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Facilitator for Change

L4W Project

Value Chain Analysis and Sub-sector

Identification

2014

Bure Zuriya Woreda

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Contents 1. Executive Summery ............................................................................................................................... 1

2. Background of the Study and the Study Area ....................................................................................... 2

2.1. Background of the Study .................................................................................................................... 2

2.2 Background of the study area ............................................................................................................. 2

2.3 Farming systems in Bure Zuriya woreda ............................................................................................. 3

3. Objective of the assessment ................................................................................................................. 3

4. Available Agricultural Commodities ...................................................................................................... 4

5. Commodity Selection Criteria ............................................................................................................... 4

6. Value Chain Analysis ............................................................................................................................. 5

6.1. Analysis of the Sub-sector against criteria .................................................................................... 5

6.2. Value Chain Mapping .................................................................................................................... 8

6.3. Quantification ............................................................................................................................... 8

6.4. Economic Analysis ......................................................................................................................... 9

6.5. End Market .................................................................................................................................... 9

6.6. Value chain constraints ............................................................................................................... 10

6.7. Opportunities .............................................................................................................................. 10

6.8. Market based solutions............................................................................................................... 10

6.9. Value chain governance .............................................................................................................. 11

6.10. Value chain vision and mission /objective .............................................................................. 11

6.11. Up-grading strategies .............................................................................................................. 11

6.12. Proposed intervention strategies ........................................................................................... 12

6.13. Risks and mitigation mechanisms ........................................................................................... 12

6.14. Action plan .............................................................................................................................. 12

7. Monitoring and evaluation .................................................................................................................. 13

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1. Executive Summery

Facilitator for Change in partnership with NED, WCAT, GDAO, FFARM, TVET Colleges with

financial support from L4W of Edukans Foundation is currently implementing a project to

enable youths improve their livelihood options and ensure their food security. To this end, skill

training in remunerative agricultural TVET courses is planned so that youths engage in income

generating activities. In order to ensure the profitability and sustainability of incomes of these

youths, value chain development and product identification is crucial step.

The objective of value chain analysis is linking the youth’s sheep fattening project with other

chain actors in the market. Value chain analysis and product identification revealed sheep

fattening as the most profitable sub-sector followed by poultry and vegetable productions.

Overview of the sub-sector and VC selection, value chain mapping, quantification, economic and

market analysis, analysis of constraints and market based solutions, value chain governance,

upgrading strategies, proposed intervention strategies, risks and mitigation mechanisms and

action planning are described. In these document all the functions, main actors and supporters are

clearly specified. The constraints, opportunities and unforeseen risks are also identified. This

value chain document is prepared to link vulnerable unemployed youths in Bure Zuriya woreda

with potential markets.

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2. Background of the Study and the Study Area

2.1. Background of the Study

FC, NED, WCAT, GDAO and TVETs with a financial support from L4W have planned to train

rural landless, unemployed and vulnerable youths in six districts of Amhara region. FC is

implementing this project in Bure Zuriya district in close partnership and collaboration with Bure

Agricultural TVET College. To this end, it was found crucial to identify key commodities which

are marketable, productive and that enable youths gain remunerative incomes. Since the project

is deemed to be pro-poor the commodities to be selected are preferred to have the potential for

value addition at various levels and involve other low income people to engage in as value chain

actors.

2.2 Background of the study area

Bure is one of the 18 and 106 woredas of West Gojam Administrative Zone and Amhara

National Regional State, respectively. The woreda has usually been classified as one of the

surplus producing woredas in the Region. The capital city of the woreda, Bure, is found 400 km

northwest of Addis Ababa and 148 km southwest of Bahir Dar, the capital of the Regional State.

The woreda has 15 km asphalt road and 84 km all-weather gravel road. It is connected by all-

weather road to East Wollega Zone of Oromia and Metekel Zone of Benishangul Gumez

Regional States. It is connected to Addis with asphalt road. The Air port in Bahir Dar also

creates good opportunities for air transport. Therefore, Bure has good opportunity to supply its

agricultural products to markets in different regions and to get inputs from other areas.

Bure woreda receives relatively high amount of rainfall with balanced distribution pattern.

According to available data the mean annual rainfall ranges from 1386 to 1757mm. Agro-

ecologically Bure is classified into moist and wet low land (10%), wet Woina-Dega(82%) and

wet Dega (8%). The altitude of the woreda ranges from 713 to 2604 meters above sea level

(masl). Long term annual mean temperature of Bure ranges from 14 oC to 24 oC. The woreda is

endowed with large number of rivers and springs. Farmers use this water resource for irrigated

crop production both with traditional and modern river diversion. Therefore, the water resource

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is widely utilized for irrigation schemes.Major indigenous and introduced tree species

aregrowing in the woreda.

2.3 Farming systems in Bure Zuriya woreda

According to the woreda ARDO report, Cattle, small ruminants such as sheep and goat and

poultry are the major livestock types in the woreda. Due to good potential for grain production

and the known local chicken breed called Tilili, there is commendable potential for poultry

production. Cattle and sheep fattening in a traditional way is becoming common practice in the

area. Nevertheless, there is a gap in terms of improving the practice in a modern and scientific

way through proper selection of breeds, feeding and health care systems and scaling up. Farmers

rear and fatten different local breeds like Dangela and Horo type sheep. The Horo type is more

adapted and widely reared in relatively warmer part of the woreda while the Dangela type is

dominant in the mid and high altitude areas.

Feed shortage is also one of the crucial problems for livestock production in the area. The natural

pasturelands available in kebeles are unproductive due to inadequate protection and poor

management practices. The practice of cattle and sheep fattening started recently but seems to be

expanding at a faster rate. Farmers are attracted to this practice, because of its higher profitability

and better financial return as they observed from their neighbors. In order to engage to the

activities as business and to enable youths get sustainable income, however, economic analysis

has to be done.

However, all animals such as horses, mules, cattle and small ruminants are openly grazing

together in the open pasturelands. This has serious negative impacts on the health and

productivity of the animals and the environment. It is followed by overgrazing and removes the

land cover exposing to soil erosion and thereby reducing crop production.

3. Objective of the assessment

This assessment was based on background described above and was conducted with the

following objectives:

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o To identify potential and select agricultural commodities to be produced by vulnerable

youths in Bure zuriya woreda.

o To assess the value chain of the selected agricultural commodities, the situations of chain

actors and supporters and the value added at each stage.

4. Available Agricultural Commodities

As it is common to other parts of the country, farmers in Bure woreda practice mixed farming

system where crops are produced and livestock are read abundantly. However, the woreda is

classified into two farming systems mainly based on altitudinal differences and dominant crops

and livestock types. The following agricultural products/commodities are available in the area:

Cereals:

1. Maize

2. Bread wheat,

3. Teff, and

4. Finger millet.

Vegetables

1. Potatoes

2. Onion

3. Tomatoes

4. Garlic

5. Carrot

6. Shallot

7. Lettuce,

8. Pepper and others

Livestock:

1. Sheep,

2. Goat,

3. Cattle,

4. Poultry and

5. Apiculture.

5. Commodity Selection Criteria

With the consideration of the objective of the project, the following criteria were developed for

agricultural product selection:

Productivity and profitability: L4W project is aimed at enabling youths become self

reliant by generating their own income and improve their own and their families’ food

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security levels through quality vocational and skill training. In order to realize this, the

youths have to be engaged in productive and profitable ventures.

Demand: as youths would be engaged in the production and marketing of agricultural

products for profit, there need to be a demand unmet in the market.

Potential for value addition: the project is needed to include as many as possible youths

or other value chain actors in the value chain. Hence the potential to add values is very

important

Low area requirement: youths have no land an commodities that can be produced on a

relatively small area are preferred.

Gender sensitiveness: in this project, equal participation of male and female is

promoted. Therefore, the commodities that can be equally produced by males and

females get first priority.

Labor intensiveness: there is acute shortage of capital among vulnerable youths in

general and among the youths in the project area in particular. On the other hand, there is

cheap labor in the woreda. Labor intensive activities, therefore, create job opportunities

for families and others.

Environmental issues: today the environmental issues are becoming vital. FC is also

concerned about the environment and sustainability of interventions and their outcomes.

Hence, commodities that have positive contribution to environmental protection or those

that do not have significant negative impacts, or in cases they do, those that could be

managed with the capacities of the target groups are preferred.

6. Value Chain Analysis

6.1. Analysis of the Sub-sector against criteria

Each of the products identified as potential sub-sectors are analyzed against the criterion. FC and

Bure Agricultural TVET College have made subsequent and detailed discussion with farmers

and youths in the intervention kebeles. Among the methods used include focus group discussion

(FGD), interview at farm level and secondary data. The secondary data was collected from

relevant documents and reports of stakeholders such as agriculture and rural development office,

project reports and available documents of the TVET College. Chain mapping, intra relationship,

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governance structure, value chain constraints, end market and chain actors and supporters issues

were carefully considered. The detailed assessment and its results are presented as follows.

Cereal Crops: Crop production such as maize, teff, millet and wheat meat all the criteria set

except that they require large farm land. Since youths do not have, farm land it would be

infeasible for them to be trained in the production of cereal crops, unless employment on others

farms is targeted. In the area, these cereals are produced traditionally on small holders’ farms and

skilled labor is hardly needed. Therefore, the production of cereals does not meet one of the

important criteria set for product selection.

Vegetables Potato, tomato, shallot, onion, garlic, head cabbage, carrot, lettuce, and pepper, beet

root and others are grown in the area. From fruits papaya, mango, avocado, banana, and lemon

are also grown in some pocket areas of the woreda. Bure zuriya worded has good potential for

the production of vegetables and fruits and also good market access. On the other hand,

production fruits and vegetables require fair area of land and can be feasible for those

youth who can get a pilot from their families. In general terms, engagement in vegetables

and fruits production is based on the potential of each youth and can be taken as one

potential area of the skill training.

Livestock production and fattening:

The available livestock in the area range from small animals such as poultry to larger ones such

as cattle. Therefore, it needs to be separately analyzed due to their natures against the set criteria

as follows.

Poultry: Poultry is an important commodity for the poor and landless both in urban and rural

areas. It can be done with small initial capital and on a small area compared to other livestock

related activities. Like in other parts of the region and the country as awhole, poultry is

unexploited commodity. Surplus grain production coupled with proximity to Tilili breeds of

chicken could have been a good opportunity for poultry production in Bure. In addition, the

proximity of Bure to big towns like Bahir Dar, DebreMarkos and Nekemte creates good market

opportunities for poultry products. Furthermore, poultries are equally manageable for men and

women, they have good unmet demand in national and local markets, have manageable

environmental impacts and good potential for value addition.

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Cattle fattening: as identified during the assessment, the woreda has good potential for cattle

rearing and fattening. It also meets the vast majorities of the criteria developed. It has high

demand, profitable, positive contribution to and manageable environmental impacts and gender

sensitive. From these perspectives cattle fattening could be selected as a potential subsector. On

the other hand, it requires high capital which the youths currently do not afford. Therefore, this

subsector can hardly selected with the current scenario due to its capital intensiveness nature.

Sheep fattening: as the market assessment indicated, fattened sheep have high demand both in

the local, national and international markets and is profitable. Sheep can be fattened in relatively

short time, managed with capacities of female and male youths, demands small area/room and

engages the family. The manure is used for improving crops and vegetable production and

contributes to the efforts exerted for improving food security situations in the area. It also has

good potential for value chain development and for adding values at various stages. It even has

the potential to develop two subsectors- meat and hides. With this regard, small farmers can

supply thin sheep and feed, the youths fatten, military camps, hotels, universities, prisons and

others consume, and/or slaughters/butchers export meet. It generally has immense potential for

value chain upgrading, growth and development.

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6.2. Value Chain Mapping

6.3. Quantification

In value chain analysis quantification is important to calculate the market share, demand and

target beneficiaries. In the context of this project and Bure waoreda, the number of youths

interested to attend sheep fattening is 198 (112 male and 86 female) rural unemployed youths.

23 and 18 youths are interested in poultry and vegetable productions respectively. It is in fact

SHEEP FATTENING VALUE CHAIN

1 8000 local C o n su me r

BUCH ER HOUSES

80 FARM ERS FROM OROMIYA AND HIGHLAND

OF BURE

198 RURAL VULNERABLE UNEM PLOYE YOUTHES

M =112 F= 86

Re tail in g

P ro ce ssin g,

C o llecting and in p u t su pply

P ro d u ctio n

C o n su min g

HARBU , FC, ARDO,

ATVET , WCYAO ADET

r esear ch

FC, TRADE AND

I NDUSTRY

, TEQUNI QUE

ENTERPRI SE DEVELOPM ENT

HARBU , FC TRADE AND TRANSP ORT

M ain functions M ain actors Chain supporters

12 BU CH ER H O U SES 2 0 0 LOC AL TRADERS

1-Bersheleko military camp

1 -University of

D ebremarkos

TRADE AND

I NDUSTRY ,

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shown in the market assessment result that sheep fattening is more profitable and involves low

level of risk compared to poultry production. The dominant sub sector in our target beneficiaries

is sheep fattening so that the value chain map is designed done for this.

6.4. Economic Analysis

Depending on the market information obtained from different markets, the economic analysis worked out

based on per unit of sheep depicts the following result.

Cost of production

Cost of sheep ETB 600.00

Cost of feed 150.00

Cost of labour 100.00

Veterinary cost 20.00

Salt, water and house rent 50.00

Marketing cost 30.00

Interest from loan/cost of fund 32.05

Other miscellaneous costs 20.00

Total cost of production ETB 1002.05

Revenue from sale of single sheep in the local market price is nearly 1500.00

Profit = revenue –cost

Profit = 1500- 1002.05

NET PROFIT= 497.95

From this analysis the producers /target beneficiaries are benefited but the profit depends on

sales volume and value addition process in the commodity.

6.5. End Market

In the case of Bure woreda the existing market is local consumers, universities, military camps,

restaurants and hotels in the town. As the youths produce in bulk they will be supplying to

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Ashraf meat processing factory in Bahirdar. This will be an opportunity for the subsector to to

enter an export market and to grow.

6.6. Value chain constraints

The value chain constraint analysis of sheep fattening subsector indicates, it will be constrained

by the following major factors:

Absence of reliable market information sources for chain actors,

Capital shortage to add value on the product through processing,

Financial constraint and inappropriate credit facilities,

Lack of potential /technology to segment the market based on consumers’ demand,

Lack of market during fasting time;

6.7. Opportunities

The subsector can use the following opportunities for expanding and up grading of the value

chain:

Training give to improve the potential of the beneficiaries

Availability of grant fund for loan from the L4W project,

Government policy supporting youths; youth development package

Availability of government structure to provide technical assistance for ensuring

sustainability,

Periodical holydays creating markets for fattened sheep

High demand for lamb meat in market

6.8. Market based solutions

The above constrains do have market-based solutions in which the value chain actors can address

in the efforts they exert for adding values, maximizing their profits, and for sustaining the value

chain in general. In the case of Bure:

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Value chain discussion forums will be organized among value chain actors. Identify the

gaps and strength of competitors and differentiate the product according to the need of

the customers.

Using production calendar, particularly targeting holydays is the best solution for the

target market.

Improving capacities of each actor according to market situations

each actor in the market should calculate the margin according to the value which is

added to the product and

establishing market information sharing systems systems

utilizing the existing opportunities.

6.9. Value chain governance

All the value chain actors in the chain should structure the relationship among actors in the

chain, and formulate the low about the product quality, who produce what, when and how, for

what based on the market share /demand. In the case of Bure woreda there is a plan to link the

youths with chain actors around. Value chain governance structure that helps to solve the

constraints by integration with chain actors will be in place.

6.10. Value chain vision and mission /objective

The vision of value chain is to see what the chain actors would be look like or where they

would be sometime in the future. The vision of this fattening value chain is to be competitive

suppliers of quality fattened sheep that meet the demand of customers.

The objective is that all target beneficiaries and chain actors penetrate the market and become

self-reliant and food secured.

6.11. Up-grading strategies

Up grading a multi-dimensional process that aims at increasing the economic competitiveness of

enterprises as well as having a positive impact on social development.To increase the market

competitiveness of the product the value chain actors individually as well as jointly need to

design up-grading strategy. During up-grading a lot of strategies might be designed depending on

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the situation. Up-grading generally will be designed as product up grading, market up grading,

and/or functional up grading strategies.

6.12. Proposed intervention strategies

To improve performance of the value chain there is a need of training to improve the conceptual,

skills, and practical understandings as well as the attitudes of the value chain actors in the chain

to add value, to strength the chain governance and to increase the market share through fattening

quality sheep, providing market information and linking to create new markets. Hence training,

monitoring and technical backstopping would be among the major interventions of the project.

6.13. Risks and mitigation mechanisms

Youths are mobile and unstable in their nature. In case these beneficiary youths move for

searching of better jobs or any other reason, it might affect the chain in general. This is because

such youths are among the major actors in the chain. In order to tackle this risk care is to be

taken starting from youth selection and screening till the final trainings. Youths are also expected

to invest on the fattening so that the sense ownership is developed. Moreover well-thought out

and tailor made trainings are organized to equip them with promising skills and knowledge.

6.14. Action plan

# Description of activities Time frame Responsible body

1 Conduct labor market assessment March 2014 FC and TVET college

2 Conduct value chain development

and agricultural product

(subsector) identification and

selection

April 2014 FC and TVET college

3 Selection and screening of youths April 2014 FC, TVET college,

kebele/woreda office

4 Conduct skill training of youths April – June 2014

And Jan. – Mar 2015

TVET college, FC

5 Linkage with MFIs, and other value May – July 2014 FC, woreda SME,

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chain actors and supporters made TVET

6 Youths start production of the

selected subsectors

Sept 2014 – March

2015

Youths

7 90% of trained youths involved

in income generation and 10%

employed in privet business

owners

By end of 2016 youths

7. Monitoring and evaluation

Monitoring and evaluation is a very important component of the value chain development. It will

be conducted to ensure or to check whether the plan is in a god track and the intended results are

achieved. The monitoring and evaluation activities would be conducted using various strategies.

Monitoring will be done every two months by the project staffs and quarterly by FC coordination

office. The technical team of the cluster will also conduct monitoring of the value chain on a

regular basis.

Monitoring;

• the routine collection and analysis of information to enable the assessment of a project

progress during implementation,

• It is a management tool for ensuring accountability and learning,

• helps to provide information to assess business progress,

• provides information to take decisions to ensure that the progress is as planned,

• It is a continuous and systematic collection and analysis data and information.

Evaluation;

• It is assessment of a projects performance conducted after a period of implementation.

Potential quantitative indicators for VCD

In VCD, Indicators (output & Impact) could be measured in, quantitative & qualitative terms,

• Quantitative Indicators could be seen in the analysis of;

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Chain: yield, production, cost, farm gate price, qualities, profitability(gross or &

net margins),value shares,

Market: sales volume, sales values, product differentiations, market penetrations,

market shares, and others.

Chain income as share of total household income,

• Quantitative Indicators

• Livelihood indicators;

Role of income from chain,

Income sources and diversification,

Income sustainability

VCD indicators;

• Be defined in a clear manner (unambiguous)

• Be easily measured

• Give a specific and accurate (unbiased) indication on the status of a situation,

• Linkage to objectives aimed to be achieved.