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� Ethiopia
A Market Systems Analysis

of the Poultry Sector
in Sidama & Amhara, Ethiopia
June 2021
Supported by On behalf of Implemented by

X A Market Systems Analysis
of the Poultry Sector
in Sidama & Amhara, Ethiopia
June 2021
By: Steve Hartrich & Amdework Berhanu

Copyright © International Labour Organization 2021
First published
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Title: A Market Systems Analysis of the Poultry Sector in Sidama & Amhara, Ethiopia
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5
Table of contents
Executive Summary .................................................................................................................................................6
1. Introduction.....................................................................................................................................................................9
1.1 Project introduction..................................................................................................................................9
1.2 Study purpose and scope ........................................................................................................................9
1.3 Study methods.........................................................................................................................................10
1.4 Report structure......................................................................................................................................10
2. Sector Structure.......................................................................................................................................................... 13
2.1 Market Overview......................................................................................................................................13
2.2 History and trends...................................................................................................................................16
2.3 Role of the target group.........................................................................................................................18
3. The Market System.................................................................................................................................................... 21
3.1 Core market.............................................................................................................................................22
3.2 Supporting functions..............................................................................................................................27
3.3 Rules and Regulations............................................................................................................................30
3.4 Constraints summary..............................................................................................................................34
4. Opportunities .............................................................................................................................................................. 37
4.1 Key market actors....................................................................................................................................37
4.2 Potential areas for intervention.............................................................................................................39
5. Conclusion.............................................................................................................................................. 42
Annex A: Research Interview List..........................................................................................................................43

6 A Market Systems Analysis of the Poultry Sector in Sidama & Amhara, Ethiopia
Executive Summary
Within the German Federal Ministry for Economic for a supplementary income to more productive,
Cooperation and Development (BMZ) funded commercial farmers that can earn a solid income
ProAgro Ethiopia project, the International Labour with poultry farming being their core business.
Organization (ILO) was tasked to conduct market
In view of the sector’s poor competitiveness and
systems analyses (MSAs) in three agriculture sec-
the relative inability of women to progress to
tors - fruits and vegetables, edible oils and poultry.
more productive roles, this analysis has flagged
These analyses have been conducted to provide
that high input costs, a lack of opportunities
the project with a strong basis for a more targeted
to graduate from household to commercial
project design and implementation1.
farming, and poor sector investment policy are
In this light, this MSA looks into the poultry sector the three most pressing issues. These issues are
in the Amhara and Sidama regions to identify the limited by a series of market constraints, which
key market constraints to both SME growth and include: feed input supply shortages, poor
the creation of more and better jobs for women. animal health services, poor orientation and un-
Based on this analysis, a series of practical, evi- availability of extension services and business
dence-informed interventions have been identi- development services; poor access to finance;
fied to address those constraints, enhance market foreign currency controls; import duties and
and SME growth and create more and better jobs. taxes; poor sector coordination and limited
sector regulations and policies.
The poultry sector is characterised as largely
uncompetitive, completely domestic-oriented While not all constraints can be addressed in this
and more reliant on egg production than meat project, this assessment has identified eight prac-
production. More than 90% of Ethiopian pro- tical intervention ideas. These interventions intend
ducing chickens are indigenous breeds, which are to cut key input costs and enhance opportunities
common in household farming and have mortality for female farmers, such that the sector can trans-
rates in excess of 70% and much lower produc- form from being traditional, to more commercial
tivity potential – producing about one-fifth to one- and competitive. If done inclusively, this trans-
third of the number of eggs of imported breeds2. formation can serve as a pull to create more and
While the sector has seen steady growth over the better jobs for women. In this regard, the interven-
last 15 years, in part due to entry of commercial tions are concentrated in three key areas:
businesses, growth has been much less impres-
1. Reduce costs to input supply by addressing
sive than that of the potential consumer base of
key input cost drivers in day-old chicks and
the emerging Ethiopian urban middle class. This
feed production;
is large part due to increases in feed costs, which
typically make up about 70% of the cost in poultry 2. Enhance commercial orientation of
production. semi-intensive female farmers through
In looking at the role of women in the sector, sev- better targeted extension services, business
eral key challenges prevail. For starters, about four development services and access to finance;
in five household poultry farmers are women, but and
they are rarely found owning or managing more
3. Support sector investment policy to make
commercial, small and medium-scale poultry
it easier for new entrants, and in particular
farms. Their work in poultry farming is usually
women, to get into commercial poultry pro-
done on top of their already demanding house-
duction as well as produce raw materials for
hold work, which makes it difficult for women to
feed, to address key feed input shortages.
shift from being part-time poultry farmers looking
1 The study was commissioned by the ILO ProAgro Ethiopia project. It received inputs from Ruchika Bahl and Meseret Shiferaw
from ProAgro project and several other Specialists from different technical units in ILO.
2 FAO. 2019. Poultry Sector Ethiopia. FAO Animal Production and Health Livestock Country Reviews. No. 11. Rome.
Executive Summary
7
Notes
On confidentiality. All data collected through primary research have been made anonymous so that
individuals cannot be identified. Instead, we refer in generic terms to ‘interviewee(s)”, “informants” or
“respondents”.
On study limitations. The study is largely developed based on the perceptions and opinions of key sector
stakeholders. Although information was triangulated by different sources where possible, it is recognised
that not all opinions and perceptions could be cross-checked and validated.
On the views and opinions. The views and opinions in this assessment are those of the authors and not
of the International Labour Organization or its country office in Addis Ababa.
1 Introduction
1.1 Project introduction

The ProAgro Ethiopia project has been funded by the BMZ Special Initiative
on Training and Job Creation to support Ethiopia to develop its agro-industry
potential and create more and better jobs. To do this, the project will work
on a portfolio of initiatives that support the development of employment
policies at a macro level, address key bottlenecks in agro value chains, and
enhance access to finance, worker skills, cooperatives, entrepreneurship and
the enabling environment.
One of the first tasks of the ProAgro Ethiopia project’s inception phase is
to conduct market systems analyses on three selected sectors: fruits and
vegetables, poultry and edible oils3 for the Amhara and Sidama regions.
This market systems analysis (MSA) unpacks the poultry market, its key
constraints and the root causes to those constraints. The analysis has been
conducted by building on the extensive research conducted in Ethiopia on
poultry as well as through conducting field research interviews with key
stakeholders in government, coordination bodies and cooperatives, key de-
velopment actors, the private sector and farmers.
The end result of this MSA is to provide the ProAgro Ethiopia project with po-
tential intervention ideas that can address key market constraints and have
a high potential to deliver more and better jobs, with a particular target of
SMEs and female workers in the Amhara and Sidama regions. The interven-
tions will form an initial implementation departure point for the ProAgro
Ethiopia project and will be structured in a way that will put local actors - both
public and private - in the lead and in a position to continue the delivery of
interventions even after the project has finished - enhancing project sus-
tainability.
1.2 Study purpose and scope

This analysis sets out to understand the project’s target group - female and
male farmers, workers and small and medium enterprises (SMEs) - in the
context of the poultry sector in Amhara and Sidama. Given the project focus,
the analysis has delved into key implementation areas that influence the
sector, including access to finance, skills, cooperatives, entrepreneurship and
the enabling environment.
3 Sectors were selected through a sector selection study completed in November 2020.
The sector scope includes both poultry broiler

(meat) production and egg production. While mar- 1.3 Study methods
kets for the end products of both are different, the
challenges facing both egg and broiler production The research was carried out in two phases:
are similar enough to where they should be con-
1. Desk research: Available literature was gath-
sidered alongside one another. Additionally, this
ered to provide a framework for the primary
assessment will touch on non-commercial “back-
data collection process. This included review
yard” poultry farming as it has a substantial pres-
of national laws, sector data and market
ence in Ethiopia. However, sector transformation
trends as well as research and analyses on
and engagement with SMEs will not happen to any
the sector conducted by other development
scale through work at the “backyard” level, and
agencies and research institutions.
thus, the core focus of the study is commercially
oriented poultry production. 2. Field research: Primary research was con-
While this analysis provides a strong departure ducted in Addis Ababa, Bahir Dar, Gonder,
point for the project, it is recognised that markets Kinzila, Hawassa, and Yirgalem during the
change over time and the project should period- three weeks of February 2021. During this
ically conduct minor follow-up analyses or action stage, a total of 28 businesses and organisa-
research initiatives to continue to remain current tions were interviewed. The interviews were
in a fast changing market. This will be particularly semi-structured and conducted with gov-
important in consideration of the rapid pace of ernment officials, producer associations and
Ethiopia’s development and re-emergence of the business owners, non-governmental organi-
economy from COVID-19. sations, farmers and key industry informants
(see Annex A for details). The interviews pro-
vided an in-depth picture of the sector from a
Box 1: What is a market system? diverse set of actors and opinions.
A market system is the network of actors and
factors that interact to shape the outcomes of an
The research is based on the methods of ILO’s
exchange. Imagine a farmer selling chickens to a Value Chain Development for Decent Work guide 4
trader in a local market. The quality and quantity and the Market Systems Analysis for Decent Work:
of that exchange is determined by the farmer’s A User-friendly Guide 5. Results were validated
knowledge of modern farming methods (‘factor’) through triangulation of data and methodologies.
obtained from extension agents (actors); as well as This means the research uses different types of
access to finance from banks, and productivity-en- data (i.e. primary and secondary) and multiple
hancing technologies available in local retail stores.
methods (e.g. observation, surveys).
A similar web of factors and actors could be applied
to workers ‘selling’ their labour in a factory; for ex- The project validated the study findings at a vali-
ample, skills acquired from training institutions, or dation workshop attended by the ILO’s tripartite
regulations governing overtime. partners and relevant stakeholders. Here, more
In market systems jargon, these ‘actors’ are known than 30 participants discussed the findings and
as market players. ‘Factors’ are split into: identified suggested changes, which have been
- Supporting functions. The context- and sec- taken into consideration in the final revision of
tor-specific functions that inform, support this report.
and shape the quality of exchange; such as
information, skills, infrastructure, finance and
access to markets.
- Rules. The legislative and regulatory environ-
ment, including policies, voluntary standards
and social norms that guide day-to-day atti-
tudes and conduct.
From ILO the Lab brief “Policy Brief: A Systemic
Approach to Creating More and Better Jobs”, 2019
4 I nternational Labour Organization: Value Chain Development for Decent Work – How to create employment and improve
working conditions in targeted sectors (2021).
5 International Labour Organization: Market Systems Analysis for Decent Work: A User-friendly Guide
Introduction
11
1.4 Report structure

The report first provides an overview of the develop a project strategy, which includes an as-
poultry sector, how the sector has developed over sessment of the incentives and capacity of market
time and how the various interactions along the actors to intervene in the market and identifica-
value chain impact the programmes target group tion of potential interventions which could help
(Section 2). It then looks at the market system, its address the identified root causes in a sustainable
key constraints and their possible root causes way (Section 4).
(Section 3). The analysis findings are then used to
2 Sector Structure
2.1 Market Overview

The market for poultry can be characterized as one with low productivity,
high cost and very little domestic consumption. Starting with productivity,
Ethiopia’s poultry industry is dominated by indigenous breeds - about 91% of
all chickens are characterised as such. While these breeds are resilient against
disease, naturally camouflaged to protect against predators and adapted to
a scavenging diet - all of which is important to less-commercial, backyard
production - they are not as productive as imported breeds. Despite com-
posing just 9% of the bird population, imported breeds account for 27% of
the egg production6, and they take about half the time to reach a stage where
they are ready for meat processing7. As an end result, the productivity of
Ethiopian poultry is about 40% of the global average and about two-thirds
of neighbouring Kenya’s productivity8. Ethiopia produces much less than its
East African neighbours relative to its population (see graph below9).
Ethiopia % Ethiopia production

production and population
and population in Region
in East Africa
East Africa Region
30% 27%
20%
11% 10%
10%
0%
Eggs Chickens Population
6 FAO. 2019.
7 Food and Beverages Processing and Auxiliary Industry Strategy, EIC, 2020.
9 Figures for 2019, calculated from FAOStat and WorldBank Data. Accessed 19 March 2021.
Another contributing factor to low productivity is Low productivity clearly has an impact on cost,
that most of Ethiopia’s poultry farming is done at but compounding this is that feed, the key input in
the rural household level where it is not the prin- poultry production, is extremely expensive. Feed
cipal income generating activity. For example, in makes up about 70%-75% of the chicken farm gate
Amhara, estimates suggest that between three- cost12, and as of 2020, the cost of feed in Ethiopia
fifths and three-quarters of rural households have was more than twice that of the global average or
poultry10. However, for the households that have that in South Africa13. This issue is becoming more
chickens, 82% have less than 10 chickens, and just problematic as a number of stakeholders indi-
0.2% own more than 50 chickens11 - a size consid- cated that feed costs had increased substantially
ered to be sufficient for commercial production. in the last year due to an input shortage, princi-
pally soy and nueg cake. As a result of this and
Ethiopia's
Ethiopia’s poultry poultry consumption
consumption (kg/person/year) other cost drivers such as import costs for day-old
(kg/person/year) chicks and losses throughout production, prices
0,8 for chickens at the farm are about 50% higher
0,66 than those in South Africa and about three times
0,6 more than those in Brazil14.
0,4 0,36 Low productivity and high costs have two neg-
ative implications. Firstly, Ethiopia is largely not
0,2
competitive on the export market and it seems
0 unlikely that it will export more than very minor
Eggs Chicken meat amounts at any stage during the ProAgro Ethiopia
project. Secondly, local consumption is very low
- standing at less than 10% of the average per
capita chicken meat consumption in Africa and
the equivalent of about a half an egg per month
Poultry meatPoultry
consumption (kg/person/year)
meat consumption per person (see graphs to the left)15. Another con-
(kg/person/year) tributing factor to relatively low consumption is
8 that chicken rarely features in Ethiopian cuisine,
6,7
apart from in a traditional stew that is prepared
6 infrequently.
4 While these are the principal challenges at hand, a
1,6 series of additional constraints stand in the way of
2
0,66 inclusive poultry sector growth and development.
0 Some of these constraints include a lack of farm
Ethiopia East Africa Africa management skills, poor sector coordination, gov-
ernment regulation and strategy, imposed import
controls and a lack of adequate animal health ser-
vices. All of these are further unpacked in section 3.
10 ailemichael, Aklilu, Berhanu Gebremedhin, Solomon Gizaw and Azage Tegegne. Analysis of village poultry value chain in Ethiopia:
H
Implications for action research and development. International Livestock Research Institute. January 2016.
11 A
gricultural Sample Survey 2019/20 [2012 E.C.] Volume II: Report On Livestock And Livestock Characteristics (Private Peasant Holdings).
Federal Democratic Republic Of Ethiopia Central Statistical Agency. March 2020.
12 From a farmer interview and verified through: Desalegn, Paulos. Poultry Value Chain in West Amhara. Agro-Business Induced
Growth in the Amhara National Regional State. August 2018
14 Ibid.
15 Both rates are from 2013, and the rates along with the graphs are calculated from section 3.1.2 of FAO 2019.
Sector Structure
15
Tigray
Amhara
Amhara is the largest poultry producing region Afar
in Ethiopia. It has solid production conditions
Amhara
as about 60% of its area has sufficient moisture
conditions for poultry production and it is home Benishangul-
Gumuz Dire Dawa
to about one-third of all of Ethiopia’s chickens16.
However, its poultry production is less commer- Addis Ababa
Harari
cially oriented as the region has just 20% of the
nation’s imported (or improved) breeds17. Gambela Oromiya
W i t hin A mahara , t he A gro Commo di t y Somali

Southern Nations Sidama
Procurement Zone Investment Plans (2020 - 2025) Nationalities
and Peoples
prioritise wheat and maize as commodities that

will drive territorial development in South West
Amhara. Poultry has also been flagged as a com-
modity of future importance alongside sorghum,
dairy and honey.
- as the by-product from oilseed production is oil-
Also critical to the poultry sector is the govern- cake, which is one of the feed ingredients in short
ment’s aggressive work to incentivise multi-mil- supply. Here, investors have recently built or are
lion dollar investments from both domestic and in the process of building three new multi-mil-
international investors in oilseed processing in lion-dollar oil processing factories - one of which
Amhara. This is important for poultry feed - a included an investment valued at USD 100 million
key cost driver in the sector’s competitiveness (see Table 1 below).
Table 1: Recent large- scale entrants into edible oil processing in Amhara
Processor Location Types of oil Capacity Status
Operational (with
Febela Edible Oil Sunflower, niger seed, 1.4M litres/day (60%
Bure IAIP, Amhara imported crude palm
Factory and Palm Oil of local demand)
oil)
Richland Bure IAIP, Amhara Soybean ~90,000 litres/day Operational
Debremarkos, Sesame, niger seed,
WA Edible Oil Factory N/A Under construction
Amhara peanut and soybean
Sidama For Sidama, the FAO ACPZ study identified coffee

& avocado as the lead commodities, as well as
Sidama is Ethiopia’s newest administrative region.
other prioritised commodities including poultry,
It emerged as a result of a referendum held in
pineapple, red meat, dairy and honey. Discussions
November 2019 with official transfer of power
with the Sidama Regional Investment Bureau
from its former region, the “Southern Nations,
confirm that the commercial development of the
Nationalities and Peoples’ Region” (SNNPR) in June
poultry sector is important and the government
2020. While some of the regional government con-
has set aggressive targets to increase the supply
tinues on from its zonal function as former Eastern
of day-old chicks and 45 day-old chickens by 10%-
SNNPR, the regional government is still in the pro-
15% per year. According to the regional govern-
cess of developing strategies and setting up the
ment, they will revise those aggressive targets
bureaucracy. Agro-industrial development in the
upwards given the solid progress they have made
region will be led and coordinated by the regional
to date.
Industrial Parks Development Corporation (IPDC),
who seem to be active and driven to ensure the In additional to being a priority in the region,
success of investments made into the Yirgalem IP poultry seems to be well positioned for sector
and RTC. growth. Throughout Sidama, the water conditions
16 Estimated based on Figure 5 of FAO 2019.

17 A
gricultural Sample Survey 2019/20 [2012 E.C.] Volume II: Report On Livestock And Livestock Characteristics (Private Peasant Holdings).
Federal Democratic Republic Of Ethiopia Central Statistical Agency. March 2020.
are suitable for poultry production18, and Sidama

has a higher proportion of “improved” chickens, 2.2 History and trends
standing at 30%19 compared to the national av-
erage of 9%. This indicates a more commercial-
ly-oriented and productive poultry farming base. A steady, but expensive growth
That said, Sidama is still a relatively small player in
The last 15 years of Ethiopian poultry produc-
Ethiopia’s chicken market - producing under 3% of
tion can be characterised as steady and reliable
Ethiopia’s total poultry20.
growth - with egg and meat production growing
by about 53% and 80%, respectively (see graph
below21). As poultry and eggs are not exported
Development actors and imports make up less than 1% of the value of
Donor-funded initiatives are quite active in the all poultry meat (and eggs are not imported)22, na-
poultry sector, most notably the following pro- tional poultry consumption is more or less equiv-
jects support poultry initiatives in the Amhara and alent to its production. This indicates a steady
Sidama: poultry consumption growth. However, consump-
tion still perhaps lags behind the potential growth
X AgroBIG is a EUR 10.3 million project based
that one might consider given Ethiopia’s rapid and
around Lake Tana, Amhara and targeting
continuous urbanisation and economic growth, its
eight value chains, including poultry. The pro-
emerging middle class and changing consumer
ject, which is funded by the Governments of
preferences.
Finland (90%) and Ethiopia (10%) works with
primary cooperatives and cooperative unions,
youth and women groups, farmers, input sup- Ethiopian Egg and Chicken Production (tonnes)
pliers, and government, among others.
80,000
X Save The Children has a programme in Sidama
that distributes day-old chicks to organised 60,000
youths to raise these chicks until they are fit
40,000
to become layers. The NGO provides financial
support and technical support through larger 20,000
poultry farms and provides trainings on man-
agement. -
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
X The World Bank has a project with the Sidama
Regional Bureau of Agriculture. Eggs Chicken meat
X World Vision funds specific Sidama woredas

(districts) to support the distribution of
chicks to smallholder farmers, which includes One plausible explanation for a slower than ex-
training and follow up. pected uptake of poultry consumption is that
the price of poultry has been increasing rapidly.
X Fintrac is implementing the USAID Feed the
Between 2006 and 2017, in Ethiopia, the prices in
Future project which is active in Amhara in
USD for eggs grew nearly 400% and the price for
supporting extension services and farmer ca-
poultry meat more than 200%23. Research did not
pacity building.
identify what drove this price increase - perhaps
increases in production costs or considerable gap
between supply and demand. Production price
increases are a probable cause as stakeholders
indicated input prices had increased, particularly
as of late. A considerable supply-demand gap was
18 Extrapolated from Figure 5 in FAO 2019.

19 Statistic from interview with Sidama Regional livestock department.
20 Ethiopia CSA Data March 2020.
21 Both data and text sourced from FAOStat. Accessed 18 March 2021.
22 Import percentage estimated based on average annual value of poultry meat imports (USD 1.2 million) between 2010 and 2019,
and sourced from Observatory of Economic Complexity, 2021.
23 FAOStat.
Sector Structure
17
reported as well, however, this has not necessarily multi-million-dollar investments from both do-
led to higher producer profits, as various stake- mestic and international investors.
holders indicated that the market for eggs was
In line with this broader government agenda,
becoming uncompetitive.
the Ethiopia Livestock Masterplan 2015-2020 has
Looking to the future, the poultry sector is ex- set ambitious targets to move toward vast pro-
pected to grow between 6-10% annually until ductivity increases. The strategy advocates for
202524 - about twice the annual growth experi- the development of the large-scale commercial
enced over the last 15 years. This uptick in growth poultry sector while also pushing the production
may be realistic, given the number of new commer- of improved/exotic breeds and the phasing out
cial entrants which have come into feed produc- of indigenous, scavenging ones. Development of
tion, hatcheries and farms which are now primed the poultry sector is important relative to other
to produce, if conditions remain favourable. livestock - one masterplan objective is to increase
the proportion of poultry consumption relative to
all meat consumption from 5% to 30% by 203025.
Structural Transformation The newly released Ethiopia 10-year Perspective
More than 80% of Ethiopia’s population lives in Plan has also identified poultry development as a
rural areas and their main source of income is major target. This includes supporting improved
agriculture. Despite recent developments, small- productivity and the commercialisation of the
holder agriculture still remains unproductive. As sector over the next 10 years to increase com-
a result, the Government of Ethiopia is pushing mercial egg output by about 150% and more than
toward a long-term structural transformation double poultry meat production.
agenda in agriculture - encouraging a shift from
traditional subsistence farming to more produc-
tive commercial methods. Covid-19
To support this, the government established the Covid-19 has been highly disruptive to the sector
Agricultural Transformation Agency (ATA) in 2010, since March of 2020. In the initial stages of lock-
which is a strategy and delivery-oriented govern- down, logistics disruptions and border closures
ment agency with a mandate to improve the live- seized up the import and access to input supply.
lihoods of smallholder farmers. Besides ATA, the As a result, the business climate has been tough,
Agricultural Growth Program (AGP) was created particularly on commercial farmers who rely on
to increase agricultural productivity and market technical inputs (feed and vaccinations), larger
access for key crop and livestock products in tar- factory based operations where people work in
geted woredas (districts) in four regions (Amhara, close proximity to one another and end-markets
Oromia, Tigray and SNNP). for restaurants and hotels.
The regional governments of Amhara, Oromia, As an indicator of this downturn, a major hatchery
Tigray, and Sidama (formerly part of SNNPR) had to cull 650,000 day old chicks26, a feed busi-
in collaboration with the federal government ness lost about USD 1.2million in sales, and various
and development partners have developed small and medium egg layer and broiler producers
Integrated Agro-Industrial Parks (IAIPs) in Bure, lost between 20-75% of their sales27. One hatchery
Bulbula, Beaker, and Yirgalem, along with accom- indicated that it could not sell chicks for the first
panying rural transformation centres (RTCs) to few months of Covid-19, which then had knock-on
channel supply of raw materials into the parks. effects to egg and broiler production, meaning
The development of these agro-parks is meant that even after the government lifted movement
to accelerate economic development, through restrictions, the market had a limited supply of
linking agriculture with agro-industries, and the layers and broilers. Broiler demand from hotels
government is aggressively working to incentivise and international airline also halted.
24 FAO 2019.
25 E
thiopia livestock master plan Roadmaps for growth and transformation. Ministry of Agriculture, Livestock Resources Development
Sector. August 2015.
26 Berkhout, Natalie. Covid-19: Millions of chicks destroyed in Ethiopia. Poultry World. O4 August 2020.
27 The Poultry Market System in Ethiopia: Challenges from COVID-19. Agrilinks. 09 June 2020.
2.3
Role of the target group
The project’s target group is both women and companies set wages, which were reported as
SMEs, and thus, intends to support SME growth extraordinarily low.
as a vehicle for creating more and better jobs for
women. This analysis looks at decent work and X Weak enforcement: So far, the government,
the role of women through the lens of SME de- which has been plagued by high leadership
velopment. turn-over, has not been as active in enforcing
the law.
Commercial feed companies, hatcheries and

Decent work producers set basic starting wages that vary
Ethiopia adopted a substantial revision to its from ETB 600 (USD 15) per month to about ETB
labour law in 201928, which several actors identi- 2,400 per month (USD 60)30. ETB 600 is the upper
fied as being a big step toward the improvement end of the tax-free employment income bracket in
of Ethiopian labour rights. The new law includes a Ethiopia. Beyond this, companies typically provide
range of provisions related to the right to organise, allowances for transport and housing and provide
occupational safety and health, gender-based vi- a bonus, all of which are non-taxable benefits. The
olence, maternity leave, severance pay and con- end result is a benefits package closer to ETB 2,150
tracting, among others. It has strengthened the (~USD 54) per month for lower skilled workers in
provisions for collective bargaining, which has most cases, about the same take-home wages
recently been used to get companies to extend that hired seasonal farm labour earn though less
maternity and paternity leave, provide education than half of Ethiopia’s living wage31. One major
grants and staff training and support staff with poultry company indicated that its admin and fi-
alternative income generating activities, among nance staff earn about ETB 4,000 (USD 100) per
others. month and skilled workers such as veterinarians
earn about ETB 10,000 per month (USD 250).
While this framework has done much to advance
labour rights and worker protections, three key On the farm, household poultry farming is done
short-comings include: by the family, and usually falls under the respon-
sibility of the woman. In these settings, poultry
X The law covers only formal employees. While
rearing is a supplemental income generating ac-
it is estimated that 70% of factory workers in
tivity that boosts household incomes by around
food and beverage are formally contracted29,
30%32. It is thus hard to assess the working con-
workers in small-scale production and or in
ditions of such work as the activity is more entre-
lower skilled factory positions are informal
preneurial in nature. Data on worker wages for
workers. Thus, the protections set-out in the
commercial poultry farms was not available, how-
law do not extend to the sector’s most vulner-
ever one farmer indicated that he pays his staff
able.
between ETB 1,000-1,500 (USD 25-38) a month
plus covers all living expenses for a total benefits
X A minimum wage was not established. The
package of ETB 3,200 (USD 80) per month - ex-
proclamation did not set a minimum wage
ceeding pay in low-skilled commercial businesses.
but indicates that a minimum wage should be
regularly revised. In the two years following
the adoption of the proclamation, a minimum
wage has still not been set, meaning that
28 Labour Proclamation No. 1156/2019.

29 As estimated by a representative from the Confederation of Ethiopian Trade Unions.
30 Key informant interviews with managers of textile and apparel factories in IPs.
31 Confirmed via interviews for lower-skilled workers.
32 Gebremedhin, B., Tesema, E., Tegegne, A., Hoekstra, D. and Nicola, S. 2016. Value chain opportunities for women and young people
in livestock production in Ethiopia: Lessons learned. LIVES Working Paper 24. Nairobi, Kenya: International Livestock Research
Institute (ILRI)
Sector Structure
19
Women In looking to other parts of the chain, an informal
estimate suggests that women make up about
Stakeholders identified very active female par-
30% of the poultry input supply workforce and
ticipation throughout the sector, particularly in
60% the processing and marketing workforce36.
household production where 80% of poultry man-
Men are more commonly found in machine oper-
agement is done by women33. This type of scav-
ating areas, but in general, women and men do
enging poultry farming is attractive for females as
the same tasks in the factory. The key issue here
it can be done alongside their intense unpaid work
is that promotion prospects and wages are more
at and around the house.
favourable to men than women37.
In unpacking this, women almost exclusively
From a business ownership perspective, women
make the sales of both meat and eggs (over
are highly under-represented in larger-scale busi-
80% of the time) and are just as likely to con-
nesses in the poultry sector. They are, on the other
trol those earnings or jointly control them with
hand, recognised as active as owners of small- and
their spouse34. This gives them some financial
medium-scale farms which one stakeholder indi-
autonomy and often assures that the funding is
cated were more successful and profitable than
well directed toward necessary household ex-
male led farms as women are more committed.
penses, like schooling for children. Despite such
an active role among women in production and
sales, training on poultry production and mar-
keting was delivered to only men in male headed
households about 85% of the time35. This clearly
limits the ability of the women to become aware of
and absorb higher productivity methods or adapt
a more commercial angle to the business.
33 Hailemichael et al 2016.
34 Ibid.
35 Gebremedhin et al 2016.
36 Gebremedhin et al 2016 and confirmed anecdotally in interviews.
37 As indicated in an interview.
3 The Market System
The market system is the overall picture of how a sector operates. The market
system includes the supply-demand transactions in the core value chain -
from hatchery to producer to retailer to end consumer - and the ‘supporting
functions’ and ‘rules and regulations’ that shape the way in which businesses
and employees work in this core chain. The market system therefore takes a
broader scope, because different actors in the value chain do not operate in
a vacuum: their commercial success and well-being of the target group are in-
fluenced - directly and indirectly - by what happens in their surroundings. For
example, access to financial services, which is a supporting function, does
not directly operate within the poultry value chain, but strongly influences
how businesses set-up, grow and operate.
Figure 1 shows an illustrative market system for the poultry sector in Amhara
and Sidama. The figure includes a simplified value chain surrounded by the
supporting functions and rules/regulations, which strongly influence and
constrain market performance. Going forward, the sections on analysis
(Section 3) and opportunities (Section 4) sharpen the focus on women and
SMEs – the target beneficiaries of the programme – with a view to create
more and better jobs.
Figure 1: The Poultry Market System

NG FUNCTIO
PORTI NS
SUP
Skills
Poultry
Infrastructure
Feed
Animal Health Access to

Services finance
Core Value Chain

Hatcheries Early Stage Production Marketing Retailers Consumers
Currency Coordination
controls
Regulations
Taxes & Import
& Policy
Duties
Access to
Land
3.1 Core market

The discussion in the core market looks at each representation of that productive chain, and the
step along the value chain from producer to end following subsections detail how each step func-
consumer. The below figure provides a simple tions and how it is constrained.
Figure 2: The Poultry Value Chain
Hatcheries Early Stage Production Marketing Retailers Consumers
Local
Backyard
Sales Wholesalers
farmers
Agents
Local
Consumers
Retailers
Value Med-scale Small-scale
Hatcheries Collectors Super -
Chain businesses farmers
Actors markets &
Hospitality
Processors
Medium-Large-scale farmers
Eggs/Live chickens Processed meat
Hatcheries hatching eggs39 from genetic companies often

located in Europe and sometimes even Brazil.
A more productive and competitive sector
This parent stock is produced from grandparent
starts with access to imported chicken breeds.
stock which are housed at the genetic compa-
Accordingly, the Ethiopia Livestock Masterplan
nies. One medium-scale hatchery indicated that it
2015-2020 identifies the lack of proper breeds as
had about 2,000 parent stock, but that every 3-4
the biggest constraint to the sector.
months it needed to replace 30% of the stock with
Imported exotic breeds are typically more produc- fresh imports.
tive (both in meat and eggs) and rearing periods
for imported breeds are about half that of indige- Parent Stock Types
Parent Stock Types
nous breeds. In Ethiopia and the regions targeted
by the ProAgro Ethiopia project, a handful of com-
panies own hatching and multiplication facilities
for the production of day-old chicks (DOCs). The Broilers
DOCs are sometimes reared on site where they Dual 70.000
are sold to commercially oriented farms or to a Purpose
series of sales agents or businesses that take the 140.000
DOCs to 45 days old.
Ethiopian hatcheries have parent stock for broilers Layers
(meat), layers (eggs) and dual purpose chickens 87.000
(see graph to the right 38), all of which produce
DOCs. Hatcheries import parent stock DOCs or
38 Graph developed from Factsheet Poultry Ethiopia. ENTAG. 2020.

39 FAO 2019. Poultry Sector Ethiopia: FAO Animal Production and Health Livestock country Reviews
The Market System
23
The Ethiopia Investment Commission (EIC) and same location. In this model, DOCs with vaccine
ATA indicated that having a parent stock multipli- and feed pack can be sold for as little as 73ETB
cation centre (i.e. local grandparent stock) within (USD 1.80) and sold on at 100ETB (USD2.50) after
Ethiopia would reduce the DOC price by 55% 40. 45 days - albeit with costs associated with the feed,
While stakeholders indicated that several North vaccinations and some mortality.
African countries, Kenya and South Africa have
For distribution, hatcheries and medium-scale
grandparent stock, the Ethiopia poultry market
early-stage businesses sell direct to commercial
is about four times too small to make grand-
farmers, who collect the birds on site42. For distri-
parent stock viable.
bution to small-scale farmers, early-stage agents
Thus, for the foreseeable future, hatcheries will sell at markets, village poultry day or through the
continue to import parent stock, which adds agriculture office given the government priority
costs in several ways. One stakeholder identified to push backyard poultry production to a more
that importing hatching or DOCs results in a commercial size of at least 25 chickens.
high mortality rate during the journey, which
Several actors participating in or familiar with the
increases cost. Hatcheries also flagged that their
scheme indicated that this was a fast-growing
businesses faced an increasingly challenging
market, that can be quite profitable and has cre-
climate to import parent stock, which is due to
ated rural employment opportunities for women
Ethiopia’s deteriorating availability of foreign
and youth43. One actor who participated in this
exchange and its foreign currency controls.
activity in Amhara indicated that he had stopped
One business indicated that imports of new parent
rearing broilers because of limited market around
stock stopped for various hatcheries for around
Bahir Dar, but had continued with rearing layers.
9-12 months last year. Then all the stock came in
at once, meaning that there was suddenly over- Even though the market is rapidly growing, a
supply to the market. This resulted in limited and number of challenges constrain this part of the
inconsistent supply of DOCs to the market. The chain and the productivity of the sector in general:
import controls also add cost considering the pre-
X The altitude: In Brazil a broiler will reach 1.8
miums that are paid to access foreign exchange
kg - the weight at which it can be sold - in about
and the duties that are levied on the imports.
85% of the time it takes in Ethiopia. One stake-
Beyond those issues, hatcheries have been cited holder indicated that higher altitude slows
as having poor management practices and low down the growth process and increases mor-
technical knowledge on hatching, and thus tality rates - both of which reduce productivity;
function below international standards41.
X Vaccine availability: While stakeholders iden-
tified vaccine costs as negligible, they indicated
Early Stage Production that their availability was a key constraint.
In the Ethiopian poultry lifecycle, the first 45 days X High feed cost incentivises these early-stage
are key to survival. Here, it is important for the businesses to cut corners on feeding the des-
chicks to receive a series of vaccinations and reg- ignated amounts and/or mix of feed, which
ular feeding, which keep healthy production on slows poultry growth at a critical stage. This
track while reducing mortality rates. Once they in turn, delays the time it takes for chickens
reach 45 days, they are then sold onto farmers to become full grown layers or broilers, and
ranging from household to large-scale size. affects their overall health and productivity
throughout their lifetime.
While hatcheries often raise chicks until they
reach 45 days, many hatcheries have decentral-
ised this activity to rural-based agents and SMEs
as a means of gaining rural market visibility and Production
penetration. These businesses receive a stock of Poultry production for both eggs and broilers is
DOCs at one time, then raise them for 45 days, where the highest number of actors are involved
sell them off and then look to receive the next in the value chain. Production can be character-
stock - different ages cannot be housed at the ised in two major segments: scavenging and
41 FAO 2019.
42 This is not the case for EthioChicken, which distributes chickens to rural areas for early stage production.
43 FAO 2019.
commercial, with the latter being broken down scales. The key characteristics of both these
into semi-intensive, small, and medium/large classes are summarised in Table 2 below.
Table 2: Ethiopian Poultry Producer Characteristics44
Characteristic Medium/ Large-Scale Small-scale intensive Semi-intensive Scavenging
> 1 000 broilers > 200 broilers

Size 50–200 <50
> 500 layers > 100 layers
Market Demand Urban Urban/Rural Urban/Rural Rural or none
Improved, cross or Indigenous or
Breeds Improved Improved
indigenous crossbred
Poultry housing Yes Yes Yes, of mixed quality No
Scavenging or regular
Feed Balanced ration Balanced ration Scavenging
supplement
Mortality < 20 % < 20 % 20% < 50 % >70 %
Box 2: A push toward more productive household

Scavenging production: The bulk of Ethiopia’s farming
poultry production is from household level scav-
enging poultry farms. This type of farming is char- EthioChicken sees household farming as a key
growth market. As such, it works through local
acterised by low input and low output - owners
government extension officers to sell and dis-
rarely invest in feed, veterinary services, hired tribute the imported Sasso variety to traditional,
labour or dedicated housing and as a conse- scavenging poultry farmers. The Sasso variety
quence, the productivity is very low and mortality can serve as a layer or broiler and can survive on a
rates high. The productivity of indigenous layers semi-scavenging diet. The chicks are usually sold in
is estimated to be about one-fifth to one-third of a package (female and male chickens) for 162 ETB
that from improved breeds45. (USD 4.00) for the package and farmers use the
layers for eggs while the males are sold later for
Despite being small-scale and relatively unpro- meat. For these breeds, the mortality rate is 60%
ductive, this type of poultry farming can bring less and the laying production twice as much as
meaningful, relatively consistent income that can traditional indigenous chickens.
top-up a household’s other income generating ac-
tivities. Such activity can provide a supplemental Commercial production starts with as few as 50
income of around 30% to poultry owning rural chickens. The level of investment into high- pro-
households, and most of the time the farm man- ductivity inputs like quality DOCs, feed, housing,
agement and production profits engage women46. feeders and drinkers, climate systems, ventilation
and lighting for 16 hours per day increases with the
For these types of farmers, key constraints that
size of the farm. One producer indicated that if you
limit their movement to a higher productive
cut corners on the input, you get less product for
farming model include lack of awareness of im-
your investment.
proved poultry farming methods and the ben-
efits of shifting to a more commercial oriented According to the Ethiopia Poultry Producers
model, poor access to capital to roll-out faster Associations, Ethiopia has at least 100 medium-
investment and lack of skills in more commercial and large-scale commercial farms, which are gen-
production. erally located in urban and peri-urban markets,
with their numbers growing in Bahir Dar, Amhara
and Hawassa, Sidama47. While most of these farms
produce their own feed, some of these farms like
ELFORA and Alema are vertically integrated and
“Good input, good output.” do the whole line of activities: producing feed, im-
Commercial producer porting day-old chicks, rearing them, processing
44 T able adapted from Appendix 1 of FAO 2019. It shoulr be noted that one stakeholder indicated another classification systems is
small (<2,000 chickens), medium (2,000-5,000 chickens), large (>5,000 chickens).
45 Hirvonen, Kalle, Kaleab Baye, Derek Headey, and John Hoddinott. Value chains for nutritious food: Analysis of the egg value chain in
the Tigray region of Ethiopia. IFPRI Ethiopia. October 2020
46 Hailemichael et al 2016.
47 FAO 2019.
The Market System
25
and selling butchered broiler meat and table eggs X Irregular consumer demand: Producers
(see graph below48). indicated that fasting seasons by Orthodox
Ethiopians, which occur about 30% of the year,
have an impact on end market demand and
Commericial Chicken Types in Ethiopia
market prices, which force them to take losses
(in millions)
for considerable parts of the year.
X High feed costs: Given that this is between

Broilers 70%-75% of the production costs - and in-
4,3 creasing - it presents a key constraint to
Dual
market off-take and thus business growth.
Purpose
13,1 X Lack of skills: Producers and workers lack
knowledge and skills on overall hygiene,
Layers upkeep and management of farms, vaccina-
12,4 tion, and medication requirements of poultry.
Box 3: Starting up a medium-scale commercial

farming business
In terms of commercially-oriented farms in the A medium-scale producer who started operations

three years ago and has 2,000 layers and 2,000
target areas, one stakeholder estimated that Bahir
broilers, recounted his story of starting-up the
Dar has in excess of 200+ poultry farms, most of
business. To start out, the producer purchased a
which are small-scale. One male stakeholder in- 15-year land lease from the regional government,
dicated that large-scale farms are owned com- which cost 2.3 million ETB (USD 57,000) for the 0.5
pletely by men, although some women owned or Ha land holding. The next step was to invest into
managed small and medium scale farms, which a 2,000 square metre shed, buy the necessary
anecdotally seemed more profitable. feeders and drinkers and then into 4,000, 45-day
old chicks - the latter of which cost 600,000 ETB
Commercial producers identified several key (USD 15,000). Private investors principally put up
issues, which constrain productivity: the capital to start-up the scheme, though 15% of
the financing came from a microfinance institution.
X Access to land: Acquiring lands can only be This is quite a level of initial investment for a busi-
done via lease from the government, which ness which employs just eight staff including one
can be both complicated to attain and if woman.
granted, can be for as little as 15 years in
urban and peri-urban areas (see Box 3). This
can serve as a considerable disincentive for in- Marketing
vestments if the land may be repurposed after
After production, several channels exist to get
such a short period of time.
broilers or eggs to market, and the methods
X Sector coordination: Several large-scale pro- depend on the producer size.
ducers indicated that sector coordination was For scavenging production, households take
very limited and had achieved very little to ad- both their eggs and live chickens to markets
vance the interests of commercial production. where they sell directly to consumers, retailers
or wholesalers 49. Very few farmers sell eggs at
X Access to finance: As identified in Box 3, in-
the farm - only 6% in Amhara - and virtually no
vestment into commercial farms can be quite
farmers sell eggs or meat to cooperatives in either
substantial and finance plays a key role in de-
Amhara or Sidama50.
termining the scale and level of commercialisa-
tion that a business can attain. For commercial production, small-scale farmers
sell their eggs to collectors at the farm, and as they
X Quality 45-day old chicks: Poor quality generally do not have slaughtering facilities, they
rearing from the early-stage producers im- sell live birds as their final product51. These collec-
pacts farm productivity. tors add an intermediary cost without adding any
48 Ibid.
49 Hailemichael 2016.
50 Ibid.
51 FAO 2019.
value - costs have been cited at ETB 0.5-1.0 per sector. Currently, Ethiopian chicken meat and egg
egg, or around 8-15% of the final egg price52. consumption is low - consumers eat about one-
tenth of the chicken that an average African eats55
Medium and large-scale farms slaughter and
and annual egg consumption in Amhara and SNNP
pluck chickens, prepare them for freezing, and sell
are only about five and eight eggs per person56.
them directly to hotels, restaurants, supermar-
While this presents a considerable growth oppor-
kets and mini-markets. For eggs, medium-scale
tunity for market demand, some key challenges
farmers typically sell through collectors, whereas
that stand in the way of that growth include:
large-scale farmers sell direct to supermarkets or
market vendors53. X Religious traditions: Orthodox consumers do
not consume animal-based products for about
Despite lower operational and processing costs,
one-third of the year - largely in extended pe-
Ethiopia’s chicken meat price is not competitive
riods before both Orthodox Christmas and
in the global market, over 46% higher than the
Easter, which severely disrupts demand for
global market price54. Hence, hospitality and su-
fresh chickens and eggs. In addition to tem-
permarket buyers sometimes import chicken
porarily seizing up the market, prices for eggs
meat (mainly from Brazil) in Addis Ababa, as well
drop-off by about 30% from peak prices57.
as in Bahir Dar, Amhara and Hawassa, Sidama.
X Culinary tradition: Apart from featuring
in ‘Doro wot’, the Ethiopian traditional stew,
Retailers poultry meat does not feature in traditional
Retailers are broken into two segments: local mar- cuisine. As one stakeholder indicated, com-
kets and supermarkets/hospitality. Local markets mercial broilers are just for hotels with inter-
are where most Ethiopian consumers buy poultry national guests.
products which are from indigenous chickens.
X Preference for indigenous breeds: Consumers
This includes live birds and eggs that are some-
prefer to buy eggs from indigenous chickens
times sold on an individual basis. Higher value
and live indigenous birds that are technically
markets, such as supermarkets and mini-mar-
less productive than improved chickens - they
kets in Addis Ababa and regional cities sell both
pay USD 9-10 for a 1.5-1.8kg live bird instead of
processed broilers and commercially produced
the USD 4-5 per kg for a butchered, cleaned
eggs. Several stakeholders identified this higher
and frozen bird58. This has two key effects:
value market as a key growth market and anecdo-
1.) it slows the diffusion of improved poultry
tally more consumers in Addis Ababa seem to be
breeds; and 2.) limits sector value-addition op-
buying broilers from supermarkets.
portunities.
Restaurants targeting domestic consumers are
very limited. Standing stalls for selling roasted and X Cost: Given that a live bird costs USD 9-10,
grilled chickens are almost non-existent in Ethiopia, and that farmers typically earn a total bene-
contrary to common practice in neighbouring fits package of between USD50-80 per month,
countries. However, such a market seems to be the cost of poultry is out of reach for most
emerging as restaurants such as ‘Chicken Hut’, a Ethiopian consumers. Eggs are considered as
local chain with retail outlets at various locations one of the cheapest protein sources, but still
in Addis Ababa, are slowly introducing ways of are about five times more expensive per cal-
preparing and consuming chicken meat other than orie than wheat59.
‘Doro wot’, the Ethiopian traditional stew.
Consumers “Eggs cannot be kept from

Ethiopian consumers present an interesting bar-
rier to the growth and development of the poultry
more than 21 days without
going bad, a reliable market is
essential.”
Commercial producer
52 Prices based on Hirvonen et al 2020.

53 Paragraph informed from producer interviews and FAO 2019
54 EIC & ATA, Food and Beverages Processing and Auxiliary Industry Strategy, 2020
55 Consumption rates calculated from section 3.1.2 of FAO 2019.
56 Hirvonen et al 2020.
58 FAO 2019.
The Market System
27
X Lack of farmer awareness on the necessity of
3.2 Supporting functions vaccines.
X Insufficient infrastructure such as cooling,

storage and proper transportation can limit
Animal Health Services both the vaccine stock housed as well as the
Animal health services were repeatedly flagged by length of time that it can remain suitable for
stakeholders as a key constraint to the poultry in- use.
dustry. Diseases cause high mortality - more than
70% for backyard farmers and up to 50% for small- X No producer mapping system to track and
scale farmers - and can also reduce egg laying ca- contain disease outbreaks before they become
pacity. One medium-scale farmer indicated that widespread and damaging.
his layers produced around 25-30% of their ca-
X Poor coordination between animal health
pacity this past year due to a disease. Amhara is
institutes. For example, the NVI, National
disproportionately impacted by disease, perhaps
Animal Health Diagnosis and Investigation
due the lack of commercial farming in the region.
Center (NADIC) and Epidemiology at the MoA
In 2016, Amhara had a poultry population of 20
conduct the same health assessments but do
million but lost 14 million birds due to disease60.
not divide work among one another.
The National Veterinary Institute is the only vac-
cine producer in Ethiopia, producing 16 livestock
vaccines. At the local level, every woreda (district)
has a veterinary clinic and about one in three ke-
beles (villages) has an animal health services post, “Sometimes it takes you 1 to 2
where diseases should theoretically be diagnosed years to register a vaccine”
and treated61.
Hatchery
Despite having a reasonable outreach of animal
health service providers, these are severely
lacking for the following reasons:
Poultry Feed
X Poor capacity providers: Sidama reportedly
Commercially oriented producers are heavily re-
has 700 animal health service providers, how-
liant on concentrated, specialized poultry feed62
ever, they are poorly equipped and do not
and stakeholders repeatedly identified its lack of
have the necessary skills to test for and diag-
quality and affordability as one the most consider-
nose diseases.
able barriers to both sector growth and competi-
X Few laboratories: The entire south of Ethiopia tiveness. Poultry feed, which makes up about 70%
has just one laboratory (in Wolaita Sodo) and of production costs, requires a particularly precise
none exist in Sidama which is important for formulation, and if this is not properly used and
early identification of diseases to alert author- rationed out, poultry farming can become less
ities and react. productive63.
X Difficult to import vaccines: Businesses Poultry feed cost comparison per quintal
identified that it can take up to three years to
import and register a vaccine. These stake-
holders felt that the vaccines were not regis-
tered quickly because NVI makes money from
being the only vaccine provider and operates
as a government monopoly.
X Limited quality vaccine supply: As a result of

the reported NVI monopoly, actors indicated
that vaccines are low quality and some key
vaccines are not offered - such as for Fengil
disease.
60 FAO 2019.
61 Ibid.
62 VCA Poultry, USAID - Feed the Future Ethiopia, 2017.
63 VCA Poultry, USAID - Feed the Future Ethiopia, 2017 citing “USDA GAIN, June 2017, Ethiopia’s Demand for Chicken Meat is
Expected to Grow”.
The most common poultry feed ingredients in- and concentrates have been cited as factors
clude cereal grains (60%), milling by-products such driving up feed prices67.
as wheat shorts and middling (10%) and oilseed
X Little competition: More than half of
cakes (23%) and a premix (7%)64. The figure on the
Ethiopia’s feed production comes from one
previous page shows a comparison of the costs
processor, meaning that the feed market func-
for key poultry feed ingredients versus the global
tions with a monopolistic structure68.
averages (though does not include premix) and
shows that the principal ingredients are collec- X Poor electricity supply: Poor electricity
tively about 75% more expensive in Ethiopia65. As supply limits the operating hours of feed pro-
feed costs represent 70% of production costs, if ducing companies or causes them to operate
feed input costs were brought to a level equal with on expensive diesel generators, which adds
the global average, the cost of Ethiopia commer- cost.
cial poultry production would drop by 30%.
Poultry farmers and feed producers identified a
rapid increase in the market price of poultry feed Skills
over the last few years. Last year alone, the feed
Skills have been flagged as key issues in several
price increased by ETB 200 - 300 (USD 5-7.50)
parts of the sector. At the hatchery level, busi-
per quintal. In February 2021 in Amhara, stake-
nesses have poor management practices and low
holders indicated that the feed price per quintal
technical knowledge. For early-stage producers,
had recently increased from ETB 1,200 to between
they often lack animal health knowledge that is re-
ETB 1,300 - 1,400, which was similar to the feed
quired at a crucial vaccination stage. Commercial
price offered by a major feed supplier cooperative
producers and workers generally lack knowledge
union in Sidama.
and skills on overall hygiene, upkeep and manage-
A number of the key factors which have driven ment of farms, vaccination, and medication re-
up the cost of feed and in turn reduced the sector quirements of poultry. Larger businesses whether
competitiveness include: in feed, hatcheries or commercial production,
identified extensive skills needs across the board,
X Supply-demand mismatch: The feed supply is
even in areas like finance or marketing.
not sufficient for the demand. As one estimate
suggests, the annual unmet feed demand is in A lack of poultry expertise in animal health ser-
excess of 120,000 metric tons66. vices is a key constraint. One stakeholder indi-
cated that veterinary students have 5-6 years
X Shortage of raw materials: Rises in domestic of veterinary courses, but just four credit hours
maize consumption, competition for raw ma- on poultry production. While these courses pro-
terials among other feed industries and raw vided a technical base, recent veterinary grad-
materials exports have put a squeeze on feed uates still needed upskilling before they were
supply, which has pushed local prices up in market ready to work in commercial producers or
major cereal crops and oilseed cakes. In some as early-stage producers/sales agents.
cases, businesses export raw soybeans at a
loss to generate foreign currency further More broadly, businesses indicated that univer-
exacerbating the shortage. sity training is too theoretical and lacked a
hands-on component to prepare students for
X Lack of domestic premix production: the workforce. As a result, one business with 1,500
Pre-mix, a key ingredient in concentrated feed employees indicated that it trained its entire staff,
formulation, is imported from abroad entirely. most via peer-to-peer training. They also sent
A handful of importers operate in a market some higher skilled workers abroad for training
that is severely constrained by shortage from their suppliers, as the commercial market
of hard currency, leading to an oligopolistic is still too small for higher-skilled specialised
market structure and price hikes. training. The resource investment into training
can become expensive given that some medium
X Taxation: Despite a recent removal of VAT and large-scale commercial businesses reported
on poultry feed, 15% VAT on imported sup- high staff-turnover.
plements and 53% import tax on premixes
64 FAO 2019 and Food and Beverages Processing and Auxiliary Industry Strategy, EIC & ATA, 2020.
65 Calculated from figures in Food and Beverages Processing and Auxiliary Industry Strategy, EIC & ATA, 2020
66 Food and Beverages Processing and Auxiliary Industry Strategy, EIC & ATA, 2020.
67 FAO 2019
The Market System
29
At the farm level, government extension services When construction work is fully completed, and
target scavenging production and provide little ownership is transferred to qualified operators,
support to graduate to more intensive and it is expected that each region will have up to 3
commercial production. Furthermore, exten- RTCs linked to the Bure and Yirgalem agro-indus-
sion service training generally targets knowl- trial parks.
edge transfer to men instead of the women
that manage the farm. While just 2% of men in
male-headed households manage poultry pro- Access to Finance
duction, men received poultry production training
Access to finance supports business growth and
without their spouses 85% of the time.69 This pro-
can help businesses enter the poultry market and
vides a serious barrier to women becoming more
existing businesses scale-up faster. For poultry
productive.
SMEs, capital is needed to purchase machinery
Beyond adequate extension services, farmer and equipment including drinkers, feeders,
graduation to more intensive poultry farming brooders, build housing infrastructure and cover
also requires a re-orientation of the business. This other start-up costs72.
will require a different set of skills, including busi-
In Ethiopia, financial services are provided
ness development services, which are largely
through an array of providers (see Box 473). The
lacking, particularly for rural women who could
state-owned Commercial Bank of Ethiopia (CBE)
benefit most from them.
and 16 private commercial banks provide regular
banking services, while a dedicated public policy
lending bank - the Development Bank of Ethiopia
Infrastructure (DBE) - primarily lends to prioritized sectors, in-
Poor quality infrastructure, particularly relative cluding agriculture.
to electricity, transport and cold storage, adds
product costs and can incur product losses at Box 4: Access to finance by numbers
each step of the production chain.
- 18 banks (16 private and 2 public)
X Erratic electricity supply has a disruptive - 18 insurance companies (17 private)
effect on incubation at hatcheries as pro-
ducers need continuous heat to hatch eggs. - 41 microfinance institutions (13 private, 11
public, and 17 NGOs)
Also, producers need quality lighting to rear
chicks properly and ensure that they remain - 6 Capital Goods Financing/Leasing companies
productive70. Commercial producers depend (5 public, 1 private/foreign)
on generators which adds production cost. - 19,000 Saving and Credit Cooperatives
New oilseed processing plants in Amhara
- ETB 271.2 billion (USD 6.75 billion) dispersed by
cannot operate at full capacity due to insuffi-
banks in fresh loans in 2019/20
cient electricity supply, limiting the production
of oilseed by-product which goes into feed. - 9.2% of the loans went to agriculture
X Transport vehicles with the necessary cold While the share of loans disbursed by banks to
chain facilities for transporting meat are in agriculture increased by 38.5% in 2019/2020 from
short supply and thus, their use comes at a the previous year, it still remains under 10% of
premium71. total loan disbursement - low relative to the im-
portance of agriculture in terms of employment
Positive developments in this regard include the
(~80%)74 and contribution to GDP (32.7%)75. At
Rural Transformation Centers (RTCs) that are close
practical level, entrepreneurs, farmers, and coop-
to being operational in both Amhara and Sidama
eratives find it difficult to borrow from banks for
regions. RTCs will be equipped with aggregation
reasons related to both the supply and demand
facilities for poultry and cold storage for eggs.
of loans.
69 Gebremedhin et al 2016.
72 VCA Poultry, USAID - Feed the Future Ethiopia, 2017
73 NBE Report 2019/20 for data on banks and MFIs, FCA 2020 data for SACCOs
74 Various sources
75 NBE Report 2019/20
The supply side: micro and small businesses through their group
X Banks view agriculture as highly risky, a lending methodology.
view that is reinforced by the highly publicised
Omo and Sidama, the MFIs operating in the
failure of large volumes of agricultural loans
Sidama region, disbursed 67% and 9% of their
made by the Development Bank of Ethiopia.
total loans to MSMEs in agricultural, respec-
Some banks have expressly indicated that they
tively.78 In poultry, youth and women associations
do not view poultry business as bankable due
reported accessing credit from Omo Microfinance
to the high level of risk involved76.
institutions, however, they complained that it
X The banking sector is closed to entry of takes too long to approve loans. In some cases,
foreign banks and thus, its liquidity con- it takes up to two years to obtain loans from the
strained. Hence, banks tend to be very se- time they complete their application and fulfil their
lective in lending, and most of their credit is initial saving obligations (~10% of loan amount).
channelled to businesses that offer collateral SMEs often fall outside of the lending offer -
worth 100% or more of the loan value. needing loans larger than MFIs or group lending
methods can provide, but not having the collateral
X Many banks lack the experience and knowl-
for larger size loans from more formal financial
edge of the agricultural sector, which makes
institutions. Recently established capital goods fi-
it difficult to properly assess and measure the
nancing companies were created to close this gap,
risk and benefits of financing actors in the
and play a key role in creating alternative means
sector. This perception results in asking for
for SMEs – and potentially agriculture cooper-
very high interest rates on agricultural loans.
atives – to obtain machinery and equipment for
agricultural production and processing. In Sidama
The demand side: and Amhara, South Capital Goods Financing and
X Farmers, cooperatives, and entrepreneurs Walia Capital Goods Financing Companies are
lack knowledge and skills in developing active capital leasing companies, respectively.
business plans and putting in place financial South has so far leased 2,000 machineries worth
management practices that help them qualify ETB 60 million (1.5 million) to 600 enterprises and
for loans. Walia has leased close to 8,300 machineries worth
ETB 643 million (USD 16 million) to over 3,000 en-
X Farmers and MSMEs often lack physical col- terprises.
lateral that can be pledged against the loan.
This is especially true for women entrepre-
neurs interviewed during the field research.
Land is provided on a leasehold basis (com- 3.3 Rules and Regulations
monly short recurring leaseholding arrange-
ments for small poultry producers) which
makes it unacceptable for banks as collateral.
Poultry enterprises also do not usually employ
Currency controls
high value fixed assets (machineries and A key challenge that permeates into every area of
equipment) that can be pledged as collateral. business is the limited availability of foreign cur-
rency (ForEx). As Ethiopia’s ForEX reserves con-
Apart from formal banks, the Savings and Credit
tinue to fall, the Ethiopian Birr has depreciated
Cooperatives (SACCOs) are informal service pro-
against the dollar by as much as 28% in Nov 2020.
viders funded by a membership base of over 2.9
To defend the currency and protect the ex-
million (46% are women), which dispersed ETB
change rate, the Ethiopian government imposes
3.9bn (USD 95 million) of fresh loans last year77.
restrictions on currency exchanges to foreign
The Amhara Credit and Saving Institution (ACSI),
currencies, which are needed to import goods. A
the principal MFI in Amhara, lent more than ETB
recent report estimates that, although monthly
11 billion to agriculture as of Dec. 2020, which rep-
imports total USD 900 million, the backlog of
resented 40% of Ethiopia’s MFI agriculture lending
unmet ForEx demand could be as large as USD 3-5
and over 50% of ACSI’s portfolio. In poultry, ACSI
billion and waiting times at banks for accessing
and other Amhara based MFIs provide loans to
foreign exchange are around four to six months.

77 ILO Cooperatives Team, citing FCA database (2020)
78 Association of Ethiopian Microfinance Institutions, MFIs Loan Distribution Data as of Dec. 31st, 2020
The Market System
31
One major DOC importer indicated that it took be- Access to land
tween 6-12 months to get approval to convert ETB
The government’s prioritization of poultry has not
to foreign currency.
yet manifested itself in terms of supportive land
As a result of these protections, there is a per- allocation for feed and poultry producers. Access
sistent exchange rate gap between the formal to land is typically one of the major constraints
and parallel market (25% - 30%), meaning that that poultry entrepreneurs face when investing
informal currency traders can put a premium of into new operations - interviews with entrepre-
30% on the exchange rate for the convenience of neurs suggest that obtaining land for initial in-
immediate exchange. vestment and/or expansion is extremely difficult.
Interviewees confirm the seriousness of this chal- A recent study found that suitable land is gen-
lenge - it limits producer productivity, processor erally not available for poultry entrepreneurs
utilisation and adds substantial costs along the to purchase or enter into a long-term leasehold.
way, because it: Small-scale producers, in particular, have short-
term leasehold arrangements on a recurring
X Delays or prevents imports of essential inputs
three to six month basis. This is especially true for
and products like day-old chicks and raw feed
urban and semi-urban land, where regional gov-
materials.
ernments try to avoid giving out land to livestock
X Encourages businesses to export raw feed businesses due to health and environmental
inputs like soybeans and sesame to generate concerns. While longer-term lands are generally
ForEx (see Box 5), causing a shortage of feed granted in rural locations, poultry farms also need
inputs and driving up the local price for them. to be located near a city to have access to water
and electricity.
X Leads to predatory/exploitative pricing of
It is relatively easier to obtain rural land, espe-
day-old chicks and feed given that few busi-
cially for farmers that are organised into youth
nesses can actually get ForEx.
and women groups. Regional governments pro-
X Creates an unfair advantage for foreign inves- vide land at low to no cost to groups of farmers for
tors and other traders (e.g., exporters) that micro and small poultry production enterprises.
have access to ForEx. Licensing requirements can also prevent land
access for new entrants or small-scale farms.
Box 5: Exporting to Import For instance, in Sidama poultry producers with
flocks of less than 2000 cannot obtain an invest-
The principal business for many Ethiopian exporters ment license, which prevents them from lodging
is actually importing. Why is that? Ethiopian export a request for land.
businesses often take losses on uncompetitive ex-
ports as a means of generating ForEx that can be Obtaining an investment license appears to be
used to import products, and sell them at margins seamless for foreign investors, even if obtaining
in excess of 200%. So while, exports are sometimes land closer to Addis Ababa is a challenge79. A for-
uncompetitive, it may still be worthwhile to export eign investor interviewed for this assessment de-
(by later selling imports).
scribed his experience of getting land from the
regional government as very positive and wel-
coming.
Taxes and import duties
While the government has recently removed VAT
from the end sale of poultry feed, import duties
Regulations and policy
and taxes add substantial cost to the sector, par- One of the key pillars of the Ministr y of
ticularly on feed ingredients - the largest cost Agriculture’s Agricultural Policy Reform is greater
driver. At the moment, import duties on feed private sector participation for the poultry sec-
inputs are around 15% with an additional VAT of tor’s development. In this light, the MoA recently
15%. However, feed premixes, an ingredient that created a department for the commercialization
has to be imported because it is not produced in of poultry sector, and is leading consultative pro-
Ethiopia, has a 53% import tax. cesses to address issues and improve the enabling
environment. The Livestock Master Plan also iden-
tifies targets and interventions to promote a shift

toward semi-intensive poultry production, how- integrated producers with feed production op-
ever, some stakeholders criticise them as being erations. Interviewed stakeholders appreciated
overly ambitious or realistic. the strong advocacy role played by the associa-
tion towards the lifting of tax on feed. The asso-
Despite these recent efforts, the poultry sector
ciation continues to lobby for the introduction of
still has regulatory and policy shortcomings. For
investment incentives for feed crop production,
example, poultry processing currently lacks its
and provision of land for the production of forage,
own regulation that segments out the private
maize, and soybean exclusively for animal feed
and government responsibilities in relation to pro-
inputs. However, funding and financial capacity
duction, processing and marketing80. Additionally,
are too limited to continue to drive these critical
the government has yet to introduce a poultry
initiatives.
specific investment incentive policy. As a result,
the regulatory and policy landscape is not condu- The Ethiopian Poultry Producers and Processors
cive to poultry business operations or investment Association (EPPPA) indicated that it has banded
and such barriers prevent potential investors from together with EAFIA and the Ethiopian Milk
financing poultry projects. Producers and Processors Association to try to
work with the government to address the issue
Domestic investors find regional government res-
of rising feed costs. In addition to that, EPPPA in-
ervations in issuing land in urban and peri-urban
dicated that they are working to lobby for the re-
areas unfriendly. Regulations linking size of
moval of VAT from eggs.
flock to investment licenses, such as those dis-
cussed above for Sidama, seem to be putting new Despite their work, the EPPPA’s members had a
entrants into the business at a disadvantage. less optimistic view of its performance, citing it
as “extremely weak” and with “no voice with the
relevant parties”. The key causes for its underper-
Coordination formance include:
Strong coordination supports inclusive develop- X As is common in business membership organi-
ment. An active employers’ association can ensure sations , funding is limited, and thus, they do
that stakeholders work together to lobby for and not have sufficient staff to fulfil functions
address key sector challenges. A functioning that the industry needs. This is a product
trade union can ensure that sector growth does of the sector being relatively small with a
not come at the expensive of its workers. And small potential membership base to draw
effective rural primary cooperatives and cooper- from. As the association acknowledged itself,
ative unions can improve farmer productivity and they do not have someone who can knock on
market power. doors and follow-up activities to make this
more effective, and if a member needs to
The Ethiopian Poultry Producers and Processors
attend a meeting in Addis, he needs to drive
Association (EPPPA) represents 90 medium-scale
there at his own cost.
and 8 large-scale commercial producers. The as-
sociation operates with the objectives of advocacy, X Members criticised the association for lacking
capacity building and peer to peer experience the ability to bring the right actors to the
exchange. The association funds its activities pri- table – they might get the approval from one
marily through member contributions, but it has ministry but when they take it to another for
received financial support from the Netherlands approval, it would get stuck because it was not
Embassy through the Ethio-Netherlands Trade in their interests.
for Agricultural Growth (ENTAG) project. With
the ENTAG project closing at the end of 2020 and X The association has just two meetings a
the economic fall-out from COVID-19 reducing year which was not sufficient to get the in-
member capacity and interest to pay membership dustry together to discuss emerging issues
fees, the association’s organisational health and coordinate among each other.
looks quite weak.
X One member indicated that the government
On the feed side, Ethiopian Animal Feed coordination between regional planning
Industry Association (EAFIA) conducts policy offices and national ministries is also poor,
advocacy on behalf of over 100 members that are making it difficult for a coordination body to
engaged in supply of feed ingredients and feed, actually have influence given the divergent
cooperative unions producing feed, and vertically opinions.
The Market System
33
The Confederation of Ethiopian Trade Unions the cooperatives, but also another “intermediary
(CETU) indicated that two of the largest poultry level”. While some cooperatives and cooperative
businesses, ELFORA and Alema, have associations unions in Sidama and Amhara actively produce
which have CETU membership. CETU also indi- feed - such as Elto Coop Union and Alema in
cated that it has a good working relationship with Hawassa, primary cooperatives do not coordi-
those associations. However, discussions with a nate the production or marketing of small-scale
series of medium and large-scale businesses, in- or backyard production. This could potentially be
dicated that trade unions played little role in their due to the lack of facilities to keep live poultry
business or the sector in general. The lack of and eggs. Handling poultry products also
trade union presence could be a product of the assume a considerable risk relative to other
small, emerging, large-scale commercial side agriculture produce, as live poultry could catch
of the sector. disease and die in their custody and eggs are rel-
atively perishable.
In Ethiopia, smallholder farmers are organised
into producer and marketing primary coopera-
tives and cooperative unions, as well as saving
and credit cooperatives. Cooperative unions sit as
an apex body over a series of producer and mar-
keting (primary) cooperatives, adding strength to
3.4 Constraints summary

The constraints identified throughout the above sections have been summarised in the below table:
Table 3: Constraints Summary Table
Constraint Underlying Causes Impact on market/decent work
Core Market
- Ethiopian poultry market is too small to support

grandparent stock Increases costs in DOCs which 1.)
- High DOC import mortality increases production costs; and 2.) slows
Hatcheries
- Poor availability of foreign currency the diffusion of more productive poultry
- Poor hatchery management practices and farming to smaller-scale farmers.
technical knowledge
- High altitude of production areas High mortality rate, increases costs
Early Stage
- Poor vaccine availability for producers, and lowers producer
Production
- High feed cost productivity
- Poor awareness of methods and benefits of
commercial poultry farming;
- Lack of technical skills for household and
commercial poultry farming Poor productivity at the household and
- Poor access to land commercial farm level limits the sector
Production
- Poor sector coordination competitiveness and its ability to grow,
- Lack of available financing create jobs and improve farmer incomes.
- Poor quality 45-day old chicks
- Inconsistent consumer demand
- High feed costs
- Orthodox fasting traditions Causes peaks and troughs in demand
- Culinary traditions as well as demand for less productive
Consumers
- Consumer preferences for indigenous chickens poultry, slowing the uptake of
- Cost commercial production
Supporting Functions
- Poor capacity health service providers

- Few vaccine producing laboratories
- Difficult to import vaccines
- Limited quality vaccine supply
Increases poultry mortality, increasing
Animal Health - Lack of farmer awareness on vaccines
cost and reducing farm productivity and
Services - Insufficient infrastructure (electricity, cooling,
farmer incomes
transport)
- No producer mapping to track outbreaks
- Poor coordination between government health
service providers
- Supply-demand mismatch
- Shortage of raw materials High costs and poor availability of feed
- Lack of domestic premix production increase production costs reduce the
Poultry Feed - Lack of foreign currency use of feed particularly at the small-
- High taxation on inputs scale level, reducing productivity and
- Little competition in feed production farmer incomes.
- Poor electrical supply
- Little inclusion of poultry in university veterinary
curricula
- Lack of practical training integrated into university
curricula Limits farmer yields and incomes
- Commercial market too small for higher skilled
Skills training Incurs training and human resourcing
- Extension services target household farming, have costs for processors and reduces
little commercial orientation and train men instead productivity.
of the farm managers, women
- Lack of business development services for women,
household farmers
The Market System
35
- Lack of government investment into power and Increased operating costs, and product
Infrastructure
transport losses at each step of the chain
- Banks view agriculture as highly risky

- Poor financial sector liquidity
- Lack knowledge in assessing agriculture risk
SMEs and farmers - particularly women
- Poor farmer/business knowledge of putting
Access to Finance - struggle to access credit which can
together a business plan and cannot meet
support faster business growth.
collateral requirements (particularly women)
- Lengthy approval times due to savings
requirements
Rules and Regulations
Severely limits the import of inputs,

- Ethiopia lacks foreign currency reserves, and thus packaging inputs, etc. and increases
Currency Controls
needs to protect currency exchange costs throughout the chain, reduces
competitiveness.
- Requirements too stringent to apply to smaller,

Taxes & import Adds substantial cost to any inputs and
non-exporting businesses that do not add
Duties limits industry competitiveness.
considerable value.
- Short-term lease agreements often due to health

Insufficient new lands opened up for
and environmental concerns
Access to Land entrepreneurs to shift into commercial
- Stringent requirements for small-scale and new
production
entrant participation
- Lack of sector investment policy

Limits sector investment and growth
Regulations - Lack of sector processing regulations
and business opportunities start,
& Policy - Stringent requirements small-scale and new
expand and create jobs
entrant participation
- Small sector size limits membership base and

funding for association staff and active advocacy,
as well as union activity
- Poor ability to bring right actors to the table Limits policy development and sector
Coordination
- Limited coordination activities growth and development
- Government coordination difficult to navigate
- High risk and lack of facilities for coops to handle
live birds and eggs
4 Opportunities
A market systems approach seeks to identify, address and remove sys-
tem-level constraints that inhibit the growth of more inclusive markets. By
nature, projects using the market systems approach pilot many different
interventions, hoping that some gain traction and drive a larger systemic
change that benefit the many while expecting that some never make it to
a point where they can have significant impact (though do no harm). The
reason for this is that lots of factors, many of which are often outside of pro-
gramme control, determine the success or failure of a pilot intervention. Such
factors could include partner capacity and motivation, and market forces
which affect prices and demand.
Once pilots are tested and have been demonstrated as effective for creating
more and better jobs for females, the project could then try to see how these
approaches can be upscaled to have further impact. Sustainability and scala-
bility will be a central focus, ensuring that business and intervention models
can be scaled up and replicated by market actors to further increase the
long-term impacts.
Box 6: Facilitating market system interventions
Traditional value chain development projects tend to orient their interventions

towards the question of “what problems do value chains have and how can the
project solve them?” rather than focusing on “why isn’t the market environment
providing solutions to these?” and “how can the project address the constraints
that prevent it from effectively doing so?”
A market systems approach opts for a ‘light touch’ way of intervening, running a
temporary package of activities designed to stimulate lasting behaviour change
among public or private market players. The facilitation approach encourages
market actors to take on new or improved roles which will lead to systemic
change in the market system.
Anything is possible with facilitation: from ‘hard’ tactics like cost-sharing and
technical advice, to ‘softer’ tactics like brokering relationships - as long as the
facilitation stays true to the MSA principles on developing a more efficient and in-
clusive system that benefits the poor and which doesn’t have to rely on continued
external support. There is no ‘correct’ single way to do facilitation and decisions
must always be contextual.
Some general ‘rules of thumb’ are outlined in the ILO Lab brief “Market systems
facilitation, how good are you?” 2017
4.1 Key market actors

For sustainability purposes, it is recommended that the project implement
with existing market actors taking the lead in delivering interventions. To help
ensure that the partners have the right incentives and abilities to take initiatives
forward, the below table summarises perceived organisational motivation and
human and financial resource capacity to drive change in such initiatives.
Table 4: Key Stakeholders in the Sector
Motivation /
Organisation Relevant Information
Capacity81
- Uppermost body of government with the mandate to capacitate, supervise, and regulate
Motivation:
the agriculture sector
Ministry of Medium
- Has extensive networks of extension programs, down to the smallest level of government
Agriculture
administration in all regions Capacity:
- Responsible to developing supply chains feeding into agro-industries High
- Reports directly to the Ethiopian Investment Board, chaired by the PM or his designee
- Responsible for promoting, attracting, and facilitating investment
- into agro-processing and other sectors Motivation:
Ethiopian - Has developed a strategy for promoting investment into Food, Beverages, Packaging, and High
Investment Auxiliary industries jointly with ATA
Commission - Has signed MoUs with both regional IPDCs for the attraction of investment into the agro- Capacity:
parks High
- Responsible for mobilising key agencies to provide one-stop-shop services in agro-parks
- Has the power to convene any and all agencies around investment issues
- Responsible for developing and operating agro-industrial parks
Motivation:
- Manage agro-parks that will be hosting 120 - 150 agro-processing companies
High
Regional Industrial - Responsible for overall coordination of support organisations and government organs to
Parks Corporations make the supply chains feeding into agro-parks work
Capacity:
- Leading technical steering committees made up of donor and government representatives
Medium
to push the agro-parks implementation agenda
Motivation:
Ethiopian Poultry - Membership based association representing 90 medium scale and 8 large scale High
Producers and commercial poultry producers
Processors - Undertakes advocacy, capacity, building, and experience sharing activities
Association - Collaboratively lobbying key improvements to the policy environment in the poultry sector Capacity:
Low
Motivation:
Ethiopian Animal - Association with a broad composition of membership from feed ingredient and feed High
Feed Industry suppliers, feed producers (cooperative unions and vertically integrated poultry farms)
Association (EAFIA) - Undertakes research, advocacy and experience sharing activities Capacity:
Low
- Large scale hatchery of Sasso dual purpose DOCs for meat and eggs
Motivation:
- Employs an innovative agent model to distribute DOCs nationwide including in Amhara
Medium
Ethio-chicken and Sidama (stronger presence in Sidama)
- Provides training, BDS, and input (feed and vaccines) to early stage rearing entrepreneurs Capacity:
- Works with MFIs to help agents access finance for operations High
- A fully integrated feed and poultry producer company
- Among the major companies importing breeding stocks and hatching eggs Motivation:
- Has hatchery and multiplication facility to produce DOCs for its own farm and distribution Medium
Alema Farms to smaller producers
- One of the largest suppliers of quality poultry feed in the country under a JV arrangement Capacity:
with a Dutch company High
- Close to realizing an expansion project for feed mill and poultry farming in Amhara
- Jointly with EIC, developed a comprehensive and detailed strategy for attracting
investment into Foods, Beverages, Packaging, and Auxiliary Industries Motivation:
Agricultural - Helping create a network of 30 Agricultural One Stop Shops across the country, with a few Medium
Transformation in Amhara and Sidama regions
Agency - Has well staffed and equipped regional offices in Sidama and Amhara Capacity:
- Part of the technical committee for value chains development around the agro-parks in High
Sidama and Amahara
- Quasi – government entity formed by a partnership betweenUNDP and the Ministry of
Motivation:
Urban Development and Housing (MoUDH)
Entrepreneurship High
- Est. in 2013, provides services to start - up, micro, and small enterprises
Development
- Has branch offices, training centres, and trainers in Hawassa and B/Dar
Centre Capacity:
- Provides training on entrepreneurship and BDS services
High
- Provides resource people for trainings organised by other organisations
81 M
otivation indicates the perceived organisational motivation to drive change in the sector. Capacity is related to human resource capacity
to drive change in the sector. Both of these were gauged by the team based on the semi-structured interviews which took place during the
field research.
Opportunities
39
household farming and underrepresented in
4.2
Potential areas commercial farming.
for intervention 3. Support sector investment policy to incen-

tivise new entrants into commercial poultry
Based on findings of the constraints analysis and production and raw poultry feed material pro-
given the assessment of the key market stake- duction to both expand the sector and reduce
holders, several potential areas for intervention feed input costs and raw material shortages.
have been identified. These interventions focus The investments would create commercial
on addressing the underlying causes to key con- farming jobs, make quality production more
straints and take account of existing development, affordable, and potentially make commer-
government and private sector initiatives. They cial farming more viable for semi-intensive
also have a sustainability and scalability focus, farmers.
such that businesses and organisations can con-
tinue, scale-up or replicate interventions beyond
the life of the project. Intervention Area 1: Reduce
The below is tentatively proposed as an action costs to input supply
plan for the project to take forward. This should
1.a) Enhance the technical management ca-
be reviewed and updated regularly when new
pacity at hatcheries to reduce mortality of
market information or analysis becomes avail-
day-old chicks. Hatchery mortality rates are
able and in light of changing sector dynamics. The
reported to be high (some indicated up to 20%)
identified interventions take a portfolio approach
which has an effect on both the supply of day-old
as it is recognised that some interventions may
chicks to the market as well as their price. At the
never get traction while others may become very
same time, research indicates that these hatch-
successful. The idea here is to test many initiatives
eries need to enhance their technical capacity to
and put resources into those that succeed while
reduce mortality rate. In this intervention, the pro-
minimising investment into those that do not.
ject would work through the EPPPA to reach out
The proposed intervention strategy tries to al- to hatcheries to understand which technical areas
leviate constraints in three key areas, which are need support. The project could hire a technical
broadly set-out below and detailed on an indi- specialist to review operations at a series of hatch-
vidual intervention basis in subsections there- eries to recommend actionable hatchery invest-
after: ment measures to reduce DOC losses. The project
could look at piloting or framing this support as
1. Reduce costs to input supply: High input
an EPPPA member service, to re-establish EPPPA
costs are the key driver in limiting the dif-
member trust and create some more membership
fusion and use of more productive poultry
value, or work toward projects fully funding on-
farming methods to existing and new en-
going technical support for the future82.
trants. They also push the purchase price of
poultry products out of reach for the vast ma- 1.b) Work through EPPPA and EAFI A to
jority of Ethiopian consumers. Thus, these in- strengthen the existing advocacy efforts
terventions intend to address some key input around reducing feed costs. The project would
cost drivers, which can incentivize poultry build on the work that EPPPA and EAFIA are al-
farmers to use more productive inputs and in ready doing in this area, and the interest of EIC
turn, become more profitable. and ATA, who have identified that addressing feed
costs is a high priority for sector competitiveness.
2. Enhance commercial orientation of semi-in- While it is unclear how these organisations intend
tensive female farmers: In line with the na- to address the issue at hand, the project could
tional policy of shifting to more commercial convene the four parties and devise a strategy to
sector development and the project objective support the reduction in feed costs. Based on this,
of creating more and better jobs for women, the project could support the four organisations
this intervention seeks to strengthen the com- to convene a larger meeting to identify a road map
mercial orientation of female poultry farmers ahead. While the project’s next steps will depend
- who are overrepresented in unproductive
82 An alternative option to reduce DOC costs could be to support MoA in assessing the viability of setting up grandparent stock
multiplication centres. While it is recognised that the Ethiopian poultry market is currently too small to support grandparent
stock, such a feasibility study can help mark out a strategy for the future development of grandparent stock centres such that
they come online at the right time
on that road map, some potential support areas respect to the training packages, the project could
could be developing an economic case for allevi- work from the BDS training networks, adapt the
ating import duties on premix and day-old chicks contents from the ILO’s existing BDS packages:
or working with government to open up access for Start and Improve Your Business83 (SIYB) or the more
feed companies to direct source raw feed inputs gender targeted GET Ahead.
from farmers rather than at the high price, lower
2.c) Work with financial service providers –
quality, Ethiopia Commodities Exchange.
formal or informal – to support lending to BDS
1.c) Enhance raw input production. As edible oil trained, semi-intensive female farmers. One
cake is the most expensive and over-priced feed key constraint is that financial institutions con-
input, the domestic supply shortage of the com- sider lending to agriculture, including to poultry
modity is an issue. The project will work to boost farming, as too risky. The project can intervene
supply through a series of interventions identified with awareness raising and training to financial
in the ProAgro Ethiopia edible oils market systems service providers – particularly those oriented
analysis. toward lending to females or those with funds
to lend - to increase their knowledge and un-
derstanding of the business. This would enable
Intervention Area 2: Enhance them to measure the risk better, price it in their
commercial orientation of semi- loan products, and potentially develop tailored
intensive female farmers financial products for the poultry sector to make
it more acceptable to lend to poultry businesses
2.a) Orient regional extension services to looking to expand. The project’s work in inter-
better target women. Current extension ser- vention 2b will help in this intervention as female
vices are directed toward household farmers. semi-intensive poultry farmers will create busi-
The issue is that these trainings overwhelmingly ness plans and improve business record keeping
engage men at the household level, when women to enhance their eligibility for loans.
are the ones actually doing the poultry farming. A
If the above work does not free up lending, the
first, minor step in positioning women to be more
project could use risk-sharing methods such as
productive household farmers would be to give
establishing a matching revolving fund and/or
them access to the existing extension services.
guarantee funds. The latter is more cumbersome
Here the project could work with the extension
administratively and requires a level of fund man-
service directorates in both regions to identify a
agement and technical assistance capacity in the
road map to better target extension services to
project team. The former can be done relatively
ensure that they actually train those doing the
easily - once the right partners have been identi-
poultry farming – women.
fied, the project and financial partner institutions
2.b) Enhance business development services can design appropriate funding and implemen-
(BDS) for female semi-intensive producer tation mechanisms and a practical phase-out
groups. Making a switch to more commercial strategy.
farming requires knowledge on some business
skills. Women in semi-intensive farming have al-
ready made a leap into a more productive busi- Intervention Area 3: Support
ness - which is a large transformation in itself sector investment policy
- however, they may still need to develop their busi-
3.a) Work with regional investment bureaus to
ness with some further upskilling. In this regard,
develop and enhance investment strategy, par-
the project could work with existing BDS pro-
ticularly in Sidama where the new regional gov-
viders to structure a training around targeted for
ernment structure is in the process of developing
semi-intensive poultry farmers. This could poten-
new policies and regulations. Here, the project
tially be paired with some basic technical training
could work with the Sidama regional government,
on more commercial farming techniques and an
as well as ATA and EIC - organisations trying to
assessment of return on investment for higher
incentivise investment into poultry production.
productive chickens and feed. To ensure that the
With these organisations, the project could work
BDS providers have a market for such services,
to address key investment barriers, particularly
the project could link BDS providers to regional
for women, to the start-up and develop poultry
bureaus in Amhara and Sidama and women’s
farms. The investment work should target a more
poultry producer groups as a first step. With
83 In particular the SIYB Association in Sri Lanka could be consulted as they have poultry training experience.
Opportunities
41
inclusive approach to help commercially oriented competitiveness. Linked to intervention area 1,
smaller-scale poultry farms invest into growth and this intervention would advance EAFIA’s efforts to
development. lobby the national government to create invest-
ment incentives for the production of raw animal
The first step would be to discuss with both re-
feed inputs. Work has started here, however,
gional authorities - including their livestock de-
EAFIA needs support to analyse and demonstrate
velopment teams - to understand the existing
the economic case for creating these investment
organisational and bureaucratic pain points and
incentives. The ILO could support EAFIA in cre-
incentives to bring about such a policy change.
ating the economic case as well as in setting-up
The ILO can support this technically to link to the
and facilitating a private-public dialogue platform
ProAgro policy work.
to bring key actors to the table to discuss the eco-
3.b) Support EAFIA to advocate for the opening nomic case, policy implications and way forward
up of investment lands for poultry feed inputs. to put these incentives into action. If this process
can push forward the necessary investment in-
The domestic supply shortage of poultry feed
centives, it can enhance both major gains in the
inputs such as edible oils and maize, drives up
poultry and edible oils sectors.
the cost of poultry feed, which in turn, increases
poultry production costs and reduces sector
42
5 Conclusion
The project has a considerable opportunity to develop the poultry sector in
Amhara and Sidama in a way that generates more and better jobs for female
workers and eventually reduces poverty for these individuals and their fam-
ilies. The analysis in this study provides the project with a starting point to
engage with and drive change in the sector and identifies eight potential
interventions to do so.
These interventions aim to incentivise sector investment and create more ef-
fective, less costly production to improve the sector’s competitiveness. In this
effort, the project must ensure it engages women and reduces the barriers
for women – who work in traditional, unproductive farming operations and
are underrepresented at the commercial scale. This will ensure that women
serve as an engine to the sector’s transformation from unproductive to com-
mercial farming rather than being left behind from the gains ahead.
Finally, it should be noted that although this analysis is considered compre-
hensive, the project should strive to revisit, update and build upon it as the
project team gathers more insights in the sector, its constraints and the
market actors. This will help the project more aptly adapt and deliver in a
rapidly changing sector.
Annex A: Research Interview List
43
Annex A: Research Interview List

Semi-structured Interviews
Large-scale hatchery, Addis Ababa
Medium-scale early-stage producer, Addis Ababa
Large-scale feed producer, Addis Ababa
Feed oriented cooperative Union, Hawassa/Sidama
Family Poultry Farm, Sidama Region
Ministry of Agriculture - Agricultural Investment Directorate, Federal Level
Ministry of Agriculture - Extension Department, Federal Level
Ministry of Agriculture - Poultry Commercialization Department, Federal Level
Agricultural Transformation Agency, Federal Level
Bureau of Investment and Industry, Amhara Region
Bureau of Agriculture - Livestock Directorate, Sidama Region
Confederation of Ethiopian Employers Federation
Amhara Credit & Saving Institution, Amhara Region
Walia Capital Leasing Company, Amhara Region
South Capital Leasing Company, Sidama Region
Poultry Producers and Processors Association, Board Chairman
Ethiopian Animal Feed Industries Association, Head
Andarge Feed Distributor & Poultry Enterprise, Bahir Dar, Amhara Region
Abay Youth Group, Bensa Woreda, Sidama Region
Bensa Woreda Livestock Extension Head, Sidama Region
Regional Industrial Parks Development Corporation, Sidama Region
Environment & Forestry Commission, Federal Level
Development Bank of Ethiopia, SME Financing Division - HQ
Cooperatives Agency, Amhara Region
Cooperatives Agency, Sidama Region
CETU - Federation of Food, Beverages, Tobacco and Allied Trade Unions
Entrepreneurship Development Centre, Sidama Region
Bureau of TVET & Enterprise Development, Amhara Region
Observations
Yirgalem Industrial Park, Sidama Region
Bure Industrial Park, Amhara Region (sector selection stages)
Bensa Rural Transformation Center, Sidama Region
Bensa Poultry Centre, Sidama Region
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� Ethiopia

A Market Systems Analysis

Supported by On behalf of Implemented by

By: Steve Hartrich & Amdework Berhanu

Publications of the International Labour Office enjoy copyright under Protocol 2 of

1.1 Project introduction..................................................................................................................................9

1.2 Study purpose and scope ........................................................................................................................9

1.3 Study methods.........................................................................................................................................10

1.4 Report structure......................................................................................................................................10

2.1 Market Overview......................................................................................................................................13

2.2 History and trends...................................................................................................................................16

2.3 Role of the target group.........................................................................................................................18

3. The Market System.................................................................................................................................................... 21

3.1 Core market.............................................................................................................................................22

3.2 Supporting functions..............................................................................................................................27

3.3 Rules and Regulations............................................................................................................................30

3.4 Constraints summary..............................................................................................................................34

4.1 Key market actors....................................................................................................................................37

4.2 Potential areas for intervention.............................................................................................................39

Annex A: Research Interview List..........................................................................................................................43

1.1 Project introduction

1.2 Study purpose and scope

The sector scope includes both poultry broiler

1.4 Report structure

2.1 Market Overview

Ethiopia % Ethiopia production

W i t hin A mahara , t he A gro Commo di t y Somali

prioritise wheat and maize as commodities that

Processor Location Types of oil Capacity Status

Sidama For Sidama, the FAO ACPZ study identified coffee

16 Estimated based on Figure 5 of FAO 2019.

are suitable for poultry production18, and Sidama

X World Vision funds specific Sidama woredas

18 Extrapolated from Figure 5 in FAO 2019.

Commercial feed companies, hatcheries and

28 Labour Proclamation No. 1156/2019.

Figure 1: The Poultry Market System

Animal Health Access to

Core Value Chain

3.1 Core market

Figure 2: The Poultry Value Chain

Hatcheries Early Stage Production Marketing Retailers Consumers

Eggs/Live chickens Processed meat

Hatcheries hatching eggs39 from genetic companies often

38 Graph developed from Factsheet Poultry Ethiopia. ENTAG. 2020.

Characteristic Medium/ Large-Scale Small-scale intensive Semi-intensive Scavenging

> 1 000 broilers > 200 broilers

Box 2: A push toward more productive household

X High feed costs: Given that this is between

Box 3: Starting up a medium-scale commercial

In terms of commercially-oriented farms in the A medium-scale producer who started operations

Consumers “Eggs cannot be kept from

52 Prices based on Hirvonen et al 2020.

X Insufficient infrastructure such as cooling,

X Limited quality vaccine supply: As a result of

76 VCA Poultry, USAID - Feed the Future Ethiopia, 2017

79 VCA Poultry, USAID - Feed the Future Ethiopia, 2017

3.4 Constraints summary

Constraint Underlying Causes Impact on market/decent work

2.3 Role of the target group.........................................................................................................................18

4.2 Potential areas for intervention.............................................................................................................39