Helping Smallholder Farmers Rule the Roost

By Daphna Berman

When she first entered the poultry business more than a decade ago, Mekia Mekonen poured her savings into purchasing a few dozen chickens. Within a few months though, the flock got sick and died, but as she recalled recently, “I didn’t lose hope.”

Indeed, Mekonen tried again, this time with support from EthioChicken, a poultry distributor with headquarters in Addis Ababa that specializes in disease-resistant chickens.

It worked: with support on when to vaccinate, how to construct a proper shed and best practices for ventilation – as well as a healthier breed of chicken — Mekonen’s business began to flourish. She now raises upwards of 13,000 day-old chicks (DOC) per month, and the income has allowed the family to easily pay school fees for their three children, while also saving money to build a new, more modern coop.  

“Everything has fallen into place for me now,” she said, taking a break from the now thriving chicken operation behind her family’s home. “There is no disease, death, or sickness. I can be positive about the future.” 

For Mekonen and farmers across rural Ethiopia, EthioChicken is creating economic opportunity — and an important source of nutrition in a country where more than 20 million people faced severe food insecurity last year, according to World Bank estimates.  The company’s breed boasts higher productivity and because they’re dual-purpose chickens — providing more eggs than traditional breeds, while also growing bigger and faster – they’re an important alternative to the indigenous birds that smallholders previously relied on.

A 2021 IFC investment in EthioChicken is now fueling the company’s expansion and boosting the availability and affordability of poultry products across the country. And with support in the form of a $10 million equivalent Ethiopian birr loan to EthioChicken through the IDA Private Sector Window (PSW), the company is constructing two new breeding farms and one new hatchery, which will increase the number of farmers it can serve from 2.2 million to 3.1 million. Established in 2017, the IDA PSW allows IFC, MIGA and other co-investors to undertake higher-risk projects, by providing guarantees and loans for a project with high development impact that wouldn’t otherwise attract commercial funding. 

“One goal is to make farmers healthier and wealthier,” said Dr. Justin Benade, Managing Director for EthioChicken. “Our vision has always been to provide one chicken per person per year across Ethiopia and if that is to happen, we need to continue to grow, at least doubling in size over the next five years.”

As part of the business model, EthioChicken sells day-old chicks to grower agents like Mekonen, who raise the chickens until they’re 45 days old and able to survive outside. At that point, the chickens — now heartier, healthier and less susceptible to disease — are sold to nearby smallholder farmers, where they become an important source of eggs and animal protein.

Agriculture is critical in Ethiopia, constituting a third of gross domestic product (GDP) and two-thirds of employment. By expanding the company’s network of poultry agents, EthioChicken will create indirect employment opportunities for rural entrepreneurs and farmers. Currently, the company currently works with nearly 7,000 poultry agents – and that number is expected to grow to about 12,000 as operations expand.

With food insecurity growing, malnutrition remains widespread — and the company targets nutrient deficiency as part of its mandate. Nearly 20 percent of Ethiopia’s population is undernourished — and its child stunting rate of 36.8 percent and child wasting rate of 7.2 percent both exceed the Africa average. In some of the country’s poorest regions, stunting approaches 50 percent.

Chicken is a popular food in Ethiopia, but it’s largely unaffordable to vast swathes of the population. Egg production is also low, resulting in high prices, low consumption and lost nutritional potential. As such, the company’s business model aligns closely with government ambitions to ramp up food production, including a Livestock Master Plan (LMP) that aims to boost poultry meat production by 247 percent and egg production by 828 percent by 2030.  

As part of IFC’s support, an advisory project through the Agribusiness Leadership Program helped professionalize the company’s poultry agents and feed sellers, and supported the expansion of available quality inputs, including feed, to smallholders. A pilot used radio programming and SMS text messaging to promote best practices, including shed building, health management and bookkeeping, while also connecting farmers. 

Abdu Meri, an agent in southwest Ethiopia, learned to better maintain his flock, create feeding schedules, ensure proper ventilation and vaccinate chickens — and in the ensuing weeks and months, the mortality rate among his chickens plummeted drastically. He also says that in addition to better bookkeeping skills, he’s now able to feed his family doro wat on the holidays, a popular spiced chicken and egg stew that was once an unattainable luxury. “My children can now have ample supply, which fulfills their nutritional needs,” he said. “EthioChicken taught me that through hard work, everyone can have daily access to chicken meat and eggs.”

The advisory project, which closed this year, reached more than 1,000 agents and more than 70 feed dealers in four regions, extending to some 132,066 smallholders. Outreach to women farmers has been critical to the program’s success — with targeted training on leadership, access to finance, decision making, and marketing to help empower women, particularly in promoting nutrition. The additional training paid off: women in the program saw a 116 percent increase in their sales revenue and over a three-year period, the gender gap in overall sales revenue narrowed from 27 percent in 2018 to 15 percent in 2022.

Initial results are promising: The company is currently distributing 35 million chicks annually, with plans to expand to new markets in Sub-Saharan Africa — and it has already extended its operations to Rwanda, Uganda, Kenya, Ghana and Côte d'Ivoire under the name Hatch Africa.

For farmers like Mekonen, the company’s continued growth is a win-win — and she’s become something of an unofficial spokesperson, convincing friends and neighbors, particularly women, to consider a future in the poultry business. “You can manage your household, run your business, and still be successful,” she said. “In my experience, it is a business you can start with little capital and still see big results.”

Scaling poultry markets in the region

EthioChicken is supported by the IDA Private Sector Window’s Local Currency Facility which enables IFC to provide the client with affordable, long-term funding in local currency with U.S. dollar disbursement, otherwise not available in the Ethiopian market. Blended finance support mitigates foreign currency risk for the client, whose revenues are in local currency, and catalyzes projects with high impact for local communities. At a market level, the investment in EthioChicken is expected to promote the inclusiveness of the formal poultry market by expanding both the use of the appropriate breed and business model tailored to the needs of both farmers and consumers.

The poultry sector in Ethiopia is in the early stages of development, but EthioChicken’s extensive experience is supporting the development of a greater poultry market. IFC is seeing other market players across Sub Saharan Africa that are drawing on the company’s expertise in refining their inclusive business models to structure their own operations.  There is evidence of the regional market already being influenced by EthioChicken’s innovation as several companies in Tanzania, Nigeria, South Africa and Zambia have entered the dual-purpose poultry segment. To support scaling poultry markets, a key factor in addressing food security in the region, IFC is partnering with the Bill and Melinda Gates Foundation in the region to scale this poultry model by incentivizing companies to either introduce or expand their existing operations in this space, which is increasing access to affordable sources of animal protein.

Read more about the IDA PSW here.