Mekelle Farms Poultry Entrepreneurship in Ethiopia

Mekelle Farms Poultry Entrepreneurship in Ethiopia

By
Hau Lee, Michael Kennedy, Jonathan Elist
2014|Case No.IDE05| Length 14 pgs.

After deciding to transform a former government-owned poultry farm in Ethiopia, two American business partners encounter challenges related to input costs, inventory management, delivery, government relations, and other key challenges that are common to entrepreneurs operating in an emerging market context. The partners identify Ethiopia as a country in which to build their business because of its favorable investment climate, and they decide to pursue poultry because of significant latent demand and a lack of suppliers. The partners address many of the challenges they face by adjusting their business model to better control a more limited set of risks. In lieu of raising and slaughtering the chickens themselves, they develop a network of rural farmers to raise the day-old chicks to maturity, enabling the farmers to make a profit as well. The partners also develop a close relationship with the government, leaning on them for the areas where the government excels; namely, farmer mobilization, communication, and messaging. The government therefore helped identify rural farmers that could help raise the day-old chicks and identified customers for those rural farmers for the meat and eggs. The model has proven effective and impactful. Rural farmers who have chosen to work with Mekelle Farms and who have disproportionately been women now have a significant source of income. The community now also has access to poultry breeds that produce more meat and eggs in less time than local varieties, thus resulting in better income and nutritional outcomes. While setting up a business in Ethiopia has proven difficult, the case demonstrates how one company was able to mitigate many of those challenges and succeed in many ways.

Learning Objective

The objective of this case is to expose students to the myriad challenges that can present themselves to entrepreneurs who hope to operate in an emerging market, particularly in the industry of agriculture. The purpose is to identify those challenges, which include supply chain issues, a lack of clarity on future input costs, a highly inflationary macroeconomic picture, and government relations challenges, and to analyze how one company attempted to mitigate those challenges.

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