Cost-Benefit Analysis of Powdered Camel Milk Production in the Somali Region of Ethiopia

Kehinde Olusoga (), Mikhail Miklyaev and Glenn Jenkins ()
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Kehinde Olusoga: Department of Banking and Finance, Eastern Mediterranean University, North Cyprus

No 2021-05, Development Discussion Papers from JDI Executive Programs

Abstract: The Somali region of Ethiopia has a high potential for milk production. The perishable nature of raw camel milk imposes a significant loss to the pastoralists and the economy. This study assesses the ex-post evaluation of the milk processing plant in Jijiga city, the Somali region of Ethiopia, by identifying the risk variables that affected the outcome of the project. Also, we employ a Cost-Benefit Analysis to evaluate a possible solution to the milk processing plant by appraising the financial viability of powdered camel milk production and identifying the potential risks that might affect the outcome of the project. The milk production plant will process raw camel milk to powdered form to benefit from the seasonal fluctuation of camel milk supply because of the higher shelf life of powder camel milk. Although there is potential growth in the camel milk value chain in Ethiopia, market access is one of the major limitations of camel milk production. There has been an increase in the demand for powdered camel milk globally due to the awareness of its physiochemical properties, health benefits, and higher shelf life. By 2027, the camel milk global market is projected to hit USD 10.07 billion, rising at an 8 percent growth rate. The result of the Cost-Benefit Analysis (CBA) shows that the powdered camel milk production project will generate an NPV of 38.47 million ETB and a MIRR of 26.6%. The minimum ADSCR is 1.93, the average ADSCR is 5.95, the minimum LLCR is 4.34, the average LLCR is 7.47. The project’s sensitive variables are the exchange rate, the export price of powdered camel milk, raw camel milk price, and the milk processing capacity.

Keywords: Cost-Benefit Analysis; ex-post evaluation; financial analysis; Risk analysis; Powdered Camel Milk; Somali Region; Ethiopia. (search for similar items in EconPapers)
JEL-codes: D61 D62 Q12 Q13 (search for similar items in EconPapers)
Pages: 34 Pages
Date: 2021-04-14
New Economics Papers: this item is included in nep-agr
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