AKSUM UNIVERSITY

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF MARKETING MANAGEMENT

Agricultural Marketing Group Assignment

Group Two

S.N Name ID NO

1. Yidinekachew Assfaw…………………………………… …………………..0578/08

2. Elias Tilahun………………………………………………………………………0582/08

3. Abebaw Desalegn…………………………………………………………….. 1485/08

4. Zebiba Kedir……………………………………………………………………….3794/08

5. Molla Melaku…………………………………………………………………….. 0349/08

6. Firehiwot Anja……………………………………………………………………. 0359/08

7. Efrata Fikremariam……………………………………………………………..0398/08

8. Abenezer H/ Mariam……………………………………………………………0586/08

9. Agerie Bishaw……………………………………………………………………….0470/o8

10.Abebual Wende…………………………………………………………………….0475/08

Submitted to Mr. LEAKE LEGESSE 15/08/2010E.C

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Brief description about the background of safawo
business enterprise

Ethiopia has one of the largest inventories in Africa with a

national hard estimated at 49.2 million cattle, 48.8 million
ships and goats and 9 million pack animals .all livestock
currently support and sustain livelihood for 80% of rural
areas poor of the total population 35-40% of all livestock
are located in pastoral areas. (MOARD 2007) female
cattle constitute about 55.48% of the national hard of the
total female cattle population daring and milk cow’s total
16, 941, 361,-14.24% daring I caws and 20.12 % milking
2 cows (CSA, 2008).

In the Ethiopia fresh milk sales by small holder center

pones and farmers, those are important only when are
close to formal milk marketing facilities such as
government enterprises or milk groups. Farmers for from
such formal marketing outlets prefer to produce other

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daring products instead, such as cooking butter and
cottage cheese.

Most of milk produced in the rural areas, which are

profitable market for it exists largely in the urban areas.
The major portion of milk comes from small dairy
farmers with few milk animals located in the rural areas.
(CSA, 2008) Ethiopian pastoralist raise large portion of
the national hard estimated at 42% of the cattle, 7% of the
goat, 25% of the equines and all of the camels. In
Ethiopia namely the rural dairy system which is part of
the subsistence farming system and including pastoralists,
agro-pastoralists and mixed- crop livestock producers.

• The first system pastoralist contributes to 98% while

per-urban and urban dairy farms produce only 27.of
the total milk production of the country (ketema,
2000).

• Ethiopia pastoralist community of 10 million people

occupies 61% of the total land malls. The 29
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 nationalities and ethnic group in have it land with
natural resource and wealth of cultural and traditional
heritages that reaming largely untapped.

Thus of we have well developed animal agriculture as

demand for animal products increases with economic
development. Therefore improving livestock productivity
and their perspective marketing activities may improve
the milk and dairy marketing contribution to the GDP of
the country’s economy. There are few milk processing
plants in Ethiopia one is owned and operated by
government (dairy development enterprise) and others are
private. In the enterprise there is milk production to those
customers including café, coffee house, restaurants,
supermarkets and etc…..

The name of the business enterprise (safawo) is come

from the name of that area. They have different workers
that works in hours and birr. Their salary is depending on
the amount of the job they perform. The safawo enterprise

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was established in 2004 E.C around Aksum University
the name called safawo with the aim of producing milk to
university community, Aksum city customers, coffee
house, restaurants, supermarkets.

Market demand and supply analysis

Most of the milk supply is distributed from producers to
consumers through in formal means in both rural and
urban areas. The informal market involves direct delivery
of fresh milk by producers to consumers in the immediate
neighborhoods. Market demand and marketing facilities
are not well developed in the country.

Most of milk is produced in the rural areas while the

profitable market for it largely in the urban centers. The
major portion of the milk comes from small dairy farmers
with few milk animals located in the rural areas. What is
produced on the animal farm has to reach the market

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demand and supply analysis lesser would be Trans
potation changes, lesser would be less due to spoilage.

Identify marketing cost and margins

The overall marketing margin is simply the difference
between the farm gate price and the price received at
retail sale. The total gross marketing margin is highest for
marketing actors. Because of lack of sufficient market
information the farmers or the producers get the lowest
margins. In general, all marketing channels were
profitable.

In developing countries population rely on milk

subsectors for their income and employment opportunity.
Therefore, enhancing the growth of economy livestock
sector to increase their outputs is greatly mainly depends
on the advancement of agriculture decisive means to
poverty. Growth of the sector is important for cutback
population, urbanization and per capital income level of

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poverty as 75% of the world highly poor people favor
livestock seaports increase the demand of high inhabit
rural areas and dependent on it for their income value
food sources of livestock products. Ethiopia economy is
largely agrarian economy livestock production and
management; the economic contributions of service,
agriculture were trained. The economic contribution of
the sector and increase the contribution of agriculture for
employment and export income level of household at
large and there by ensure earning is also estimated to be
more than 80and 88% food security of the community
respectively. In the study areas milk and dairy marketing
chain includes livestock resources is an essential part of
Ethiopia’s different actors along the chain while involves
producers, agriculture sector play a crucial role in the
countries collectors, semi wholesalers, processors,
cafes/hotels and economy. The livestock sectors
contribute about 60-70%retailers.

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The milk producers provides their milk to livelihoods of
the population 47%of agriculture GDP 12-16% of the
total GDP more than 85% of agricultural cash income and
15% of the total earning of the country. On the other hand
the per capital consumption of milk in Ethiopia is low
(19kg) when compared with the average world
consumption (104kg) and Africa (49kg).This shortage of
milk supply in Ethiopia is due to sustainable approach of
dairy development and challenges of active engagement
in milk value chain and marketing by milk in producers to
improve milk production and marketing. About 98%of
milk in Ethiopia is produced and managed by small
holder dairy farmers. Nevertheless only 5% of the milk
produced in the country is sold in markets where as the
rest 95% is used for consumption and processing at home.
So, improving milk market supply and benefits share of
milk producers can help to satisfy demand in the areas
and create market access which increases producer’s
income.
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Marketing costs are the representation of barriers to
access to market participation by resource poor
smallholders. It refers to the costs which are incurred to
perform various marketing activities in the transportation
milk and dairy products from producers to consumers.

Economic contribution
The sector has great impact on economic growth; some of
the contributions were the followings,

- They are a source of food security

- They are a source of income

- They are a source of social value

- They are a source of employment

- They are a source of per capital income

Does the specialization is existed so far

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 To be successful, any dairy marketing strategy should
be based on the principle of specialization that means
creating value in every segment of dairy chain ( farmer,
farm inputs supplier, milk traders, processors, retailers
and etc..) makes profit that is, the return are higher than
the costs. Thus specialization should existed for the
benefits of both producers and consumers.

Pricing strategies
The major factor that affecting the pricing of milk and
dairy products in the case enterprise include season (dry
and wet season), access to market proximity to urban
consumers, fasting and non fasting days (the followers of
orthodox Christians church), holidays and festivals,
quality of milk and dairy supply vs. purchasing ability of
the urban dwellers and dwellers in the university etc…..
Thus milk and dairy products pricing is complicated, that
why the producer earn lowest profit from the milk

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because most of the time the price is set by retailers to get
highest return on it.

Channel structure or distribution

• Marketing channels of marketable milk and dairy
products in case enterprise is indicated below.

• Butter was the most marketable dairy derivative

having the longest market channel and more
intermediates between producers and consumers,
while milk had few intermediates and reached with
the shortest channel.

• The terms related to marketing outlets, marketing

channels, and marketing chains are important to
describe milk and dairy marketing system.

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Marketing outlet is the final market place to deliver the
milk and dairy products, where it may pass through
different channels.

A network (combinations) of market channels gives the

rise to the market chain. The major’s milk and dairy
market chains include;

• Producer-consumer

• Producers-catering institution- retailer-consumer

• Producer-government institution (like universities)-

retailers -consumers.

• Producer-cooperatives-retailer-consumer

• Producer-retailer-consumer

The main outlets for rural producers are;

- Restaurants

- Cafe and coffee house

- Individual consumers
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Marketing related problems we
observed
Those gaps we observed is the following;

- Price setting issues

- Unbalanced demand and supply

- Costs and margins

- Lack of sufficient market information

- Lack of experience in dairy production

- Distant to the market

- Problems related to access of to service

- Problems related with seasonality of milk production

and consumption

- Low supply chain for their milk

- Inadequate quality control

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- Lack of specialization

- Etc…..

Recommendation
• In orders to develop the milk and dairy sector in the
case enterprise and to support pastoralist livelihood
development. We suggest the followings;

- Improve animal health extension to increase the

production of milk to reach the target set by the
government growth and transformation plan.

- Improve transportation opportunities from pastoralist

area markets.

- Investigate and promote value-additions activities.

- Support external private sector participations in the

milk sector.

- Account for the benefit the sector provides to the

national economy through better data collection.
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- Consider expanding exports directly to the relatively
for consumer markets

- Design and trial appropriate milk collection strategies

that are compatible with pastoralist mobility.

- Market participation decision and sale volume are

found to be important element in the study milk and
dairy marketing in the case enterprise is;

- Age of household

- Education level

- Experience in dairy production

- Distance from milk market; this factor has significant

impact on probability of household milk and dairy
marketing. There is some strength and weakness, the
strength are the following;

Strength;
- Low production cost

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 - High farm income margins

- Low liabilities

- Low liquidity risk and etc…

Weakness;
-lack of knowledge and technical know-how

-poor access to support services

-low per capital income and limited access to credit

-low (labor) productivity

- the practice that is done in safawo enterprise should

the following; it is shown in the form of photos and
video;

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