Ethiopia Livestock and Fisheries Sector Development Project - World Bank


World Bank Supports Ethiopia’s Efforts to Unleash the Potential of its Livestock and Fisheries Sectors

December 12, 2017


Ethiopia - Livestock and Fisheries Sector Development Project

December 12, 2017

  • Closing DateJuly 7, 2024

  • Total Project Cost**US$ 176.20 million

Commitment Amount US$ 170.00 million

  • Region: Africa

Federal Ministry of Finance and Economic Development, Federal Democratic Republic of Ethiopia

Proposed Development Objective(s) Increase productivity and commercialization of producers and processors in selected value chains, strengthen service delivery systems in the livestock and fisheries sectors, and respond promptly and effectively to an eligible crisis or emergency.

1. Ethiopia is a large, land-locked, and diverse country. Located in the Horn of Africa, Ethiopia extends over an area of 1.1 million square kilometers, about the size of France and Spain combined. Its bio-physical environment includes a variety of contrasting ecosystems, with significant differences in climate, soil properties, vegetation types, agricultural potential, biodiversity and water resources and with a challenging topography vulnerable to the impacts of climate change. Ethiopia is a country of many nations, nationalities and peoples, with current total population of estimated 104 million (2017).

2. Ethiopia has experienced strong economic growth over the past decade and is amongst the fastest growing in the world. Although still one of the poorest countries in the world, Ethiopia’s per capita income has increased from US$350 per capita in 2010 to US$619 in 2016.1 Economic growth averaged 10.7 percent per year in 2003/04 to 2011/12 compared to the regional average of 5.4 percent and had a continued high level throughout FY 2013/14 and 2014/15 with some decline to an estimated 7.6 percent in FY 2015/162 due to especially severe drought and global economic factors. Over the medium-term, growth is projected by IMF to remain within the 7.3-7.5 percent range. If the trend continues, it is possible for Ethiopia to reach middleincome status by 2025. The rapid growth is based on a mix of factors, including agricultural modernization, the development of new export sectors, strong global commodity demand, and government-led development investments. Private consumption and public investment have driven demand side growth, with the latter assuming an increasingly important role in recent years.

3. There have been positive impacts from structural change for the period 2005 to 2013 especially on poverty reduction. Extreme poverty has fallen from 55 percent in 2000 to 34 percent in 2011 and 24 percent in 2016, which is one of the most impressive poverty reduction results recorded internationally. Yet, vulnerability to return to poverty remains high and inequality rose slightly during the most recent five years, with the Gini coefficient3 moving from .284 to .328. Economic growth and substantial improvements in the provision of safety nets and basic services have been important drivers of poverty reduction in the last decade, with each percent of growth reducing poverty by 0.55 percent. While there is a modest shift in labor from agriculture to services and construction, the structural change was not sufficiently inclusive.

4. Political unrest in 2016 has largely settled but pockets of uncertainty remain. The state of emergency was lifted in August 2017. However, strikes and signs of unrest erupted in some parts of the Country linked to an increase in the tax liabilities of medium and small size businesses and ethnic tensions in the borders between Somali and Oromia regions; but the federal government has moved to reduce the tensions.

5. Agriculture is a dominant sector contributing significantly to economic growth and poverty reduction. Central Statistics Agency (CSA) data show that the sector makes up 40 percent of total output, employs 78 percent of the country’s labor force and contributes over 80 percent of goods exports (including coffee). Over the past 15 years, the sector has grown by an average of 7 percent per year resulting in positive impacts on farming and non-farm rural economies. However, this growth was mainly due to an increased area under cultivation and to a far lesser extent from improvement in productivities or public policy. Ethiopia has the largest livestock population in Africa and the fifth largest in the World. The livestock subsector contributes nearly 20 percent of total GDP and foreign exchange earnings of the country, and some 35 to 40 percent of agricultural GDP.

6. The Livestock and Fisheries sectors are expected to help the country reach middle-income status. Spurred by population growth, increasing urbanization and incomes, domestic demand for meat, dairy, eggs and fish is expected to increase significantly. The livestock and fisheries sectors present opportunities for business, and increasing the availability of livestock sourced products and fish can address food and nutrition security challenges in Ethiopia. Approximately 38 percent of children under 5 years are stunted. In the coming years, the livestock sector can become a major contributor to poverty reduction. In consequence, the livestock and fisheries sectors have been made priorities in the government’s Second Growth and Transformation Plan (GTP2) from 2016-2020. Livestock and Fisheries are now seen as critical in achieving priority goals of the government including: (i) contributing to overall economic growth, including an increase in the volume and value of exports; (ii) contributing to poverty reduction in both highland and lowland areas; (iii) contributing to improved food security and nutritional outcomes for rural and urban households; and (iv) supporting the country’s green growth priorities.

7. These objectives are reflected in the recently-approved Livestock Master Plan (LMP). The LMP is a series of five-year development plans for the key livestock value chains, and production systems within each value chain. These include red meat and milk from cattle, sheep, goats and camels, poultry and cow dairy. The investments proposed in the development plans include appropriate combinations of genetic, feed and health interventions and related policy changes to improve livestock productivity and the performance of the value chains. The interventions are meant to transform traditional family farms into improved market-oriented systems, to improve household incomes, food security, livestock product consumption and nutrition, and to contribute to national economic growth (Box 1, Annex 1 of the PAD).

8. As the result of the renewed attention to the livestock and fisheries sector, the Government created a Ministry of Livestock and Fisheries (MoLF). Previously under the Ministry of Agriculture and Natural Resources (MoANR), it lacked the autonomy and focus for a scale up of government support for the sectors. The MoLF is refining its structure from the Federal to the Woreda and Kebele levels. Currently, the Ministry comprises three State Ministries: (i) the State Ministry for Animal Health and Feed; (ii) the State Ministry for Animal Production; and (iii) the State Ministry for Inputs and Marketing. The Ministry also has a specific unit for Pastoral Area Development and Cooperation which is placed under the responsibility of the State Ministry for Animal Production. Being recently established, the institutional and organizational capacities of the MoLF need to be built while strategic priority programs need to be initiated and/or reinforced.

9. Ethiopia has not experienced significant productivity gains in the sector. Even though Ethiopia’s total meat production increased by 4.6 percent, with mutton and goat meat registering growth rates of 12 and 13 percent respectively, the growth is because of the increase in the number of slaughtered animals, but not from an increase in productivity. Milk yield averages 1.5 kg per day, which is about one-eighth of the milk yield for improved dairy breeds which can manage 9 liters per day per cow. Average yields are much lower compared with other countries in the region such as Kenya and Rwanda (3.6 kg per day) 4 . Similarly, there is a substantial productivity difference between local and improved poultry breeds. The local poultry breeds lay only 50 eggs per year, which is one-third the number laid by modern breeds. As a result of these low productivity levels, the livestock sector is characterized by relatively high greenhouse gas (GHG) emissions per unit of product. Average GHG emissions per litter of milk are 19 kg CO2 eq among mixed crop-livestock systems, against an average of ca. 9 kg CO2 eq./kg milk in Sub-Saharan Africa.

10. Key challenges continue to undermine the performance and potential of the livestock and fisheries sectors. These include: reduced availability and access to communal grazing and natural pasture; insufficient access to forage, forage seeds and feed supply; poor animal health due to disease prevalence; and low livestock genetic make-up. Limited adoption of improved livestock practices and poor provision of livestock support services are major sources of low productivity levels. The public sector dominates livestock support service delivery, which is weak for animal health, breeding, feed, and extension. In addition, the sector has a low commercial market off-take due to inadequate processing and marketing infrastructure. Most farmers do not participate in the livestock market and household livestock production is ultimately consumed within the household or sold on the local market.

11. The fisheries and aquaculture sector are constrained by similar challenges. There is an acute shortage of trained personnel and specialized service delivery systems. There are poor institutional capacity, extension services, health and food safety services. The lack of reliable data has hampered preparation of a master plan for the development of both inland fisheries and aquaculture. Fishery associations are not well developed and the sector is constrained by the remoteness of fishing areas; and the lack of basic equipment such as fishing gear, improved technologies and techniques, brood stock and good quality fish seed, and good quality fish feed. Environmentally unsustainable fishing practices limit inland fisheries development.

12. The government seeks to scale up its investment and institutional support for the livestock and fisheries sector. It has addressed the challenges and overall weak performance of these sub-sectors, limited access to quality livestock and fisheries services and markets, limited participation of the private sector and institutional and policy gaps and challenges existing in the sector. It wishes to focus particularly on the subsistence level and small holder farmers, where the maximum benefits can be obtained for both the sector and its participants. Improvements in productivity can have a substantial impact on farmer incomes and thus on poverty reduction. Improvements in quality can increase the potential to build value chains in the agroprocessing sector, contributing to the country’s broader aims of industrialization as well as export earnings.

13. The proposed project supports the government’s strategy for livestock growth and transformation as articulated in its GTP2 and LMP by adding value to the existing investments that support the sector. The fisheries sector was not addressed in the LMP, but was recently added by the government as a priority.

14. Increase productivity and commercialization of producers and processors in selected value chains, strengthen service delivery systems in the livestock and fisheries sectors, and respond promptly and effectively to an eligible crisis or emergency. Key Results

15. Direct beneficiaries. The direct beneficiaries of the project will include smallholder livestock and fisheries producers and processors. The project will support an estimated 1.2 million households (HH), of which 466,000 HH from sub-Projects in the selected 58 Woredas (component A) and 735,000 HH from improved services (component B). Targeted staff of the MoLF and associated livestock support institutions will benefit from capacity development support provided by the project. A full description of the project beneficiaries is provided in Annex 1.

16. Gender and Youth. In Ethiopia, gender disparities are found in the production, marketing and sales of livestock and fisheries and their products. The project will pay special attention to women headed households and unemployed youth in all intervention areas, including capacity building and skill development trainings which would help them to participate and benefit from the project. The detailed description on how the project will address Gender and Youth can be found in Annex 4 of the PAD.

17. Target Value Chains. The project will target four priority value chains i.e.: (i) dairy with small-scale mixed crop-livestock systems; (ii) poultry with improved semi-scavenging systems, small-scale broilers and layers systems; (iii) red meat with fattening in dairy and small ruminant systems, and (iv) fish with sustainable inland fisheries and aquaculture in selected suitable areas. In addition, the project will indirectly support the red meat cattle value chain nation-wide through its support to the strategic national programs on animal health, access to feed and traceability system. There is a strong rationale for the selection of the value chains for the project as highlighted in the LMP.

18. Geographical targeting: The primary geographic focus area of the project targeted value chains would be the rural and peri-urban areas of the high potential highland regions where the dairy, poultry, fisheries and aquaculture production systems dominate. Furthermore, the project would follow the Government cluster approach and intervene in the existing or planned clusters of dairy, poultry and fisheries and aquaculture. This would enable the project to benefit from synergistic gains which might arise from other investment (infrastructure, private sector, etc.) coming in these clusters. While the crosscutting activities of the project will have a national coverage, the value chains activities will be implemented in the 58 Woredas of the following six regions: Amhara, Benishangul-Gumuz, Gambella, Oromiya, Southern Nations Nationalities and Peoples Region - SNNPR, and Tigray.

19. The project is closely aligned to the new CPF goals. The Ethiopia new FY18-22 Country Partnership Framework (CPF) is based on the recommendations of the WBG’s 2016 Systematic Country Diagnostic (SCD) which emphasizes the leading role that agricultural growth (including livestock) has in poverty reduction. The predominance of agriculture as a source of income for the poorer households in Ethiopia suggests that growth in the sector will remain important for poverty reduction in the coming years. The SCD identifies eight binding constraints to the achievement of the twin goals, including poor market access for farmers and an uncompetitive private sector. These resonate with the project, as it aims to increase smallholder productivity, access to markets and service delivery, improving the overall functioning of the agricultural sector. 20. The project will contribute to the Ethiopia Nationally Determined Contribution (NDC) and the GoE intention to limit its net GHG emissions in 2030 to 145 Mt CO2e or lower5 . This ambitious objective constitutes a 255 Mt CO2e reduction from the projected ‘business-as-usual' emissions in 2030, or a 64% reduction from the BAU scenario in 2030. Improving crop and livestock production practices for greater food security and higher farmer incomes while reducing emissions is the first of the four pillars that Ethiopia has identified to achieve its target, in line with the fact that livestock is estimated to contribute over 40 percent of the national emissions. The efficiency gains achieved by the project, and related GHG emission reduction (Annex 5) will be monitored and reported as contribution towards the NDC. D. Project Description Strategic approach

21. The proposed project will follow a dual approach of: (i) targeting strategic commodity value chains through a comprehensive support to smallholder producers and other value chain actors; and (ii) supporting the newly established MoLF and its strategic national programs for immediate and long-term impact of national coverage.

22. Poverty focus. The project is designed to focus primarily on smallholder producers in the mixed croplivestock production systems of the central highlands, and in areas with potential for fish production. Smallholder farm households are defined as those with small parcel of farm land, few farm animals, large family size and unemployed youth and women headed households. The project will contribute to the LMP goal to raise out of poverty 25 percent of livestock keeping households, which is about 2.36 million households.

23. Maximizing Finance for Development. Although there is a strong rationale for public sector support of the livestock sector, there are also elements that should be left to the private sector and a few barriers prevent them from fully engaging. The project will therefore complement existing efforts to build private sector engagement, including upgrading policy and regulations to make them more conducive to the private sector. It will also support the progressive transformation of the service delivery system, from pure public delivery to a more public-private, comprehensive and specialized services delivery system. As well as private goods and services, private providers would also be allowed to deliver specific public goods and services under the oversight of the public authorities. Private producers, processors, buyers, young entrepreneurs, and others will be encouraged to participate in the transformation of the sector in a more structured way, through the productive partnership arrangements supported by the project. Private engagement will strengthen the growth and transformation agenda of the livestock and fisheries sectors.

24. WB-IFC Linkages. The World Bank Group is also working to improve the quality and access of inputs related to animal drugs, vaccines and feed used in the livestock sector and the competitiveness of the SMEs working in this sector. Support in the form of regulatory reform and capacity building is provided though ongoing IFC non-lending advisory services (Livestock Micro-Reform for Agribusiness project - L-MIRA) from the Trade and Competitiveness Practice Group to Ethiopia’s Veterinary Drugs, Feeds and Vaccine Control Authority (VDFACA). In addition, the L-MIRA project will support initial World Bank Group engagement on the recently adopted breeding policy and the intent to introduce veterinarian certification.

25. Transformation pathway. The Transformation Pathway for improved livestock and fisheries productivity and commercialization is set out in Figure 1. While recognizing the fluidity of the levels, each level requires specific set of interventions tailored to the beneficiary present status in the transformation pathway (Table 3 in Annex 1 of the PAD). The project will simultaneously intervene in all three levels of the transformation pathway.

26. Climate smart agriculture and greenhouse gas emissions. The project will systematically ensure that all activities and investments financed include climate-smart and good environmental management practices, and that the technical support and financial incentives provided by the project facilitate the wide adoption of such practices. Most technical and institutional interventions envisaged under the project will have effects on more than one of the climate smart agriculture outcomes, that will be thoroughly integrated in the transformation pathway. At the lower levels of the pathway, focus will be on adaptation and increased productivity (resulting in lower emission intensities), whereas interventions in support of beneficiaries at higher levels of the pathway may also include specific mitigation option such as covered manure storage, biogas and energy saving devices.

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