By Yayneshet Tesfay, Dawit Woldemariam, Haile Tilahun, Berhanu Gebremedhin and Dirk Hoekstra
A milk shop owner in Axum (photo credit:ILRI\Yayneshet Tesfay).
According to the Ethiopia Central Statistics Authority’s 2007 census data, of the total 4.3 million people residing in Tigray region, an estimated 0.6 million live in urban areas with an unemployment rate of 22.6%.
If fully developed, the dairy industry has the capacity to absorb a significant number of unemployed young people in Tigray. This development will include improving the dairy value chain in the region to enhance the adoption of technologies and use of improved dairy production practices.
The Livestock and Irrigation Value chains for Ethiopian Smallholders (LIVES) project is working closely with livestock value chain actors in Tigray by providing capacity development training, demonstration of technologies, and in setting up knowledge sharing platforms.
Observing that milk shops (aka milk bars) are recently mushrooming in response to urbanization and increasing household income, the LIVES project team carried out a survey of 10 dairy products shops across four towns (Axum, Adigrat, Firewoiny and Wukro) in Tigray region to assess their business practices and their contribution to the dairy value chain in the region. Seven of the milk shop owners had received training facilitated by LIVES. Previously, most of the milk shop owners worked in trade, pharmacy, civil service and some were recent graduates.
The survey found that the median experience in milk business is 12 months. The total number of workers hired by the ten milk shops is 26 and additional 14 people have used the opportunity to create self-employment.
The monthly milk purchase averages 37,500 litres, which is traded in the form of boiled/cold whole milk, yoghurt, soft and hard cheese, table and hair butter, whey, and other products which are sold to cafes, hotels, and individual consumers. At an average market value of ETB 12 (USD 0.5)/litre for raw milk, the annual gross income generated from milk purchases in the 10 shops is 5.4 million ETB. If this is retailed at 20 ETB/litre (some estimated this at 30 ETB/litre), the total annual added value is 9 million ETB. Milk purchase is often on temporary contractual agreement. Some milk shop owners even went as far as short-term renting of dairy processing equipment owned by dairy cooperatives in exchange for guaranteed purchase of raw milk from the dairy cooperative members.
Based on the findings in Tigray, the following suggestions are useful in increasing the contribution of milk shops to the overall dairy value chain development:
- The role of private milk shops in the dairy value chain should be recognized. They are a critical part of a functional value chain node especially as a component of promoting market-oriented dairy development.
- There is a need to create an enabling environment with access to credit for expanding and improving milk shop businesses including by providing essential dairy products processing equipment and ensuring public health safety.
- Most small milk shop urgently need capacity development opportunities especially in formal training in dairy processing and marketing.
LIVES-Ethiopia 
The story demonstrates how the private sector is driving market-oriented development in Ethiopia. In the expansion of competitive private service providers and processing and marketing businesses, smallholder farmers will definitely respond to market demands by adopting improved production and management practices. It is also interesting that the story shows civil servants, including development agents, are taking advantages of increasing business opportunities in the agriculture sector.
What is the implication for the public extension service in terms of roles, institutional arrangements, and competencies of extension staff? By whom should private actors such as service providers and processing and marketing businesses be served? How can specialized private sector advisory service providers be supported to develop and operate in competitive and accountable way? These are some of the questions that need to be answered as the landscape of extension services in Ethiopia began to change.