Collective development of an action plan

19-05-2022

In June 2021 Agriterra approached four Dutch Agripoolers to ask whether they would like to help develop a so-called roadmap for the cooperative development of the dairy sector in Ethiopia.

The need for such a step-by-step plan arose during the BRIDGE (Building Rural Income through inclusive Dairy Business Growth) project. This is a five-year project (2018-2023), subsidised by the Dutch government, in which Agriterra works in conjunction with WUR and SNV to improve the productivity and quality of dairy farming and the dairy sector.

The four Agripoolers, each with their own background and expertise, joined forces for this assignment. 

• Pierre Berntsen - Director for agricultural companies at ABN AMRO 
• Gerben Smeenk – Dairy farmer, member of Northern Netherlands Agricultural and Horticultural Organisation (LTO Noord) and member of the supervisory board of Agrifirm
• Atze Schaap – Former Director of Dairy Development FrieslandCampina, member of the advisory council of Amalthea Goat Cooperative
• Jan Kamphof - EMEA Regional Director at Hamlet Protein

Due to corona, contact with Ethiopia was via online meetings. Conducting interviews with a broad group of stakeholders from the sector, the four developed a step-by-step plan together with two local Agriterra business advisors in Ethiopia.
They considered the situation in the dairy sector at that time, the role that cooperatives play in this and the challenges and problems they face.  A large number of recommendations were subsequently made, with the aim of developing successful cooperatives in the future with a strong market position and a key role in improving the livelihood of dairy farmers in Ethiopia. ​

The current situation

Pierre Berntsen: "The dairy market in Ethiopia is largely informal. Raw or minimally processed milk is sold privately in the area. Around 3% of the national milk pool is processed by private dairies and sold in shops, restaurants and hospitals. Mostly as drinking milk, butter oil, yoghurt and fresh cheese.  In cities, the demand for dairy products is growing as a result of the growing middle class.  These are now often imported. There is more than enough processing capacity in the country, but the knowledge and skills to operate it are often limited, as is sufficient milk supply.”

While cooperatives sometimes play a role in milk marketing, this is usually done by traders.  Cooperatives were traditionally not founded by farmers, rather by the government.  Many cooperatives lack knowledge, skills and entrepreneurship. There are exceptions, however. Agriterra works together with eleven cooperatives and four dairy unions which are all ambitious and keen to become more professional.

Challenges

Gerben Smeenk can give several examples of the challenges facing a dairy cooperative in Ethiopia. “Large parts of the population fast two days a week and two months a year. Dairy sales drop during this period. That makes setting up a stable sales chain difficult. Furthermore, the milk sold by farmers is also usually not refrigerated, of poor quality and diluted with water. In addition, the availability of roughage and concentrates is a major bottleneck in the relatively densely populated country. Crops are primarily intended for human consumption.  Cattle feedstuffs are not imported due to currency shortages and unfavourable exchange rates. An additional disadvantage is that dairy farmers have to pay 15% tax on purchased concentrates, making it too expensive to use.” 

Atze Schaap adds: “The professional knowledge among farmers is also very limited and very little advice is available to support them.  There is also a need for good dairy breeds, feed, veterinary knowledge, a refrigerated sales chain and access to the sales market. Obviously with the aim of earning a reasonable income. But this can only be achieved if there is a good plan and investments are made in setting up the chain. In short, there is still a long way to go for the Ethiopian dairy sector."

Action plan

“This requires vision, tenacity and cooperation,” explains Jan Kamphof. “We have drawn up an action plan, setting out how a cooperative can be successful. What they need to take into account and what requirements they must meet in terms of governance, management, size and entrepreneurship. It is also important that Ethiopia recognises the important role that cooperatives play in the transition towards productive dairy farming. Successful cooperatives are not a government policy tool; they are members-owned and focus on creating value for their members. In this case, on the production, collection and marketing of milk.  Guaranteeing the quality of the milk, jointly purchasing feed, and supporting the members with knowledge and genetics.”

Agriterra business advisor Marco Streng presented the plan during the ‘International Conference on Dairy Sector Transformation’ symposium held in Ethiopia in the last week of October 2021. Some discussions with the public followed on topics as ownership, government involvement and the entrepreneurial mindset of cooperatives. The next step will be the further development of the roadmap for implementation.

Collaboration

The four Agripoolers look back on a successful assignment. Atze Schaap: “Of course, one of the disadvantages of working via online meetings is that you can't see everything for yourself and that interaction is more difficult.  We were nevertheless able to speak to many people in a short space of time and so gather information. Hats off to the local Agriterra team, who managed to organise this time and again. We also formed a great team as Agripoolers, complementing each other well.”  Pierre Berntsen agrees: “I found the cooperation to be very pleasant and constructive. The added value of the different backgrounds and experiences was especially great. It is also quite difficult sometimes to weigh the information properly during digital sessions. It's nice if you are able to discuss it together afterwards. Which, during the Covid time, we were thankfully able to do in Jan Kamphof's garden. At the end of the day, we are people who communicate best when they can meet each other face to face.”