Evaluation of interventions to improve markets for rural dairy households of Ethiopia: Evidence through system dynamics approach

Abstract

There is a growing consensus that improving market access for smallholder farmers will help them earn more income and enhance food security. In this respect, we employed system dynamics approach to evaluate interventions to expand market access for the traditional system dairy producers in West Shewa zone, Oromia region, Ethiopia. Investment by dairy cooperatives in milk collection capacity and/or raising the price of milk for producers are the interventions identified in the study. These interventions were assessed ex-ante for impacts on (1) milk collection and dairy enterprise balance for dairy cooperatives and (2) milk production and profitability of dairying for producers. Analysis results show that compared to the baseline, the interventions can increase milk production by 17 to 57 %, milk collection by 24- to 43-fold, dairy household's profit by 11- to 21-fold, and cooperatives' dairy enterprise balance by 27- to 55-fold. In the long-term, both dairy cooperatives and producers are better off under market access improvement than under market access with higher milk price for producers. The findings suggest that continued improvement in market access for the traditional dairy farmers in Ethiopia is necessary to sustain higher gains in milk production, milk marketed, and income from dairying.