Green milk? Sounds good to Ethiopia's dairy industry

Ethiopia is home to the largest livestock population in Africa. These animals—cattle, horses, camels, and other ruminants—are vital to the country’s economic development, food and nutrition security, and poverty reduction , but they are also the major source of the country’s greenhouse gas emissions, with livestock projected to emit nearly half (48%) of Ethiopia’s GHG emissions in 2030. Dairy farming has been identified as a key culprit, with high GHG emissions in part due to inefficient livestock management practices.

How can this essential and high-value growth sector adapt to more sustainable farming and boost productivity and incomes? A new pilot program in Oromia, Ethiopia’s biggest dairy-producing region, supported by the World Bank, is now showing positive results - indicating that a more holistic and sustainable approach can boost productivity, jobs, and incomes and at the same time reduce greenhouse gas emissions.

Facing a triple challenge

Ethiopia anticipates increased demand for animal protein products, including milk and meat, as its economy continues to grow (averaging 9.5% annually over the last 15 years) along with its population (reaching an estimated 190 million people by 2050). Domestic milk production has increased gradually over the last years from 3 billion liters in 2016 to 4.96 billion liters in 2021.

However, this growth has been insufficient and, at times, inefficient, because while some larger, commercial farms exist, almost 95% of dairy cows are kept by rural, smallholder farmers with fewer than five head of cattle per household. A typical cow produces just 1-2 liters of milk a day, which are either consumed at home or sold through informal market systems with little or no quality control. These farmers struggle to access inputs and services needed to improve their herds—such as feed, veterinary care, and artificial insemination—and there is little incentive for them to sell to the formal market.

This low productivity results in the current greenhouse gas footprint of smallholder-produced milk being very high, varying depending on production systems but averaging 19 kg CO2e per kg of milk, compared with an average of 9kg in Sub-Saharan Africa. It also means the demand for dairy products is largely being met through imports. Combined, this equates to a triple challenge: high greenhouse gas emissions from current domestic dairy production, spending of valuable foreign currency on imports, and a missed opportunity to develop dairy livelihoods and supply chains.

Investing in a triple win

That opportunity is now being seized as Ethiopia looks to become self-sufficient in milk production. The World Bank is working closely with the government to find the best ways to shift toward a more professional and efficient dairy system that benefits people, the economy, and the environment. The World Bank’s BioCarbon Fund Initiative for Sustainable Forest Landscapes (ISFL) has teamed up with the international civil society organization Solidaridad to test three climate-smart, market-oriented business models  in Oromia. Research shows these strategies can fill the missing links (namely, fodder) and strengthen the weak points (including the service structure, knowledge, and skills) in the value chain.  

First, the test aims to demonstrate the business case for dairy service hubs—commercial enterprises that link farmers to processors. These hubs can play a crucial role in ensuring joint milking, collection, and cooling can be done near dairy villages, thus enabling a more reliable flow of higher-quality milk to market at more stable prices. Dairy service hubs can also provide farmers easy access to inputs, services, and training that can help them turn their subsistence dairy farming into larger businesses and further increase their incomes.

Second, farmers will need assistance along this growth path, which may involve replacing bulls and non-productive cows, rearing young stock, investing in better veterinary care, and adopting climate-smart dairy farming practices, such as reducing grazing during the dry period or installing biogas digesters to convert manure into fuel. To that end, embedded extension services into the dairy hubs will be needed to provide selected farmers with training and farm planning services via Solidaridad digital solutions. This will also help showcase service provision opportunities.

Finally, the proof of concept will pilot fodder service centers, a new type of private venture that will provide quality animal feed to the dairy service hubs at a commercial scale. Better, readily available feed can make for healthier cows that produce more milk and less methane (from enteric fermentation in the gut), as well as healthier land that is less stressed by grazing.

This work involves just a small cohort of farmers: just 1,250 small producers and 200 semi-commercial dairy farmers (of whom half are women), but a proof of concept is necessary to attract private investors and convince farmers, small businesses, and milk processors and co-ops to adopt these models. Scaled up, these investments could go a long way toward realizing Ethiopia’s climate targets under the Paris Agreement—70% reduction in greenhouse gas emissions by 2030—and its national Pathway to Prosperity (2021–2030). In the end, the project aims to validate that this business model can reduce the carbon footprint per kilogram of milk produced by half, boost participating farmers’ incomes by 100%, and demonstrate the viability of strategic partnerships and investments in the Ethiopian dairy industry’s green growth.

The Oromia livestock dairy program further bolsters the work of the Government of Ethiopia and of Oromia and their recently signed Emission Reductions Purchase Agreement with the ISFL, which unlocks up to $40 million to help communities, government, and stakeholders to reduce carbon emissions and increase carbon sequestration through forest preservation and sustainable agriculture, livestock, and other critical land uses. 

Through these programs and others in the Oromia region, Ethiopia is showing that creating a more efficient, productive dairy industry coupled with more sustainable land use to reduce greenhouse emissions is possible  - and the climate and economic benefits are becoming clear for all to see.