biological demand of milk over five times this
amount at 321.7 million litres per year.
Though the discrepancy between the demand and the
supply is noticed in the city in all milk brands,
the shortage in one of the brands, Mama, is
remarkably high pushing its price to seven Birr from
4.50 Br per litre.
Scarcity of pasteurised milk, particularly Mama, in
many supermarkets in Addis Abeba has been observed
resulting in many selling Mama on a rationed
schedule. At times, consumers bustle about the city
and stocking the quantity of milk from supermarkets
in the city.
An attendant of the Fafresh Supermarket on the road
from Meskel Square to Gotera, Abera Seme agrees that
his business’ Mama Milk is sold to customers on
ration. He further admitted that due to the duration
with which Mama would last without being spoiled,
most consumers prefer it over other brands. Hence,
Farfresh stocks larger quantity of Mama whenever
possible, though the availability of all brands of
the processed milk have become even scarcer of late,
he told Fortune.
Mama currently is the number one choice of most
consumers in almost every corner of the city. In
most of the supermarkets, the first brand of milk
that consumers would like to pay for is Mama.
Melaku Berihun, the manager of Sebeta Agro Industry,
which launched operation in April 1998
supplying Mama, believes that the fact that most
consumers prefer Mama has to do with the way it is
being produced to meet the satisfaction of consumers
both in terms of taste and nutrition.
Melaku told Fortune that the shortage of raw
milk supply from farmers living in the outskirts of
the city brought the price hike in their product.
The dairy farm, located 40Km west of Addis Abeba at
Sebeta town of the Oromia Regional State, obtains
the raw milk from milk collectors obtaining it
through 2,000 dairy farmers in and around Sebeta and
its own farm.
Commercial co-operatives and farmers living around
the metropolis supply the majority of milk used in
Addis Abeba. However, their supply has substantially
dwindled these days following the price hike in
frushika and fagulo produced by grain
milling factories.
Manaye Desalegn, who runs a dairy farm in Debre Zeit
(Bishoftu) told Fortune that animal
feed has indeed become unaffordable. Most people
that he knows previously winning their daily bread
from selling milk have now chosen to be employees of
factories.
The price of bi-products used for animal feed like
frushika, which was available for 40 Br per
quintal a year ago has now shot up by 300pc, as the
price of a quintal is being sold at 120 Br. Another
edible oil bi-product used for animal feed,
fagulo, which was going for 90 Br per quintal
one year ago, has hit a record high price when it is
sold for 300 Br per quintal.
“As factories’ animal feed bi-products became
increasingly unaffordable, the lack of fertile
grazing land to field the cattle has exacerbated the
already deteriorating situation on the part of the
dairy farmers,” Tefera said.
However, it is not only the price hike in animal
feed that caused the reduction in the supply of raw
milk. The fact that the size of investment in the
flower farms has significantly increased in the past
six months on land previously used by the dairy
farmers to graze their stocks over, have contributed
to the decline of the number of farmers
participating in milk production, Tefera emphasised.
He further said that the booming construction works
in and around the areas where most of these farmers
are living and would be employed by, made them to
look elsewhere to generate their incomes.
Over the past six months alone, flower farms in the
country have grown to occupy 805hct of land up from
700hct. Moreover, within the past three years, more
than 750hct of land has been transformed to flower
farming, sources from the sector disclosed to
Fortune.
The fact that cash crops such as wheat from which
frushika could be obtained has increased its
prices to 295 Br per quintal, mean that the
bi-products such as frushika as well as
fagulo obtained from oil-seed widely used for
animal feed became unaffordable especially for those
subsistent dairy farmers, said another expert in the
dairy industry.
Tadelle Yilma, general manager of Ada’a Flour
Factory, one of the largest suppliers of furshika,
argued that the more the price of cash crops such as
wheat inflates, the less the availability of its
bi-product. For instance, frushika, which is
the bi-product of wheat, constitutes 28pc of the
crop’s body. This means that with the same rate of
increase in the price of wheat would directly cause
its price to inflate Tadelle added. The same applies
to other bi-products used by dairy farmers for
animal feed; due to the high demand on oil-seed, the
price of its bi-product such as fagulo would
shoot up, he added.
However, attention should be given to correct
feeding and feeding practices, to the animal
housing, production environment and the introduction
of modern dairy management package as well as coming
up with better incentive to get investors involved
in the dairy industry, a milk expert suggested.
Desalegn Tassew, general manager of Shola Dairy
Development Enterprise, shares the idea that the
main reason for loss of the supply is the high
increase of prices in animals feed, besides the fact
that the majority of farmers in the country are
subsistent farmers and do not farm the dairy product
in commercial capacity to meet the growing demand.
Shola Dairy is the first milk processing enterprise
in Ethiopia. It came into existence in 1979 at a
project cost of 4.4 million dollars and employs 358
workers. Located in Lamberet, the Enterprise was
producing 60,000lt per day. However, for the
combination reasons mentioned, currently, the
production has declined by 42pc, as it produces only
25,000lr of pasteurized milk each day.
The increase in animal feed affected the dairy
industry in terms of production, causing a price
hike beyond the means of many people’s budgets,
Desalegn argues.
According to Biruk Kidan, deputy manager of MB Plc
(Family Dairy), if more and more milk processing
plants would be encouraged to come into the market,
prices would be determined by market forces rather
than being monopolised by large scale processors
such as Mama and Shola.
“The more milk processors enter into the market, the
better for those farmers who earn for living from
producing dairy products to set their own prices,”
he added. “The trend by which the prices of fresh
milk set by the two larger plants that hardly
benefit the milk producing farmers, producers have
been forced to divert their production line.”
Family Dairy, owned and managed by Machal Argaw, was
established in 2005. From its location in Lafto
Industrial Zone, Family’s supply chain exists
through the Debre-Zeit Ade’a Cooperatives. Although
initially the company had managed to process
20,000lt of milk per day, currently, the capacity
has declined to 5,500lt a day, due to the decrease
in supplying of milk from the farmers. These milk
processors are working below their capacity due to
the decline in milk supply from the dairy farmers.
Biruk stressed that if investors would be encouraged
to enter the sector by way of incentive, the
increase in the production of milk would be
beneficial to consumers. More and more investments
in the sector would have the impact in declining the
steady increases of prices in pasteurized milk, for
there would be competition between suppliers.
Another milk processor, relatively new in the
industry, Lema, owned by Marco Vigano (Professor),
is processing 1,500lt of milk per day. According to
Mr. Vigano, in addition to the shortage of animal
feed, the recently introduction of surtax by the
Ministry of Finance and Economic Development (MoFED)
has seriously affected the capacity of production,
as paying more to import crèmes from overseas would
limit the volume of production that the new
companies such as Lema could process.
With things being improved to encourage the small
processors, however, Mr. Vigano expressed optimism,
since the demand on fresh milk tends to increase as
far as consumers in Addis Abeba are concerned; he
believes there are lots of opportunities for
business in the dairy industry.
The growth of population is one factor to play
against the equilibrium of the existing high gap
between the demand and supply balance of the milk
market. As the fertility rate grows, the demand for
such basic commodities like milk is expected to grow
exponentially.
The research conducted two years ago by TAM and HNV
consultants at the cost of 50,000 Br on behalf of MB
Plc stated that there is a 50pc deficit between the
demand and supply of fresh milk in Addis Abeba.
Consumers in the city require 150,000lt of milk each
day vis-a-vis the combined production of 75,000lt of
milk being produced per day.
Consumers such as Mola, whose income deprives the
ability to feed his kids with fresh milk would be
very happy to see the increase on the production of
milk by way of encouraging more investors in the
sector as well as those involved in the production
of the milk all the way from the dairy farming
families in the rural areas to the processors in the
city.
When the issue of milk was raised for discussion,
Tsige Hailu, who owns a grocery store in Olympia,
grumbled and checked her wristwatch as if she would
not want to waste time talking about it. For her,
affording and finding pasteurised milk such as Mama
became a source of concern and she had to opt for
powdered milk to feed her three children.
Importers of powdered milk such as NIDO, however,
are enjoying the shortage in the market as consumers
consider it cost effective now.
Rather than spending seven Birr for a litre of
packed milk that would not sustain his two children
for more than a day, Mola buys NIDO at 25 Br and
feeds the kids for five days that would save him at
least 60 Br every month, eight per cent of his gross
income.
Abdul-Karim Bedri, who owns Petram, the sole company
importing NIDO in Ethiopia from the Netherlands,
says his company has, since January 2007, increased
the supply by 30pc.
“Because fresh milks are becoming not only costly
but also they are rare in the market due to the
decline in production, NIDO becomes the convenient
commodity to replace the need on the fresh milk,
Abdul-Karim told Fortune.
The four major fresh milk processing plants in
Ethiopia, Shola, Mama, Lema, and Family Dairy, have
combined production capacity of 50,835lt per day.
Despite the fact that Ethiopia has the largest
livestock population in Africa, the dairy industry
in the country has long been inefficient in
exploiting the local and foreign demands.
An expert told Fortune that the fate of this
potentially vital sector depends on the attention
given to it in terms of having to transform the
existing dairy farming in the country into an
industrialised system, creating optimal integration
between the production unit (the cow), technologies
and equipment (engineering), the operator (the
farmer) and the production environment (the dairy
farm).
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