Abstract:
This study was initiated with the objective of examining the existing production, consumption and
marketing of milk, identify problems of milk supply shortfall and estimate the benefits that an investor can get
from milk investment in Jima town. Descriptive statistics and chain ratio method were used to analyze the data.
The result indicated that the existing annual supply of 1.3 million liter from 200 producers couldn’t satisfy the
huge demand from the large number of consumers. Shortage of feed, dairy cow disease, absence of improved
production technologies and shortage of capital were the major constraints of dairy production in the town.
Determination of TEPU and revenue indicated that a maximum per unit revenue of 175,000 Birr/10,294 USD can
be achieved at an optimal price 7 Birr or 0.41 USD/liter and 100% of the consuming households are capable to
subscribe to the supply at this optimal price. The result of demand projection also indicated that the current
aggregate demand of 8.5 million liters of milk continues to grow and is expected to reach 9.4 million liter by
2016.Therefore, in addition to addressing the above constraints, it is imperative to invite private investors in
the production of milk so as to satisfy this huge demand and enjoy the possible benefit from the investment.
