Although most rural families keep chickens in Ethiopia, the most common breeds are highly susceptible to disease and have low weight gain and egg-laying productivity. Because of low productivity and high demand, farmers have been missing a key opportunity to improve nutrition and generate income. One Ethiopian poultry company, however, is changing that.
EthioChicken is addressing this market gap by commercializing improved chicken breeds and expanding its network of sales agents to reach rural farmers. Agents raise chicks for the first 40 days and receive a commission for each sale thereafter. In addition to training its sales agents and providing last mile access to more productive chickens, the company also expanded its sale of high-quality poultry feed.
In two years, with support from Feed the Future Partnering for Innovation, EthioChicken sold 3,073 MT of feed and more than 3 million day-old chicks, well over its goal of 2.2 million, to almost 350,000 rural households, and employed an agent network of 1,500 entrepreneurs.
A few keys to EthioChicken's success were:
Developing a strong training program for its sales agents that included both proper poultry raising strategies and savvy business practices. This program enabled EthioChicken to reduce losses and increase productivity.
A strictly for-profit business model that allowed it to effectively attract investors in addition to donors.
Working in close partnership with the Ethiopian government and Ministry of Agriculture, which helped EthioChicken market its products to rural customers.
Flexibility in its marketing model. In addition to focusing on economic benefits, it advertised the nutritional benefits of poultry, especially for women and children, making chicken more attractive for smallholder consumers.
In addition, EthioChicken also noted a couple of trends:
It found that smallholder farmers care a lot about value for money, and thus are willing to pay more for a high quality product.
Because of the limits of working in a developing country, EthioChicken had to take on more of the value chain operation - producing both chickens and chicken feed - than it might have in a different country. Companies operating in similar circumstances should be prepared to expand operations vertically.
Have you found that these are important factors to consider when working in smallholder markets? What are some of the lessons you've learned for commercializing a new product aimed at smallholder customers?