Agriculture / Amhara / Animal Feeding / ASSP / Cattle / Dairying / Ethiopia / Extension / Feeds / LIVES / LIVESTOCK-FISH

Evaluating viability and benefits of small-scale feed chopper businesses in Ethiopia

A motorized chopper introduced by LIVES (photo credit:ILRI\Dereje Legesse)

A motorized chopper introduced by LIVES (Photo Credit:ILRI\Dereje Legesse)

Motorized feed choppers introduced by the Livestock and Irrigation Value chains for Ethiopian Smallholders (LIVES) project are helping the country   ‘s livestock farmers better utilize available feed resources to increase milk production.

Farmers in the Maresege Dairy Cooperative in Tikeldengaye town of Lay Armacheho District, North Gonder Zone were among the first to use the ‘LIVES chopper’ after a demonstration over a year ago. The cooperative members were interested in testing if the chopper could be used to start and sustain a feed production business. The LIVES team linked them with the Austrian-funded ‘Livelihood Improvement through Sustainable Resource Management Program’, which supported them to buy a motorized chopper.

In 2016, after two seasons, all 43 cooperative members (7 female) reportedly make use of the services provided. Also non-members use the chopper services and to accommodate potential users further away, the cooperative introduced a mobile service – i.e. transporting the chopper by cart to the dairy farmers in five (5) neighboring PAs – Kerker Balegzabhir, Tikel Dengay, Shumara Lomeye and Ayquachker PAs.

The machine is mostly used between December and May to chop crop residues and grind grains. According to Defre Alemnhe, the chairman of the dairy cooperative, in its first year, the machine  chopped 16,800 kg of crop residues and 5,775 kg of maize grains at a cost of ETB 1 (USD 0.05)/kg.

Purchased at an initial cost of ETB 35,000 (USD 1,597) and with an estimated salvage value after 10 years of ETB 5,000, the depreciation cost of the chopper is ETB 3,000/year. Even though there were no maintenance costs in the first year, it is expected that, over 10 years, the average maintenance cost will average 5% of the original investment cost. Two hired staff operate the machine and share 50% of the income generated (i.e. ETB 0.5/kg of chopped feed).

Based on observations elsewhere, the mechanized chopper uses about 1 litre of diesel fuel to process 450-500 kg of dry crop residues, up to 900 kg green grass and 200 kg of maize grains depending on the particle size of the powder. , 1 litter of oil is used monthly (at a cost of ETH Birr 55).

Based on this information, a chopper business annual  would look like this:

Item Unit price (ETB) Service given Total (ETB)
Revenue sources
Chopping service 1.00/kg 16,800 kg 16,800.00
Grinding service 1.00/kg 5,775 kg 5,775.00
Gross revenue 22,575.00
Cost items
Labor cost 0.50/kg 22,575 kg 11,287.50
Fuel cost chopping crop residues 25.00/litre 34 litres 850.00
Fuel cost grinding grain 25.00/litre 29 litres 725.00
Oil 55.00/litre 6 litres 330.00
Repair/maintenance cost (5%of the total income generated) 1,128.75
Depreciation cost (ETB 5,000.00 Salvage value and life 10 years) 3,000.00
Total cost 17,321.25
Gross profit 5,253.75

Based on these calculations, the chopping/grinding service seems a profitable business (even at this modest scale of operation) in Ethiopia. It is therefore not surprising to see several enterprises now using mechanized chopper to engage in small-scale feed businesses. For example, women-headed households in Mecha District have purchased a chopper with support from the AgroBig Project and are providing crop residue chopping / grain grinding service at ETB 70/hour and ETB 0.60/kg respectively.

Similarly, an entrepreneur in Bahir Dar town is using the chopper to run a commercial feed processing and marketing business. The Haik Estifanos monastery has also purchased the same machine to prepare feed for their cattle and poultry farms to save feed-associated costs. In all LIVES intervention Zones, a total of 39-businesses (Individuals, Groups & Cooperatives) showed great interest to purchase the chopper and looking for the money.

Responses from farmers in Amhara Region regarding the use of chopped feed is positive:

  • Some farmers started using purchased chopped feed for their dairy cows at a cost of ETB 4.5/kg which is ETB 2.5 above the production cost of  ETB 2/kg, (ETB 1/kg for the residues and ETB 1/kg for services).
  • Farmer’s also report less wastage, better intake, and possibilities for mixing concentrates with the chopped fodder to improve rations.

The next step in the further development of the chopper business in Maresege cooperative is the addition of effective microorganisms (EM) to the chopped fodder to increase its digestibility and also to expand the services to more clients.

by Worku Teka, Yigzaw Dessalegn, Dirk Hoekstra, Beamlak Tesfaye and Dereje Legesse

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