Abstract
Modern marketing arrangements are increasingly being implemented to assure improved food quality and safety. However, it is not well known how these modern marketing arrangements perform in early stages of roll-out. We study this issue in the case of rural–urban milk value chains in Ethiopia, where modern processing companies—selling branded pasteurized milk—and modern retail have expanded rapidly in recent years. We find overall that the adoption levels of hygienic practices and practices leading to safer milk by dairy producers in Ethiopia are low and that there are no significant improvements in the incipient modern milk value chains compared to traditional ones. While suppliers to modern processing companies are associated with more formal milk testing, they do not obtain price premiums for the adoption of improved practices, nor do they obtain higher prices overall. At the urban retail level, we find there are only small price differences between pasteurized and raw milk and that modern retailers sell pasteurized milk at lower prices, ceteris paribus. Modern value chains to better reward hygiene and food safety in these settings are therefore called for.
Résumé
Les accords de commercialisation modernes sont de plus en plus utilisés pour assurer une alimentation de meilleure qualité ainsi qu’une meilleure sécurité alimentaire. Cependant, la façon dont ces accords de commercialisation modernes fonctionnent, aux premiers stades de leur déploiement, reste peu claire. Nous étudions cette question en nous concentrant sur les chaînes de valeur du lait en milieux rural et urbain en Éthiopie, où les entreprises de transformation modernes – qui vendent du lait pasteurisé de marque - et la vente au détail moderne se sont développées rapidement ces dernières années. Dans l'ensemble, nous constatons que les niveaux d'adoption, par les producteurs de lait en Éthiopie, de pratiques d’hygiène et de pratiques conduisant à un lait plus sûr sont faibles et qu'il n'y a pas d'amélioration significative dans les chaînes de valeur du lait modernes qui ont vu le jour récemment, par rapport aux chaînes de valeur traditionnelles. Bien que les fournisseurs des entreprises de transformation modernes soient associés à des tests plus formels sur le lait, ils n'obtiennent pas de primes de prix pour l'adoption de meilleures pratiques, ni de prix plus élevés dans l'ensemble. Au niveau du commerce de détail en milieu urbain, nous constatons qu'il n'y a que de petites différences de prix entre le lait pasteurisé et le lait cru et que les détaillants modernes vendent du lait pasteurisé à des prix inférieurs, toutes choses égales par ailleurs. Dans ces contextes, il est donc nécessaire que les chaînes de valeur modernes puissent mieux récompenser l'hygiène et la sécurité alimentaire.
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Notes
Miniwagaw (2019) indicates that the number of dairy processing companies increased even further to 40 in 2019.
Woreda is equivalent to district and is the third administrative level in Ethiopia next to Region and Zone.
Kebele is the lowest administrative level in Ethiopia.
However, this is only a rough approximation of consumption: we did not interview farmers—there is a significant number of urban dairy farmers (Minten et al. 2020a)—who might sell directly to urban consumers, and we did not measure turnover of pasteurized and raw milk separately (we inferred shares of each type of milk sold based on shares in products available in the shop at the time of survey).
Transport costs from the kebele to Addis, farm size, gender of household head, age of household head, household size, dependency ratio, and total land owned.
Typically, no cans are exchanged between farmers and traders. In a survey that was done with milk traders at the same time as the farm and retail survey, a question was asked to traders if they provided cans to farmers. 82% of the traders indicated that they did not.
While there were no mandatory public standards at the time of the survey, they have been imposed since (ESA 2021a, b). ESA set the limits in 2022 for milk fat at 3.34%, solid non-fats at 8.38%, and pH at 6.6–6.8. Using these cut-offs for our sample, 46% (65% for raw milk and 26% for pasteurized milk) would have met the fat requirement, 44% (58% for raw milk and 31% for pasteurized milk) the solid non-fat requirement, and 0% the pH requirement.
We note no significant differences between modern retail and dairy shops in the pricing of pasteurized milk. However, the sales of pasteurized milk in the latter shops (and the number of observations) is limited.
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Acknowledgements
The authors would like to thank Todd Benson, Agajie Tesfaye, Senne Vandevelde, Johan Swinnen, and Kalle Hirvonen for useful suggestions and discussions. The study was done as part of the Ethiopia Strategy Support Program (ESSP), financially supported by the United States Agency for International Development (USAID), the Department for International Development (DFID) of the government of the United Kingdom, and the European Union (EU). This study was made possible by the generous support of the American people through USAID under the Feed the Future Innovation Lab for Livestock Systems (LSIL), which is implemented by the Institute of Food and Agricultural Sciences of the University of Florida in partnership with the International Livestock Research Institute (ILRI). LSIL is funded by the United States Agency for International Development (USAID) through a 5-year Leader with Associates Cooperative Agreement Award No. AID-OAA-L-15-00003.
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Annex: Set-up of Sample of Retail Outlets
Annex: Set-up of Sample of Retail Outlets
Based on the map of the city, we created five geographical strata with two neighboring similar sub-cities in each stratum. We then randomly selected one sub-city from each stratum, giving us in total five sub-cities to work with (Arada, Lideta, Kolfe Keranio, Nifasilk Lafto and Bole Sub-cities are selected). In each sub-city, 4 woredas were selected randomly, with a total of 20 woredas. Next, we collected information from the woredas’ and sub-cities’ Trade and Industry Offices which provided us complete lists of retailer outlets in each sub-city. For the dairy shops in open markets, a census of all the outlets at a localized level was done. Once we obtained these lists, we randomly selected outlets to be interviewed. Detailed information was collected on, among others, types of dairy products sold, turnover, price, and quality of products (Table 11).
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Minten, B., Habte, Y., Baye, K. et al. Food Safety and Incipient Modern Value Chains: Evidence from Milk in Ethiopia. Eur J Dev Res 35, 1197–1223 (2023). https://doi.org/10.1057/s41287-023-00575-z
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DOI: https://doi.org/10.1057/s41287-023-00575-z