Grooming Ethiopia’s Livestock Industry for Export

Farmer at Doyogena,Ethiopia | Photo©ILRI/Meron Mulatu via Flicker

The conditions for a vibrant and competitive livestock industry abound in Ethiopia.

Ethiopia has the largest livestock population in Africa, a young rural workforce, and close ties to one of the world's largest meat markets, the Middle East.  

The Government of Ethiopia is aware of the livestock industry’s potential to reduce poverty, promote food security, increase high-value exports, bring in valuable foreign exchange, and the industry’s potential for contributing to adaptation and mitigation of climate change. The government has developed a livestock master plan that proposes modern technology and policies to make Ethiopia Africa’s largest meat exporter. This ten-year strategy aims to increase meat export quantity and quality through policies and public investments in areas such food safety and animal health.  

Luna Export Slaughterhouse is one of several Ethiopian meat processors hoping to tap into this momentum and expand its businesses. Luna wanted to be a first mover in the meat export industry, but lacked the technical expertise to modernize and faced the challenge of obtaining a sufficient supply of live animals.

 “The challenge is very big. Because this project is so novel, we cannot simply copy the operations used by other similar projects,” said Tesfalidet Hagos, General Manager at Luna. Knowing IFC’s technical expertise and track record for investments in the livestock industry in developing countries, Luna approached IFC for help.

Luna and IFC—with support from the governments of Canada, Italy, the Netherlands, Norway, Sweden, and the United States—completed extensive technical studies to identify opportunities for improvement. The results of these studies indicated that Luna’s business would benefit from an investment in a modern food processing facility and feedlots that would improve the efficiency and environmental sustainability of its meat production. Notably, the modern feedlots could also secure a sufficient and consistent supply of quality meat for Luna’s production. Slaughterhouse workers would also be trained to operate the facilities correctly under standardized procedures.

There are immense challenges to fulfilling the government’s ambition to become Africa’s largest meat exporter.  To begin with, livestock in Ethiopia is primarily raised by smallholder farmers and pastoralists, who rely on their animals as a form of insurance against unexpected events such as a failed crop or emergency medical expenses. The farmers often lack access to knowledge, veterinary services, and farm inputs, especially animal feed. The result is low productivity and meat that falls short of quality standards.

Without a reliable supply of high-quality livestock, meat processors are unable to process sufficient volumes of high-value meat. Although some meat processors in Ethiopia have updated their facilities and food safety systems, many still struggle to process sufficient volumes of meat that meet the visual-appearance, tenderness, flavor, and safety standards needed for export or even sale to local consumers through retailers such as supermarket chains.

Luna believed that an inclusive business model would help it develop more reliable supply, and worked with IFC to develop an innovative scheme for integrating smallholder farmers into Luna’s supply chain. Through this outgrower scheme, not only will Luna have more suppliers, but farmers who are raising livestock for Luna will also be able to access extension services that will help them improve productivity and, in the process, improve their incomes and livelihoods.

Barely ten months have passed since work for this investment began, but Luna’s factory is now already being upgraded to enable the production of higher-margin meat products. As food safety is paramount for the reputation and profitability of food producers, IFC helped develop a customized food safety foundation course for Luna to improve existing food safety management. Fourteen core food safety employees have already been trained on food safety requirements, and capacity building sessions and audits will be conducted to ensure that Luna can meet FSSC 22000 certification standards, which are fully recognized by the Global Food Safety Initiative (GFSI). Confidence in Luna’s products is surging, evidenced by the fact that three Saudi retailers have recently expressed interest in making trial sales on vacuum packed cuts supplied by Luna.

By the time this project is fully implemented, Luna will be the first local meat processor to supply meat to supermarket chains in Ethiopia. It will also be the first company in Ethiopia to work with smallholder farmers through an outgrower program to raise animals for export, and the first in the region to export vacuum packed meat to the Middle East.

This investment will lead to positive economic and social impacts for Luna and the smallholder farmers who supply them with meat. But the true potential of this investment lies in its demonstration effects. Not only will Luna’s success help raise industry standards in Ethiopia, it will also pave the way for more export opportunities for Ethiopia and lay the foundations for Ethiopia to eventually compete with major meat exporting countries such as Australia and New Zealand.

 

For more information: www.ifc.org/agribusiness

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Published in May 2018