Animal Feed Production and Distribution
Animal Feed Production and Distribution
Business Model Description
Establish and upscale production and distribution of livestock feed, adapted to local context and needs.
Expected Impact
Improve agricultural productivity, render livestock production more sustainable, and improve nutritional situation.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Djibouti: Countrywide
- Djibouti: Obock
- Djibouti: Tadjourah
- Djibouti: Dikhil
Sector Classification
Food and Beverage
Development need
Only 10% of Djibouti's demand for fruits and vegetables is domestically produced. The country's agricultural sector is made up of small plots and subsistence farming techniques. Boosting agricultural activity could generate employment and help address the high dependence on imports for food security and rising levels of desertification in rural areas (1).
Policy priority
Among the Government's priorities to diversify the economy is expanding agriculture and fishing activities, with agriculture's contribution to GDP expected to reach 5% by 2035. Other Government plans include the 2009 Master Plan for the Development of the Primary Sector, and the Strategy for Accelerated Growth and Employment Promotion (1, 2).
Gender inequalities and marginalization issues
Coping mechanisms of peasant farmers in Djibouti’s rural regions have been eroded. High food prices and unemployment rates, particularly among the youth and women, affect the country’s urban areas. All these factors have increased vulnerability to food insecurity and spurred migration (3).
Investment opportunities introduction
Providing access to water, conserving soil, diversifying livelihoods of women and fishermen, supporting agricultural, livestock and fisheries production and sensitization and mobilization of beneficiary communities in participatory planning and project implementation can help prevent displacement and strengthen resilience from climate change and droughts (4).
Key bottlenecks introduction
Challenges in the agricultural sector include high food prices and unemployment and increased vulnerability to food insecurity and migration due to successive years of drought and interspersed rain causing flash floods.
Food and Agriculture
Development need
60% of Djibouti's population depend on livestock resources as a source of livelihood. Among the challenges facing the sector is lack of rainfall to naturally produce pasture/fodder and insufficient groundwater to grow irrigated livestock feed. 80% of Djibouti’s livestock remain in the traditional pastoral system, which is dependent on natural feed (5). Pastoral destitution in East Africa is largely driven by feed and water scarcity due to prolonged and extreme climate events (6).
Gender inequalities and marginalization issues
Herd mobility due to feed and water scarcity denies women and children access to milk due to the migration of the herd, which exacerbates already poor nutrition among these groups (6).
Investment opportunities introduction
Djibouti is well-placed to export livestock if it can successfully expand its herds. Approximately two million animals pass through the country annually towards Ethiopia and Somalia (1).
Key bottlenecks introduction
Challenges in the subsector include seasonality of feeds and water, overgrazing and degradation of rangelands, prolonged and more frequent climate events, and inadequate Government support to support sustainable livestock production.
Agricultural Products
Pipeline Opportunity
Animal Feed Production and Distribution
Establish and upscale production and distribution of livestock feed, adapted to local context and needs.
Business Case
Market Size and Environment
USD 50 million - USD 100 million
1.36 million livestock require 35,100 tonnes of feed per year
The total value of Djibout's animal products is DJF 15.78 billion (USD 89 million) and the total value of goods and services directly provided by Djibouti's livestock sector is DJF 17.10 billion (USD 97 million) (23).
Djibouti's total livestock population is estimated at 1.36 million with a total annual feed requirement of 35,100 tonnes (9)
Indicative Return
5% - 10%
Benchmark returns from investments in animal feed production fluctuate around 12% (10).
Investment Timeframe
Medium Term (5–10 years)
Due to the capital expenditure required for plant construction, the investment timeframe for animal feed production is estimated to be above five years (11).
Ticket Size
USD 500,000 - USD 1 million
Market Risks & Scale Obstacles
Business - Supply Chain Constraints
Business - Business Model Unproven
Business - Supply Chain Constraints
Impact Case
Sustainable Development Need
Due to Djibouti's arid climate, only 0.1% of land is used for crop production. The country's domestic food production satisfies only 20% of the grain needs and 10% of the fruit and vegetable requirements of the population (24).
80% of Djibouti's livestock are kept in a traditional pastoral system, which is dependent on natural feed. The natural resource base in the rangelands is shrinking due to prolonged and more frequent extreme climate events (9, 12). In the absence of fodder, sedenterization of livestock breeders leads to the degradation of pastures and natural resources (13).
Besides the feed shortages and overgrazing, the management of the livestock sector in Djibouti is characterized as being constrained by low genetic potential of animals and a subsistence mentality (25).
Gender & Marginalisation
The seasonality of feeds and water means that people and livestock have to move to areas of resource concentration, which limits women's and children's access to milk and exacerbates the already poor nutritional situation (12).
Livestock constitutes the main means of capitalization and income for rural households, as 80% of the rural population (161,600 people) comprise nomads who practice livestock rearing (13).
Expected Development Outcome
Feed production leads to increased agricultural activity related to livestock and enhanced productivity and income for producers. It reduces malnutrition, stunting and hunger due to increased supply of protein from livestock and increased export volumes.
Animal feed production and distribution addresses the shinking natural resource base in rangelands and increases the environmental sustainability level of livestock rearing.
Gender & Marginalisation
Livestock feed improves farming conditions and income for rural communities and female farmers. It increases food security for women and children who are adversely impacted by herd movements.
Primary SDGs addressed
2.1.1 Prevalence of undernourishment
2.2.1 Prevalence of stunting (height for age <-2 standard deviation from the median of the World Health Organization (WHO) Child Growth Standards) among children under 5 years of age
18.9% (2017) (15).
Prevalence of stunting in children under five years of age 31.01% (2019) (14).
0% (globally) (14).
0% (globally) (14).
15.3.1 Proportion of land that is degraded over total land area
Mean area that is protected in terrestrial sites important to biodiversity is 0.81% (2019) (14).
100% (globally) (14).
8.1.1 Annual growth rate of real GDP per capita
GDP per capita growth was above 6% in two consecutive years, before turning negative in 2020 (16).
Targeted rates of annual GDP growth are above 11% for each year between 2023 and 2034 (17).
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Indirectly impacted stakeholders
People
Public sector
Outcome Risks
Increased livestock production may lead to negative environmental externalities related with water and air pollution and land degradation (18).
Livestock production may carry risks associated with improper crop rotation and unsustainable crop growing practices, such as use of pesticides.
Feed production may lead to a higher demand for crops and arable land for feed production, as feeding an animal requires three times the amount of crops necessary to feed a person (19).
Impact Risks
Inappropriate pricing strategies for feed products may result in livestock farmers not being able to buy quality feeds, which might limit the scale of the expected impact.
Impact Classification
What
Animal feed production and distribution improves agricultural productivity, renders livestock production more sustainable, and improves nutritional situation.
Risk
While the model of animal feed production is proven, potential negative environmental externalities from livestock production and product affordability for the market require consideration.
Impact Thesis
Improve agricultural productivity, render livestock production more sustainable, and improve nutritional situation.
Enabling Environment
Policy Environment
Strategy for Accelerated Growth and Employment Promotion (SCAPE) 2015-2019, 2014: Includes the reduction of vulnerability to climate change and sustainable development in regional poles in its strategic orientations, with a focus on the development of a National Adaptation Plan (13, 21).
Djibouti Vision 2035, 2014: Embraces the national priorities defined in the National Agricultural Investment and Food and Nutritional Security Programme in terms of support for vulnerable groups, hydro-agricultural development, and food security (13, 20).
Intended Nationally Determined Contribution (INDC), 2015: Sets out the Djibouti's voluntary commitments in terms of greenhouse gas mitigation and adaptation to climate change by 2030, as well as the conditions necessary to achieve the set objectives (13).
National Programme for Agricultural Investment and Food and Nutritional Security 2016-2020, 2015: Identifies accessibility to nutritious food as the overall objective. Lists food security, economic growth and export orientation, and support to vulnerable groups among four major programmes with relevance to animal feed production and distribution (13).
Financial Environment
Financial incentives: The package of priority proposals agreed in the Horn of Africa Initiative includes a pastoralist livestock insurance programme with USD 0.4 billion of concessional capital intended to leverage USD 1.6 billion from the private sector (26).
Other incentives: The establishment of the Damerjog Regional Livestock Quarantine Center and a certification process allows for livestock exportation since 2006. The facility and the state-led verification process draws in more regional livestock trade with animals from north-eastern Ethiopia being processed through Djibouti (24).
Regulatory Environment
Law No. 51, 2009: Establishes the Environmental Code and defines the content of an Environmental and Social Impact Assessment (ESIA), which must include an analysis of the basic environmental conditions of the project site, a description of the project, the environmental impacts of the project and measures to eliminate, reduce or mitigate negative impacts on the environment and public health, an estimate of the cost of implementing measures, an environmental management plan, and the findings of a public hearing (13).
Decree No. 65, 2004: Regarding the protection of biodiversity, it defines the animal and plant species that are endemic or endangered in Djibouti. It states that the removal or uprooting of endangered or endemic plant species is prohibited, and that the removal of trees without prior authorization is prohibited (13).
Law No. 200, 2007: Defines the responsibilities of the Ministry of Agriculture, Water, Fisheries, Livestock, and Fishery Resources as charged with animal production; veterinary and food control; fishery production; plant production and improvement of vegetation cover; studies and exploitation of water resources; design and construction of surface hydraulic infrastructures as well as the access roads to these structures; preparation and control of the sanitation policy (13).
Marketplace Participants
Private Sector
Alema Koudijs Feed, Tamfeeds, Concfeed International, Premier Feed Mills, Quantum Foods, Wadi Group, AGFRI Animal Feeds.
Government
Ministry of Agriculture, Water, Fisheries, Livestock and Fishery Resources; Ministry of the Interior; Ministry of Foreign Affairs and International Cooperation, Ministry of Economy and Finance; Ministry of Women and Family; Djibouti Social Development Agency (ADDS).
Multilaterals
African Development Bank (AfDB), Intergovernmental Authority on Development (IGAD), International Food Policy Research Institute (IFPRI), International Fund for Agricultural Development (IFAD), Food and Agricultural Organisation (FAO), World Food Programme (WFP), European Investment Bank (EIB), World Bank.
Non-Profit
Swiss Agency for Development and Cooperation (SDc), National Investment Promotion Agency (NIPA), Djibouti Chamber of Commerce, CCentre de Leadership et de l'Entrepreneuriat (CLE).
Target Locations
Djibouti: Countrywide
Djibouti: Obock
Djibouti: Tadjourah
Djibouti: Dikhil
References
- (1) Oxford Business Group. 2016. Plans to develop Djibouti's agriculture and fishing to promote food and employment security. https://oxfordbusinessgroup.com/analysis/living-land-and-sea-plans-develop-agriculture-and-fishing-promote-food-and-employment-security.
- (2) Republic of Djibouti. 2014. Vision Djibouti 2035. http://ccd.dj/w2017/wp-content/uploads/2016/01/Vision-Nationale.pdf.
- (3) UNIDO. 2021. Empowering women in Djibouti through dry fish-processing training. https://www.unido.org/news/empowering-women-djibouti-through-dry-fish-processing-training.
- (4) Medouar, Mohamed. April 2021. For pastoral communities in Djibouti, effective management of water and agro-pastoral resources build resilience from climate shocks. https://blogs.worldbank.org/water/pastoral-communities-djibouti-effective-management-water-and-agro-pastoral-resources-build.
- (5) IGAD. 2021. Validation Of Djibouti Livestock Development Fund (LDF) Report Undertaken. https://igad.int/programs/95-icpald/1342-validation-of-djibouti-livestock-development-fund-ldf-report-undertaken.
- (6) FAO & IGAD. 2019. East Africa Animal Feed Action Plan. http://www.fao.org/3/ca5965en/ca5965en.pdf.
- (7) Alema Koudijs. 2021. For your Feed Solutions. http://www.alemakoudijs.com.
- (8) Tamfeeds Limited. 2021. About Tamfeeds. http://www.tamfeeds.com/about/4594116712.
- (9) FAO & IGAD. 2019. East Africa Animal Feed Action Plan.
- (10) Ziggers, Dick. 2009. Building a new feed mill: Go or no – go. https://www.allaboutfeed.net/Processing/Automation/2009/6/Building-a-new-feed-mill-Go-or-no--go-AAF011435W.
- (11) Md Monirul, I., Azadul, H.M., Md Akteruzzaman, Tofael, A., Hashem, M., et al. 2019. Nutritional Compositions and Sensitivity Analysis of Poultry Feed Mills in Bangladesh through Experimental Economics Approach. https://juniperpublishers.com/artoaj/pdf/ARTOAJ.MS.ID.556159.pdf.
- (12) IGAD. 2020. Validation Of Djibouti Livestock Development Fund (LDF) Report Undertaken.
- (13) IFAD. 2019. Project Proposal to the Adaptation Fund Integrated Water and Soil Resources Management Projects. https://pubdocs.worldbank.org/en/209591619648937202/14538-IFAD-Djibouti-PROGIRES-fullproposal-clean.pdf.
- (14) Sustainable Development Report. 2021. Country Profiles: Djibouti. https://dashboards.sdgindex.org/profiles/djibouti.
- (15) Trading Economics. 2017. Djibouti - Prevalence Of Undernourishment (% Of Population). https://tradingeconomics.com/djibouti/prevalence-of-undernourishment-percent-of-population-wb-data.html.
- (16) World Bank Data. 2021. https://data.worldbank.org/indicator/NY.GDP.PCAP.KD.ZG?locations=DJ.
- (17) Republic of Djibouti. 2014. Vision Djibouti 2035. http://ccd.dj/w2017/wp-content/uploads/2016/01/Vision-Nationale.pdf.
- (18) FAO. 2016. Environmental Performance of Animal Feeds Supply Chains. http://www.fao.org/3/a-i6433e.pdf.
- (19) Lewis, Madeline M. 2017. The Negative Environmental Impacts of the Animal Agriculture Industry and the U.S. Policies in Place to Protect It. https://digitalworks.union.edu/cgi/viewcontent.cgi?article=1055&context=theses.
- (20) Republic of Djibouti. 2014. Vision Djibouti 2035. http://ccd.dj/w2017/wp-content/uploads/2016/01/Vision-Nationale.pdf.
- (21) Government of Djibouti. 2015. Strategie de Croissance Accélérée et de Promotion de l'Emploi. https://economie.gouv.dj/wp-content/uploads/de95d383afef8bcbe0a3bc609a7f5c76.pdf.
- (22) World Food Programme. 2019. Djibouti Annual Country Report 2019 Country Strategic Plan 2018-2019. https://docs.wfp.org/api/documents/WFP-0000113908/download.
- (23) IGAD. 2016. Centre de l'IGAD pour les zones pastorales et le développement de l'élevage (ICPALD). https://icpald.org/wp-content/uploads/2019/08/Policy-Brief-on-The-Contribution-of-Livestock-to-Djibouti-Economy-Jan-2016.pdf.
- (24) Hunt, S.E, Eshete, G., Tadesse, M. and Eshetu, Z. 2019. Review of agricultural production systems in Eastern Africa in relation to food and nutrition security and climate change.
- (25) World Food Programme. 2011. Urban In-Depth Emergency Food Security Assessment Djibouti. https://reliefweb.int/sites/reliefweb.int/files/resources/Full_Report_2172.pdf.
- (26) Horn of Africa Initiative. 2021. Description of Priority Projects and Readiness. https://hoainitiative.org/wp-content/uploads/2021/03/HoAI-Project-Profiles.pdf.