1. No category

ISSN: 2408-5480 Vol. 3 (3), pp. 206-213, March,
2015. © Global Science Research Journals
http://www.globalscienceresearchjournals.org/
Global Journal of Agricultural Economics, Extension and
Rural Development
Full Length Research Paper
Structure, conduct and performance of marketing
chains: The case of milk marketing among pastoralists
and agro-pastoralists of Eastern Ethiopia
Bedilu Demissie1*, Hussien H.Komicha2 and Adem Kedir3
1
Department of Agribusiness and Value Chain Management, School of Agriculture, Adama Science and Technology
University, Asella, Ethiopia.
2
Department of Economics, University of Winnipeg, 515 Portage Ave, Winnipeg, MB, R3B 2E9, Canada.
3
Department of Statistics, College of Computing and Informatics, Haramaya University, Haramaya, Ethiopia.
*Corresponding author’s E-mail: [email protected]
Accepted 24 March, 2015
Abstract
Pastoralists and agro-pastoralists in Ethiopia have untapped livestock resources. However, they have
inadequate economic benefits from these resources due to lack of efficient structure, conduct and
performance with which these resources have been explored. Despite large livestock resources, the
communities experience high incidence of poverty. Their geographic areas are susceptible to frequent
droughts. Ethiopian agricultural policies in the past had largely neglected this sector, focusing on
mainly crop production and marketing. Policy attention to milk production and marketing in the pastoral
and agro-pastoral areas had been negligible. In order to explore efficiency of milk marketing system in
pastoral and agro-pastoral areas as well as to generate information for relevant policy formulation, this
study attempts to analyze cow and camel milk marketing channels, the role and linkages of marketing
agents using the commonly-used Structure–Conduct-Performance (S-C-P) framework and commodity
approaches. Primary data from 140 pastoral and agro-pastoral households and several marketing
agents were collected and many secondary data sources were also consulted. The study found
presence of inadequate provision of public services, and predominantly traditional and fragmented
marketing system. Both cow and camel milk markets exhibit strong oligopoly in the area. The study
suggests that there is a need to link milk marketing agents through development of institutional
arrangements such as dairy cooperatives, traders’ unions and contract marketing scheme; a need for
public investment in the development of supportive infrastructure (e.g., telecommunications, roads,
electricity, water); extension support to augment traditional production system, such as promotion of
cross-bred cows and veterinary services; licensing and inspection of milk traders and producers to
ensure achievement of minimum hygiene and quality standards; and a need for development of valueadding processing facilities to minimize waste and increase the profitability of the enterprise.
Keywords: Marketing margin, structure-conduct-performance, pastoral/agro-pastoral, dairy, Ethiopia
INTRODUCTION
Ethiopia has immense and largely untapped livestock
resources useful as sources of food, income, services
and foreign exchange to the economy (Ayale et al.,
2003).However, as compared to its immense potential
the existing income generating capacity of the livestock
sector has not been exploited. The primary reason, among
Glob. J. Agric. Econ. Ext. Rural Deve. 207
others, seems to be inefficient livestock and livestock
product marketing characterized by high margins and
poor marketing facilities and services (CSA, 2006), lack
of well-developed marketing infrastructures and
appropriate marketing channel in the country (Getachew,
2003; Gizachew, 2005; CARE Ethiopia, 2009).
Pastoralists and agro-pastoralists contribute about 40%
of the country’s total livestock population. Nevertheless,
Ethiopian pastoralists have the highest incidence of
poverty and the least access to basic services compared
with non-pastoral areas (Oxfam, 2008). The National
Agricultural Sample Surveyof 2001/2002 shows a total
cow milk production of 2.6 million MT, of this 2.2 million
liters come from pastoralists in the Oromia Region. The
country’s pastoralists also produced about 114 million
litres of camel milk (Ethiopia Economic Association,
2005). However, pastoralists and agro-pastoralists have
not economically benefited to the extent they ought to, as
most of the development efforts in the country have
focused on crop production in the highlands rather than
to production of livestock in the lowlands. This study
attempts to shed some light on the conduct and efficiency
of pastoral and agro-pastoral milk marketing system for
their potential use in policy formulation.
Previous studies suggest that, particularly, camel milk
production and marketing information and its contribution
to the pastoralists in eastern Ethiopia have been
inadequate (e.g., see Yohannes et al., 2009).This study,
therefore, attempts to bridge this information gap. The
rest part of the article is organized as follows. The next
section presents data collection and methodological
issues. Results and discussion are presented in section
three, and conclusions and policy recommendations are
provided in the last section.
Sources of Data and Sampling Techniques
This section presents the research methods used in
collecting and analyzing data from pastoral and agropastoral households in the study area.
The field study was conducted during January-March
2010. Data collection focused on household heads, key
informants, rapid market appraisal and focus group
discussions. Different sources were used to collect
secondary data. The selected districts and Peasant
Associations (PAs) were selected as they were
considered the milk-shed due to their potential for both
cow and camel milk production and marketing.
Two-stage stratified random sampling was employed to
select the sample households. The target population was
first stratified into pastoralists and agro-pastoralists based
on whether they were also engaged in crop production.
The stratification of sample households was based on
milk production type, including only cow milk, only camel
milk or both cow milk and camel milk producers. The
stratification is needed because the sample household
milk production type is heterogeneous in the milk-shed
which makes the sample selection of household difficult
to select by simple random sample method. Based on
this stratification, 47, 53 and 40 households were
randomly selected from the three categories,
respectively, using probability proportional to sample size
sampling technique. A total sample size of 140 comprised
of 64 pastoralists and 76agro-pastoralists were randomly
selected for interview.
In addition to these, samples were taken from rural
assemblers, wholesalers and retailers. Milk traders were
sampled from five markets: Gursum, Babile, Harar, Dire
Dawa and Jijjiga. These markets were the recipients of
the produce from the selected milk producing areas. As
the number of cow milk and camel milk wholesalers and
rural assemblers at each stage were very few, all of them
were interviewed. Selection of the retailers in each
market was made based on the size of the markets after
accounting for the number of retailers. Retailers were
selected randomly proportional to each market with
consideration of a number of retailers.
Brief Overview of the Study Area
Methods of Data Analysis
The study was conducted in the area extending from
Gursum to Babile in the east Hararghe Zone of Oromia
Region, Ethiopia, along the main road to Jijjiga having an
area of 967.3 Km2 and 3022.2 km2, respectively. Gursum
and Babile districts are characterized by warm lowlands
lying between 1,200m to 2,950m and 950 to 2000m
above sea level, respectively. The areas have good
potential for livestock production, which is mainly
commenced by pastoral and agro-pastoral households.
districts’ livestock population comprises of 125,996cattle,
23,160 sheep and 10,936 camel (East Hararghe profile,
2009).Three major local languages are spoken in the
area: Afaan Oromo, Somali and Amharic. Majority of the
people in the study area speak Afaan Oromo.
To identify major cow and camel milk marketing
channels, the role and linkages of marketing agents, the
Structural Conduct and Performance (S-C-P) framework
and the commodity approaches were applied. In
agricultural marketing studies, market structural
characteristics are used as a basis for classification of
three categories of market: competitive, oligopolistic and
monopolistic. According to Scott (1995),four salient
aspects of market structure could be identified: degree of
seller concentration, degree of buyer concentration,
degree of product differentiation, and the condition of
entry to the market.
Market concentration is defined as the number and size
of sellers and buyers in the market (Scott, 1995). The
METHODOLOGY
Demissie et al. 208
greater the degree of market concentration, the greater
the possibility of non-competitive behavior in the market
will be. To measure the degree of concentration, a few
techniques, including Concentration Ratio (C), Hirschman
Herfindahl Index (HHI) and Gini-Coeficient could be used.
For this study the concentration ratio is implemented as
other methods are limited in their application for imposing
additional restrictions.
The Concentration Ration (C) is defined as
Here, it is also better to introduce the idea of producer’s
GMM
p ) which is the portion of the price
gross margin (
paid by consumer that belongs to the producer.Net
NMM
p ) who acts as
marketing margin of producer (
marketing middle men is also computed as:
GMM p 
r
C   S i2 , i  1,2,3, . . , r
i 1
S
th
Where, i is percentage share of the i firm, and r is the
number of firms considered to calculate the ratio.
Kohls and Uhl (1985) suggested that as a ruleof thumb a four
large enterprises’ concentration ration of 50 percent or more is
an indication of a strong oligopoly, 33-50 percent is a weak
oligopoly, and less than that 33 indicates concentrated industry.
Bain (1968) contends that a barrier to entry is simply
any advantage held by existing firms over those that
might potentially produce in a given market. Potential
entry barriers would be investigated based on demand
conditions, product differentiation, absolute unit-cost
advantages, legal and institutional factors, economies of
scale, capital requirement and technological factors.
Market conduct defines the conditions which make
possible competitive or exploitative relationships between
sellers and buyers. Competitive forces are directed by
market forces. Exploitative relationship is done via unfair
price-setting practices including collusive, predatory, or
exclusionary.
According to Cremer and Jense (1982), market
performance refers to the reflection of the impact of
structure and conduct on product price, cost, volume and
quantity of output. For instance, if the market structure for
a given product resembles monopoly or strong oligopoly
rather than pure competition, then one can expect the
market to perform inefficiently. Market researchers use
two major measures of market performance this are net
return and marketing margin. Net return per middleman
for milk marketing is calculated by subtracting fixed and
variable cost from gross return and it verifies the
existence of above average profit to middlemen.
Marketing margin is one of the commonly used
measures of the performance of a marketing system. It is
defined as the difference between the price the consumers pay
and the price the producers receive. Computing the total gross
marketing margin (TGMM) is always related to the final price or
the price paid by the end consumer, expressed in percentage
(Mendoza, 1995).
TGMM 
Pc  Pp
PC
100
where TGMM=total marketing margin;
price;
Pc
=producer price
Pc
=consumer
Pc  MGM
100
Pc
1
where MGM is marketing gross margin
Another parameter to analyze marketing margin is the
producers’ share, which is the ratio of producers’ price to
consumers’ price (retail). The producers’ share can be
expressed as:
Ps 
Px
MM
 1
Pr
Pr
where
Ps 
producers’ share;
Px 
producers’ price of
Pr  consumers’
product and by-products;
price of
product and by-products; and MM= marketing margin
RESULTS AND DISCUSSION
In this section, descriptive results on camel and cow milk
marketing, especially on marketing channels, and the role
and linkage of marketing agents, as well as results of the
analysis of costs and margins for key marketing channels
in Gursum and Babile milk-shed are presented.
In the study area cow butter is used for household
consumption and as a cosmetic for female, while milk
was used as a source of food and income. Cow milk is
sold mainly in fresh (raw) form and a small portion
(approximately 10%) of sales is in the form of sour milk or
butter. Households who produce camel milk tended to
sell liquid milk without processing it into other dairy
derivatives because traditionally cheese and butter are
not processed from camel milk in large amount as in the
case of cow milk. However, in the study area pastoralists
and agro-pastoral produce small amount of butter from
camel milk by mixing it with cow milk or sheep milk which
is not common in other places.
Sample Characteristics
\Livestock rearing is the most dominant livelihood
activities, with some crop production in the agro-pastoral
2
area. Respondents indicated that they own more camels
than cows. The number of dairy cows and camels for the
sample households in the milk-shed was 1,237 and 519
Tropical Livestock Unit (TLU), respectively.
The survey result showed that the average milking
days per lactation period in the study areas was 232 days
Glob. J. Agric. Econ. Ext. Rural Deve. 209
Table1: Socio-economic characteristics of cow milk market participants and non-participants
Variables
Mean(Std)
Participants
Non-participants
Age of household head (years)
41(12.02)
41(12.76)
Number of household members
7.57(4.05)
10.27(3)
Family size in adult equivalent
4.29(2.07)
4.14(1.45)
Household members under the age of five
1.47(1.3)
10(4.4)
Experience in milk production (years)
19(13.7)
10(4.4)
Number of milking cows owned
2.72(2.72)
1.81(1.25)
Quantity of cow milk produced per day
6.8(10.15)
3(1.86)
Income from non-dairy source per year
4,510.25(7,247)
11,585(10,299)
Source: Own survey result, 2010
Note:*, ** and *** represent 10%, 5% and 1% significance levels, respectively
for local dairy cows. This result is comparable to Kurtu’s
(2003) findings which indicated that an average lactating
length of 212 days for local cows in the Harar milk-shed.
The average milk yield per day per cow in the study area
was estimated to be 2.19 liter. This result is higher than
the national milk yield of 1.54 liter/day per cow (CSA,
2008). For camels the average milk yield per day was 4.8
litres. Moreover, total milk production in the study area for
camel and cow per day was 1,720 litres, and 543 litres
respectively or 12,042 litres and 3,803 litres of milk per
month. The average milk yield per lactation per head was
1,391 liters for camel and 512 litres for cow.
The indigenous cow breeds, although generally
considered as low milk producers, are the major source
of milk in the study area, and there is no exotic cross
breeds in the herds surveyed. The share of milk sold for
camel milk producer households and cow milk producer
households was about 78% and 57%, respectively. The
share of camel milk producers was high due to their large
milk production and more market-oriented production
objective by pastoralists and agro-pastoralists. The share
of cow milk producers’ market participation was found to
be small in terms of quantity, which may be due to less
production of the indigenous breed cow and less demand
of cow milk as compared to camel milk by traders in the
study area.
The mean milk production per day per dairy
households in the milk-shed during the survey period was
found to be 6.31 for cow milk producers and 18.49 for
camel milk producers, which is three times greater than
that of cow milk producers. For the sample pastoralist
and agro-pastoralist dairying was found to hold 78% and
83.31% of annual income value of Gursum and Babile,
respectively. This result confirms that, milk is a cash
product for the sample dairy households and it is most
important source of livelihood.
Milk Market Participants and Non-participants
The survey indicates that 98.9% and 87.4% of sample
camel and cow milk producer households respectively
were milk market participants during the survey period,
whereas the remaining 1.1% and 12.64% of camel and
cow milk producer households were non-participants at
the time of the survey. Table 1 shows mean comparison
t-value
-0.085
2.115**
0.88
-2.13**
-2.13**
-1.081
-1.238
2.624**
of the two groups of households. The t-test statistics for
milk producer households with household members
under five years of age shows that milk market
participants and non-participants were significantly
different at less than 5% probability level. This indicates
that households with more number of under-five children
had low market participation than households with older
members. This shows pastoralists and agro-pastoralists
give more priority for children’s milk consumption before
supplying to the market.
The average experience in cow milk production of
market participants and non-participants was 18.9 and 10
years, respectively, and this difference is statistically
significant at 5% level. This suggests that pastoralists
and agro-pastoralists with more experience in milk
production are more likely to supply more milk to the
market than the less experienced households as
experience matters for proper milk handling, especially
for unprocessed, raw milk, a result also similar
Woldemichail’s (2008) finding.
The independent sample t-test shows that there is
statistically significant difference (<5%) in the mean value
of financial income from non-dairy sources between
participating
and
non-participating
sample milk
producers. The non-participant sample milk producers
had about 2.5 times higher non-dairy financial income
than participating sample dairy households. This
indicates that households who have fewer source of
income from non-dairy source could sell more milk to
earn money from the sale of milk, as perhaps milk is their
only source of income.
Access to Public Service
Provision of adequate services for the forgotten
pastoral/agro-pastoral communities enhances the
communities’ socio-economic development in general
and the well-being of individuals in particular. However,
as the study shows the provisions of public services such
as access to livestock extension, credit, road and market
information is generally very weak in the study area.
Despite the county’s extensive investment in promoting
extension services, the survey shows that only about
21% and 19% of the total sample respondents from
Gursum and Babile districts received dairy extension
Demissie et al. 210
Figure 1: Camel milk marketing channel
study about 82% of the total sample households had milk
market information on supply, demand and price before
they sold their milk from unorganized market information
systems such as milk traders, personal observation and
friends.
Milk being a perishable commodity, good access to
market is of paramount importance. Some 27% of the
sample respondents had to travel more than 20 km to
reach the nearest district market, more so for
respondents from Gursum district.
Milk Traders’ Social and Intellectual Capital
Source: Own Survey Result, 2010
Figure 2: Collection centers by rural assemblers at
Bekeka/Qorre and Erare Gudda Peasant Associations to
transport milk to Jijjiga and Harar
In this study 46 milk traders and owners of five hotels and
restaurants were interviewed. Among 46 milk traders
some 12% were engaged in only cow milk trade, 37% in
only camel milk trade and 51% were engaged in both
camel and cow milk trade.
Average milk trading experience, in years, was found to
be about 11 years. Female traders accounted for 94.2%
of the sample households, dominating both camel and
cow milk trade in all market centers. However, traders at
wholesale level were found to be male and were only
engaged in camel milk trade. As to the source of working
capital, majority of the traders respond as they used their
own capital from the time they began milk trade at the
time of survey. Of the total interviewed traders, only 31%
of milk traders used credit from relatives and friends to
run their milk trading business, while the other67% had
equity fund. All respondents reported that that there was
no formal credit source for milk traders in the study area.
Milk Marketing Channels, Participants, Their Roles
and Linkages
services, respectively. In addition, milk producers’ contact
with development agents was not adequate. Rapid
market assessment results also show that some
development agents did not have the time to offer
technical advice as they were involved in other nonrelated activities. The source of extension service for milk
producers in the districts were government agents and
NGOs such as Meschen für Meschen.
The survey showed that 0.7% and 5% of the sample
milk producing households in Gursum and Babile districts
had access to credit, respectively. About 41% of the
sample milk producing households in Gursum and 52% in
Babile were in need of credit from the total sample
households.
Studies show that market information is more
perishable than the commodity itself as timely market
information is vital for business success. According to this
Different camel and cow milk market participants were
identified in the exchange functions between producers
and the final consumers. These include producers
(pastoralists and agro-pastoralists), rural assemblers,
retailers, commission agents, wholesalers, hotels and
restaurants and consumers for camel milk marketing, and
producers, rural assemblers, retailers, hotels and
restaurants and consumers for cow milk market.
A marketing chain may link both formal and informal
agents. The survey showed that milk in the study area
was found to be marketed only through informal
marketing channels. Furthermore, dairy marketing chains
prevailing in the milk-shed were found to be comprised of
various camel milk and cow milk marketing channels. The
camel and cow milk markets showed a little difference in
their market channel. The camel milk markets had longer
route as there was the participation of wholesalers unlike
the cow milk market channels. The actual marketing
channels of camel and cow milk was more complicated.
However, the main marketing channels of camel and cow
milk market in terms of quantity flow in 2010 was as
shown in figure 1 and 2.
Glob. J. Agric. Econ. Ext. Rural Deve. 211
40.8%
Camel milk producers 100% (1,483.87 litres/day)
46%
12%
10.1%
23.5%
1.9%
Hotels and Restaurants
Rural Assemblers
Commission Agent
78%
100%
100%
22%
18.4%%
Retailers
Wholesalers
100%%
100%
Out of Country
Domestic Consumers
Most pastoralists sold milk in open collection centers and
markets in their vicinities. As Figures 1 and 2 shows,
18.4% and 52.3% of the total camel and cow milk
produced, respectively, pass from producers to
consumers. The cow milk sold in this channel (producers
to consumers) accounted for the largest share than the
other channels. On the other hand, 46% and 40.8% of
the camel and cow milk, respectively, of the total milk
sold comes from pastoralists to rural assemblers at
vicinity milk collection centers. The main duty of rural
assemblers in the study area was that they accumulate
milk from the rural village of pastoralists and agropastoralists for sale to retailers in the regional markets,
hotels, restaurants and consumers in urban markets.
Milk producers in the study area supply milk in two
ways, the first way of supplying milk to market is as a unit
of household and the second way is by forming informal
type of groups locally called ‘affosha’ and supply milk to
one another by grouping themselves up to 10 persons
together to market milk by round up to same amount as
they were agreed.
Cow milk producers 100% (382.15liter/day)
5.5%
1.4 %
20%
Hotels and Restaurants
Rural Assemblers
67%
Retailers
13%
100%
52.3%
100%
Domestic consumer
Figure 3: Cow milk market channel
Source: Own Survey Result, 2010
As Figures 1 and 2 shows, about 10% and 6% of camel
and cow milk produced by pastoralists/agro-pastoralists
was sold for retailers at rural and urban market,
respectively. The lowest share from the total for both
camel and cow milk produced went to hotels and
restaurants which accounted for 1.9% and 1.4% of the
total milk sold. For camel milk commission agents
collected about 23.5% of the total milk sold from the
pastoralists and agro-pastoralists at the nearest collection
centers for wholesalers, who informally exported it to
Somali Land.
Structure, Conduct and Performance of Cow and
Camel Milk Market
Market concentration refers to the number and relative
size and distribution of buyers and sellers in a market.
For an efficient market, there should be sufficient number
of buyers and sellers in each market. However, the milk
market for the sample milk market was found to be
inefficient in general as almost all of the sample milk
markets were characterized by a strong oligopoly. The
concentration ratios for the four large enterprises (CR4)
for Gursum and Babile milk markets were 63.87% for
camel and 69.02 for cow milk, and 93.48% for camel and
86.19 for cow milk, respectively.
For Harar the CR4 was 66.65% for camel and 51.33%
for cow milk; for Dire Dawa it was 73.32 for camel and
77.75 for cow milk; and for Jijjiga it was 45.06% for camel
and 75.34% for cow milk. However, the camel milk
market in Jijjiga was found to be weakly oligopolistic. For
the remaining markets CR4 was found to be 66.65% and
51.33% for Harar, 73.32% and 77.75% for Dire Dawa,
45.06% and 75.34% for Jijjiga camel and cow milk
markets, respectively. Of the sample markets Jijjiga was
the only weakly oligopolistic market. The reason for this is
that there were a number of producers who bring camel
milk from nearby rural areas to Jijjiga market.
Demissie et al. 212
Table 2. Cow milk market channel and marketing margin
Marketing actors
Marketing measures
Cow milk marketing channels*
CH-I
CH-II
CH-III CH-IV
Quantity flow (liter)
199.86 20
31.18
104.45
Producers’
Price/liter
7
4.5
4.5
4.5
Rural assemblers
Price/liter
8
7.5
7
Gross margin/liter
3.5
3
2.5
Marketing cost/liter
0.45
0.45
0.45
Net marketing margin/liter 3.05
2.55
2.05
Retailers
Price/liter
8
Gross margin/liter
1
Marketing cost/liter
0.1
Net marketing margin/liter 0.9
Hotels and restaurants Price/liter
13
Gross margin/liter
5.5
Marketing cost/liter
0.75
Net marketing margin/liter 4.75
Total gross marketing margin (%)
0
43.75 65.38
43.75
Producers portion (%)
100
56.25 34.61
56.25
Rank of channels by producers’ share
1
3
5
3
Rank of channels by volume (liter)
1
5
3
2
Source: Survey result, 2010; prices are given in Ethiopian Birr
CH-V
21.01
6
8
2
0.1
1.9
25
75
2
4
CH-VI
5.35
6.5
13
6.5
0.75
5.75
50
50
4
6
Table 3: Camel milk market channel and marketing margin
Marketing cost
Marketing measures
Camel milk marketing channels*
CH-I
CH-II
CH-III CH-IV
CH-V
CH-VII CH-VIII
Quantity flow (liter)
273.67 68.22 81.87
532.17 150.61 328.84 28.5
Producers’
Price/liter
7
4.5
4.5
4.5
6
5
6
Rural assemblers
Price/liter
8
7
6.5
Gross margin/liter
3.5
2.5
2
Marketing cost/liter
0.35
0.35
0.35
Net marketing margin/liter 3.15
2.15
1.65
Retailers
Price/liter
8
8
Gross margin/liter
1.5
2
Marketing cost/liter
0.1
0.1
Net marketing margin/liter 1.4
1.9
Wholesalers
Price/liter
Gross margin/liter
Marketing cost/liter
Net marketing margin/liter Hotels and Restaurants Price/liter
12
12
Gross margin/liter
5
6
Marketing cost/liter
0.75
0.75
Net marketing margin/liter 4.25
5.25
Total gross marketing margin (%)
0
43.75 62.5
43.75
25
50
Producers portion (%)
100
56.25 37.5
56.25
75
50
Rank of channels by producers’ share
1
3
5
3
2
4
Rank of channels by volume (liter)
3
6
5
1
4
2
7
Source: Survey result, 2010; prices are given in Ethiopian Birr; CH stands for Channel, CH-I stands for Producers to
Consumers, CH-II stands for Producers to Rural assemblers to Consumers, CH-III stands for Producers to Rural assembles
to Hotels and restaurants to Consumer, CH-IV stands for Producers to Rural assembles to Retailers to Consumers, CH-V
stands for Producers to Retailers to Consumers, CH-VII stands for Producers to Commission agents to Wholesalers to Out
of Country, CH-III stands for Produces to Hotels and restaurants to Consumers.
The most important factors considered by sample milk
producers in their decision as to whom to sell were proximity to
a market center which had greater influence (57% of the
respondents) followed by price of milk (43% of the
respondents). The structure of the markets indicates that
licensing and formal education did not hinder entry into
milk market, as there was no need of licensing to start
camel milk and most of the traders (56.9%) were illiterate
in the sample markets. However, business experience, clan
relationship, risk and capital were important barriers to enter
into the milk market.
There was no organized standardization and grading system
in purchasing and selling of milk. However, locally, milk traders
can differentiate quality by testing the milk. And the marketing
system for milk was predominantly traditional and fragmented,
and characterized by adulteration, poor quality, weak seasonal
demand and low price.
It was also found that although livestock husbandry played
important role both in economic and socio-cultural tradition,
there were no commercial farms, value addition at primary level
and agro-processing industries in the study area. As a result,
the current income generating capacity of dairy was not
encouraging and the share of final price received by
producers was apparently small. The producers’ share of
the consumers’ price was found to be the highest along
channel-I, channel-II and channel-IV that was 100%, 75% and
56.27%, respectively for both cow and camel milk (see
Tables 2 and 3 below for more).
Glob. J. Agric. Econ. Ext. Rural Deve. 213
Note: CH stands for Channel; CH-I stands for Producers to
Consumer, CH-II stands for Producers to Rural assemblers to
Consumer, CH-III stands for Producers to Rural assemblers to
Hotels and restaurants to Consumers, CH-IV stands for
Producers to Rural assemblers to Retailers to Consumers, CHV stands for Producers Consumers, CH-VI stands for Producers
to Retailers to Consumers.
CONCLUSIONS AND POLICY IMPLICATIONS
The results of this study suggest the following policy
implications for the future intervention strategies in camel
and cow milk production and marketing.
One of the constraints to dairy marketing in the study area is
inadequate horizontal integration among the rural producers
and lack of vertical integration among rural producers, rural
assemblers, retailers, wholesalers and consumers. This missing
vertical and horizontal linkage can be enhanced through
institutional arrangement, such as dairy cooperatives and
traders’ unions among the milk producers and traders, as
cooperatives and trade unions are more likely than individual
agents both in overcoming information asymmetry and in
attaining competitive edge by forming a strategic alliance
in the milk market chain. The development of these milk
producer cooperatives and traders unions could also
allow the development of persistent and horizontal
network relationship rather than the existing spot market
relation, which would enable milk marketing agents to
develop higher level of trust and interdependence which
would facilitate development of contractual agreements
and business to business relationships in the milk
marketing chain. As most of the milk traders in the study
area are females, improving the milk trading practice
through vertical and horizontal linkage would empower
the female milk traders to enhance their capacity and
productivity.
Collecting and transporting camel and cow milk from
the distant agro-pastoralist and pastoralist production sites to
the transformation unit or consumption zone is a very
challenging task to the milk producers and traders exacerbated
by poor transportation, roads and telecommunication services.
To improve the situation, government should increase its efforts
to develop appropriate dairy policy, investment in
infrastructure and special support to the dairy subsector
in pastoral and agro-pastoral areas.
It was also found that the indigenous cow breeds were the
only sources of milk in the study area. Therefore, the
government and other pastoral and agro-pastoral development
partners should support introduction and adoption of highyielding cross-bred cows in the region in order to enhance dairy
productivity and market participation of the pastoralists and
agro-pastoralists.
In the study area milk marketing system was
predominantly traditional and fragmented due to lack of proper
milk standardization, grading, inspection and licensing. It was
also characterized by adulteration, poor quality, weak seasonal
demand and low price. Hence government intervention in terms
of adult education and training, extension services, licensing
and inspection of competing milk traders and producers is
required to ensure achievement of a minimum hygiene
and quality standards in the production and marketing of
milk in the region.
The seasonal surplus and shortage in milk production
and the mismatch between seasonal production and demand
also require the development of processing facilities that would
enable production of storable dairy products, such as milk
powders, or hard cheese. Dairy processing would add value,
increase shelf life of the product and profitability of the
enterprise, and enhance food security in the pastoralist and
agro-pastoral areas.
Acknowledgements
The authors are greatly indebted to the Italian
contribution to the Education Sector Development
Program
(ESDP)-Postgraduate
Program
(PGP)
Haramaya University.
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