ETF value chain analysis in dairy sector: objectives, rationale and expected results

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1 ETF value chain analysis in dairy sector: objectives, rationale and expected results Ummuhan Bardak European Training Foundation (ETF) Podgorica, 15 June

2 Objectives and expected results Why the good quality dairy products from the North can not reach to the domestic market and particularly tourism sector in the South? How to create more jobs and/or higher income for dairy producers/ processors in the North by linking it with tourism sector of the South? What to improve in the value chain of dairy sector (special products, actors) for more employment creation in North? What are the specific skills and training needs for these jobs to make them viable and more profitable? Identification of challenges and opportunities in each segment of dairy value chain from North to South (from farmers to processors, traders and consumers) Development of policy recommendations to increase the added value of dairy chain, so as its income and employment contribution in the North 2

3 Rationale for the ETF proposal (1) Montenegro has a service-based economy (70% of GDP and 73% of total employment), particularly relying on tourism activities Booming tourism sector with an annual growth of sector at 12.4% per year in 2009 total tourism& travel income of 730m EUR (20.8% of GDP) 1.12 million foreign tourists expected to visit Montenegro in 2011, generating a direct income of 634m EUR direct jobs created in the sector (9% of total employment), while indirectly reached to jobs (17.8% of total employment) covering hotels, restaurants and travel agencies Creation of an additional new jobs over the next 10 years, reaching to jobs by 2021 (33.2% of total employment) Tourism concentrated in the South (coastal area) of Montenegro receiving most FDI investments, while the North has agro-tourism potential 3

4 Rationale for the ETF proposal (2) Job creation in tourism occurs in the South, providing little opportunity for the long-term unemployed in the North if they don t move A total of people are employed in the agricultural sector (around 7% of total employment), contributing to 15% of GDP Agriculture and cattle farming are particularly important in the North-East regions: 70% of all farmers own cattle Sector with job potential for the long-term unemployed, but jobs are not satisfactory due to low income and poor working conditions Montenegro is net importer of agricultural and dairy products (annual >20 million euro spent for importing dairy products, esp. Serbia) Tourism sector in the South does not use local dairy products widely e.g. the problems of hygiene, food safety standards (and maybe marketing?) Necessity of high-quality and secured dairy supply for the success of hotels& restaurants and higher value added tourism sector 4

5 Rationale for the ETF proposal (3) Food processing industry: 6% of GDP, 3.6% of total employment: mainly beverages, followed by meat and dairy products Dairy sector: 8% of gross value added, 9% of total employment in food industry, only milk constituting 25% of gross agricultural output Dairy herd: 78, ,000 cows, 200 million litres milk production, by 26,300 dairy holdings (mostly small scale family business, 2-3 cows per family) 76% of milk production remain in farms, some sold in local market after onfarm processing, only 15% of total milk production sent to processing companies Dairy processing companies: a total of enterprises, mostly small size, with daily processing of 1-20 tonnes of milk, yogurt as the main product Problems with the milk collection from farms, hygiene and food safety standards, marketing of processed products and local specialty products Closer attention to the distribution of processed milk and dairy products: wholesalers, retail chains, supermarkets, specialised shops, tourism sector 5

6 Linking dairy production with tourism sector If dairy production in the North meets commercial needs and customer tastes of tourism sector in the South, the benefits of tourism can be felt among the dairy producers/ processors: (i) to examine the backward linkages from the tourism sector (hotels& restaurants) in the South to the dairy production/ processing (milk and cheese) in the North (ii) to identify constraints and opportunities for the producers and processors in production, storage, processing, marketing and distribution of their products to be linked to the tourism value chain (iii) to find out the role of human resources, knowledge and skills in the whole value chain, and the type of HCD investment to increase opportunities of the long-term unemployed for more jobs and income 6

7 Methodology and coverage A study including both the analysis and recommendations through: Desk research: analysis of existing knowledge on the dairy sector in Montenegro, with particular focus on the Northern region Collection of recent statistics on dairy sector: its real and potential size in the national and regional economy Deep interviews with each segment of the value chain in dairy sector: farmers, processors, traders, and tourism consumers Critical focus on the position of North (11 municipalities) in the sector, and on milk and cheese (but not excluded yogurt and cream) Action points for employment creation, income increase and skills/ training needs, based on its trade links from the North to the South 7

8 Steps and timetable Expert team selected: Assist. Professor Liesbeth Dries (Wageningen University), Dr. Milan Markovic (Biotechnical Faculty Podgorica), ETF experts Analytical framework agreed: A study outline covering each segment of dairy value chain (farmers to processors, traders and consumers) Kick-off seminar organised on 15 June to present/ discuss analytical framework, methodology and preliminary findings of interviews Analysis to be completed by September and send for comments to the national stakeholders Validation seminar to be organised in November to present and discuss the findings of analysis (22 November, Thursday?) Involvement of national stakeholders (i.e. labour, agriculture, SME development agency) and coordination with international donors 8

9 Outline of the ETF value chain analysis An overview of the consumer-side of the dairy value chain in the retail sector in the South and the main food service actors in tourism An overview of the producer/ processing-side of the dairy value chain with focus on the North (in comparison with national context) An overview of cheese sub-sector and specialty local products with potential for niche markets Key actors and organisations involved in dairy sector (both at national and Northern region levels) and power relations Vision for the growth of dairy sector at national and Northern region levels: an analysis of opportunities and constraints Recommendations to improve the role / position of dairy value chain in the North for more employment and income creation 9

10 Kick-off seminar and expert presentations The objective of kick-off seminar: present/ discuss analytical framework, methodology and preliminary findings of first interviews, get feedback from the participants on the focus of analysis and suggestions for improvements Presentation of Liesbeth Dries: How to make a value chain analysis: the definition, methodology and expected benefits? What are the demand-side advantages of this analysis for more employment and income generation? Presentation of Milan Markovic: Value chains in the dairy sector of the North and in the tourism sector of the South: what are the main information sources and list of interviewees to be used? What are the preliminary results of first interviews conducted with local actors? 10