Milk Value Chain Analysis: The Case of Urban and Peri-Urban Areas of Ambo and Dendi Districts, West Shewa Zone, Oromia National Regional State, Ethiopia

This study was aimed at analyzing value chain of milk in Urban and Peri – Urban areas of Ambo and Dendi districts of West Shewa Zone. The study made use of both primary and secondary data collected from 146 smallholder farmers, 30 consumers, 10 Hotels and Cafeterias and 2 primary milk cooperatives through application of individual interview schedules, focus group discussions and key informant interview. The analysis was made using descriptive statistics and value chain analysis. The value chain analysis revealed that the major actors in the districts milk value chains are input suppliers, milk producers, collectors, processors and consumers. Accordingly, the value chain activities in the chain were input supply, production, processing, marketing and consumption. Four milk marketing channels were identified and relative to all other fresh milk marketing channels, producers get a higher proportion of total gross marketing margin when they sell milk to cooperatives. Profitability analysis result for dairy production indicated that, a dairy producer obtains average gross margin of 83.65per improved cow per day, in the study areas which shows that dairy production was a profitable venture for smallholder dairy producers. Milk value chain in the study areas was hindered by shortage of feeds, continuous increasing price of feeds, poor AI service provision, poor supply of genetically improved cattle breeds, limited availability of credit services, limited extension service provision, poor feeding and animal husbandry practices, low level of market linkage among the value chain actors, absence of milk processing plant and non-market oriented milk production. Therefore, policy aiming at increasing farmers’ access to modern inputs, feed conservation practices, adequate training provision to AI technicians, developing and improving infrastructure, cooperative development and improving extension services are recommended to accelerate the milk value chain’s development in the study areas.