The outbreak of COVID-19 intensified the many daily challenges facing agribusinesses in emerging markets. More than a year later, the economic impacts of the pandemic continue to reverberate and, in some cases, have been intensified by other shocks along the way.

For EthioChicken, an Ethiopia-based poultry company and current Feed the Future Partnering for Innovation partner, strategic action taken early on proved critical for not only keeping the company running (and even thriving), but also for reimagining how the company approaches resilience in the face of the unexpected.

In early 2020, EthioChicken sold a weekly average of 530,000 day-old chicks (DOCs) of improved poultry breeds to smallholder farmers in the country. By April 2020, this rate plummeted to just 40,000 DOCs as COVID-19 shifted market demand, disrupted transportation of raw materials and made it difficult-to-reach customers in person and at marketplaces.

Upheaval at this scale threatened EthioChicken’s ability to function normally and survive as a business. It also threatened to undo the success the company achieved following its first partnership with Partnering for Innovation five years earlier: the creation of a robust sales network of 6,500 agents who collectively sold 19.8 million DOCs to more than 3 million smallholder households.

Pivot to Succeed

To stay afloat, rapid and strategic action was required to navigate the new business landscape. In mid-2020, Partnering for Innovation and EthioChicken partnered anew to meet the unprecedented challenges brought about by the pandemic. A collaborative process ensued to reimagine the company’s sales strategy, in compliance with newly implemented social distancing protocols, that would aim to sell 17.4 million DOCs to more than 2 million smallholder farmers and stabilize the country’s DOC market to help actors along the poultry value chain.

A crucial part of this strategy focused on safeguarding against delivery delays by increasing EthioChicken’s inventory of feed stock by a minimum of two weeks. Disruptions in international trade and air travel created havoc, as businesses were forced to rely on the arrival of imports of feed and related micronutrients.

If EthioChicken could not find reliable sources of feed, it would be forced to cull its current parent stock, sending disruptive shock waves throughout the domestic poultry market and among its sales agents and smallholder farmer customers. And in the longer term, such an action would only hamper the company’s ability to quickly scale once the pandemic eased.

At first glance, increasing the storage of feed — essentially doubling the company’s inventory levels — may appear to be an obvious decision. Yet, for small agribusinesses operating on tight margins, it is a tough call to essentially allow two weeks’ worth of company resources to sit idle "just in case." However, it was a crucial move that enabled EthioChicken to successfully pivot around several unanticipated shocks throughout the year.

Ready for the Unexpected

While disruptions from COVID-19 continued, the company faced yet another shock — this one resulting from intense conflict in Ethiopia’s northern Tigray region, where the company’s breeding farm is located. As a result, the company was cut off from its parent stock of chicks, unable to communicate with employees or move feed delivery trucks. Company management located in Addis Ababa feared losing the entire operation due to the unrest. Fortunately, all employees were safe and accounted for and the increased feed stock inventory — already stockpiled in response to COVID — was now pulling double-duty to help combat this new shock.

With more surplus feed than the company would have had normally, EthioChicken was able to keep its chickens alive and maintain operations and profitability in the most dire of circumstances. Impressively, EthioChicken is currently on target to meet its annual sales goal of 17.4 million DOCs and expand its geographic footprint into other regions of the country, as well as in Somalia. The company is also in the process of establishing a third feed mill to support growing demand and to ensure breeder sites are well stocked with feed.

The buffer of having a few weeks of feed stock on-hand enabled the company to withstand these drastic conditions, throwing into stark relief how close the company came to ceasing operations altogether. The importance of having a reserve became clear, as did the realization that even three weeks’ worth of inventory was insufficient. Partnering for Innovation’s funding allowed EthioChicken to make an initial jump and lay the groundwork for building resilience in responding to sudden shifts in the market. Having seen the benefits, EthioChicken is now looking to expand its feed inventory at its breeder farms to upwards of eight weeks.