The effect of the war and drought in the country on the recent spike in milk prices can be drawn almost like a straight arrow. In Adama, 100 KMs from the capital, this trajectory is easily explained through a combination of wheat shortage, animal fodder and the factories that supply the town’s dairy farms with food for their cattle.
Adama, along with neighboring Bishoftu, is one of the country’s crucial milk producing areas; the milk sheds of the country as they are known. The price of milk there has been growing steadily since September 2020, with retail price jumping from around 15 Ethiopian Birr per liter to 45 in the past few months.
One of the reasons behind the price hike is shortage of food for the animals, fodder, a by-product of different grains that factories then sell to dairy farmers. While animal feed shortage has always been a factor for the sector’s unmet potential - Ethiopia has the largest livestock population in Africa - this year the problem has been worsened by the war and the drought affecting large parts of the country.
Since the beginning of open conflict between the federal government and the Tigray People’s Liberation Front in November 2020, looting, and displacement of rural farming communities has thrown farming and harvesting off course. An estimated 1.3 million hectares of crops were damaged in Tigray alone according to a report by FAO. A volley of reports on food insecurity and drought in Borana and Somali have warned of looming humanitarian disasters.
“We get our supply of wheat from farmers or imported wheat from the government,” said Abiy Hayleyesus, manager of a wheat processing factory in Adama. “The farmers aren’t making enough and the government has shifted priorities to giving its imported wheat toward humanitarian efforts.”
Despite Ethiopia being one of the largest wheat producers in Sub-Saharan Africa, the import of wheat has shown a steady rise in the past few years. Meeting this demand has increased import of wheat which is then distributed to wheat processing factories in the countries. The factories then sell the by-products to dairy farmers.
Bran, locally known as furushka, and by-products of walnut and cotton are commonly used by dairy farmers as fodder for their cattle. Other products like grass, hay and silage are also used. The price of fodder has increased shot up within the last year; furushka has gone from 600 to 2000 Ethiopian Birr per quintal, walnut by-products from 1700 to 5000 and even hay has tripled to 120 Birr.
The shortage of fodder is now pushing dairy farmers out of business.
Rabira Teshome, 24, used to run his family’s dairy farm with his brother, supplying milk to their neighborhood and other businesses locally. But they've recently decided to turn their business elsewhere.
The cow sheds, which used to be in the same compound where they live, have been changed to rental blocks.
“We’ve sold off our business,” said Rabira. “It’s not profitable anymore and we’re looking to rent out our sheds.”
The family has opted to restructure the sheds to cement blocks and looked into manufacturing instead.
Another layer to the problem is the breed of the cattle. Nearly all of the country’s livestock, including cattle, goats and chicken, are indigenous animals. In other words, the cows are not able to produce high volumes of milk.
“The cows have to provide upto 20 liter milk per day inorder to be profitable in this business. The breeds here produce from 12 to 15,” said Henok Foche, a dairy farmer in Adama. "The highly productive exotic breed of cows are very expensive. It’s sold above 100,000 Etb ( 2500 USD), which is expensive.”
The mixed breeds are expensive but need much less fodder than their local counterparts.
An increase in fodder prices directly affects dairy product prices according to Dr Deribe Hailu, head of the livestock resource development department in Adama’s Urban Agricultural Cluster Office.
While the office is well aware of this issue, it’s mandate has shrunk and is now unable to find recourse even in providing mixed breeds for sale. Recent administrative reform has merged the livestock resources development, previously an independent section under the Urban Agricultural Cluster Office.
“Breed selection, and the supply chain has been left to the private sector,” said Deribe. The department which used to work on that is now obsolete.”
The office is now turning to the tax authorities to request a waiver on fodder tax as a way to mitigate the effects of the price.