COVID-19 Impacts on Meat and Dairy Systems in Zimbabwe and Ethiopia
Following on its examination of COVID-19 and the New Risks to Food Security and Nutrition, the Feed the Future Enabling Environment for Food Security (EEFS) project looks into how challenges in the enabling environment from the COVID-19 crisis have impacted food systems in developing countries. Throughout the series, EEFS will present feedback from its remote survey of private sector partners operating in Feed the Future countries.
The first installment of the series examined impacts on grain and oilseed systems in Uganda, and the second installment focused on impacts to the poultry system in Ethiopia. This third installment looks at factors in the enabling environment that are creating challenges for meat and dairy systems in Zimbabwe and Ethiopia.
The Role of ASF Systems
It is important to recognize the contributions that animal source food (ASF) market systems make toward economic growth, inclusiveness, and household nutrition. Livestock is estimated to account for 40 percent of global agricultural output value,  and two-thirds of the 600 million livestock keepers worldwide are women. ,  ASF systems also provide livelihoods for youth in not only production enterprises, but also in the provision of inputs and services. Additionally, ASF systems play a vital role as a source of protein and micronutrients, particularly for children and women of maternal age, and contribute to reduced stunting and cognitive development. 
The commercial sustainability of private sector enterprises engaged in the production, processing, and distribution of ASF as well as input supply (feed, genetics, and animal health) is a critical avenue for Feed the Future countries to achieve the potential systemic gains that ASF can deliver. Firms operating in ASF systems are subject to a range of factors present in the enabling environment, including both market forces and public sector decision-making, that drive their investment opportunities and incentives. Now, as the COVID-19 crisis unfolds across the world, ASF systems are faced with new, pronounced, and rapidly evolving challenges in the enabling environment.
Challenges in Zimbabwe and Ethiopia
Feedback from private sector meat and dairy enterprises in Zimbabwe and Ethiopia suggest at least three main challenges in the enabling environment as a result of the COVID-19 crisis: reduced liquidity, limited access to foreign exchange, and logistical disruptions.
There are several reasons for firms’ reduced financial liquidity. Dumisani Murindagomo from MC Meats in Zimbabwe tells EEFS that consumer demand has plummeted as a result of 90 percent national unemployment, reduced remittances from the diaspora, local market closures, and closures in the hospitality sector (hotels and restaurants). Muridagomo also points out that financial lenders have become more risk-averse, and access to capital has been frozen for firms in the meat market system.
Bezabeh Amedebirhan from S&S Farms PLC, a cattle and small ruminant feedlot and abattoir in Ethiopia, indicates that they have experienced an 80 percent reduction in revenue from domestic consumers. For S&S Farms, the market closures have meant that they are unable to source live cattle, sheep, and goats from rural and pastoral areas for slaughter and processing — suggesting that small-scale producers and pastoralists who rely on live animal sales for their livelihoods are faced with limited domestic market access.
Access to foreign exchange is often viewed as a concern only for the largest internationally oriented firms. But this view fails to recognize the critical need in many developing countries where there is no domestic availability of certain products to import inputs — a process which requires foreign exchange. Many importers of agri-inputs in Feed the Future countries are small firms themselves, and their customer base is often primarily small-scale producers. Thus, limited foreign exchange can impact small-scale farmers and other enterprises throughout a market system.
Limited access to foreign exchange has become debilitating for small and medium-sized meat and dairy enterprises in Ethiopia, and the challenge flows down to micro-sized producers as well. Hailu Eshetu from Family Milk Ethiopia, for instance, indicated to EEFS that they lack the foreign exchange to purchase milk testing kits and spare parts to repair pasteurization equipment. This scenario impacts the firm’s productive capacity and limits the volume of milk they are able to source from small-scale dairy producers.
Reduced access to foreign exchange has also drastically impacted input supply firms operating in the meat and dairy market systems. Addis Alem Feed PLC and Ethio-Feed PLC both indicated to EEFS that without access to foreign exchange, they are unable to import critical premix products to improve the quality of the feed they sell to small-scale producers. Similarly, Gasco Trading PLC, Al-Impex, Genesis Veterinary Drug Store, and EGAA Agricultural Input Suppliers PLC all indicated to EEFS that they have been unable to import animal health products, such as vaccinations and therapeutics, which they sell to small-scale meat and dairy producers. If this challenge persists, it will certainly hamper the productivity (yields) and income that small-scale meat and dairy producers are able to achieve.
Finally, firms in Zimbabwe and Ethiopia have faced logistical supply chain bottlenecks that have hampered animal sourcing and marketing. Murindagomo from MC Meats indicates that institutional unpreparedness and inadequate resources at the Department of Livestock and Veterinary Services for abattoir inspections has caused supply chain disruptions. Almi Fresh Milk Processing Plant, with a daily capacity to process 32,000 liters of milk, has experienced logistical barriers to sourcing raw milk from rural areas, and the quantity of milk products they are able to purchase from small-scale producers has declined. Allana Group, the largest halal meat exporter in Ethiopia, and Organic Export Abbattoir are both unable to capitalize on demand for meat products from Middle Eastern countries because passenger flights on Ethiopian Airways have stopped. Limited cargo plane space has driven transport costs up, ultimately hampering the number of live animals they are able to purchase from pastoralists who rely on these sales as their primary livelihood.
Meat and dairy are critical ASF systems that can deliver economic, social, and nutritional gains in Feed the Future countries. Several disruptions in the business enabling environment as a result of the COVID-19 crisis are creating challenges for the input supply, production, processing, and distribution of meat and dairy products in Zimbabwe and Ethiopia. The major challenges cited by firms are reduced liquidity, limited access to foreign exchange, and logistical disruptions in the supply chain. These challenges not only threaten the profitability and commercial sustainability of these firms themselves, but they also have potentially significant knock-on effects for small-scale livestock producers and pastoralists.
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