Gulaid, I.

Kiptoo, E.

Mtimet, Nadhem

Mugunieri, Lawrence Godiah

Wanyoike, Francis N.

Gulaid, Ibrahim

CGSpace

ILRI Research Brief — February 2019 1A review of the bones and tallow value chains in SomalilandIO.LRI RESEARCH BRIEF  NDate  year         ILRI RESEARCH BRIEF  89          6             February 2019         14    Nadhem Mtimet, Lawrence Godiah Mugunieri, Francis Wanyoike, Enock Kiptoo and Ibrahim GulaidBackgroundExport of livestock and livestock products is the main source of foreign currency earning in Somaliland. However, in the recent past, the growth in earnings from livestock sales has been declining against a background of increasing human population growth. Adding value to livestock and livestock products provides an avenue for reversing declining growth in incomes. This study was conducted by the International Livestock Research Institute (ILRI), Terra Nuova and IGAD Sheikh Technical Veterinary School (ISTVS) to map and characterise the bones and tallow value chains in Somaliland, as well as to delineate the main constraints that have hindered the growth of this sector.The two value chains are promising and were initially developed with support from the Somaliland Meat and Development Association (SOMDA) in 2011. SOMDA is a non-profit and non-governmental local humanitarian organization registered with the Ministry of National Planning and Development and the Ministry of Livestock to support entrepreneurship and micro-businesses that add value to livestock byproducts in Somaliland.MethodsThe research used the case study approach focusing on SOMDA and encompassing three steps. The first step entailed collecting secondary information about SOMDA and reviewing literature on the value of the bones and tallow value chain in the horn of Africa. The focus was to gather information on the content of technical training Figure 1. Sample jewellery made out of bones and bars of soap produced from tallowILRI Research Brief — February 20192offered to value chain actors prior to the establishment of the value chains. The second step involved contacting and interviewing trainers to obtain their perspective on the potential viability of these value chains. The third step comprised focus group discussions with value chain actors and physical inspection visits to their premises. It was envisaged this would provide a good understanding of the current state of the value chain and promote understanding of the constraints and opportunities within the chain. A SWOT (Strengths Weaknesses Opportunities Threats) analysis was also carried out to identify the strengths and weaknesses of the soap processing and bone crafting ventures, as well as the threats and opportunities they face. This will help outline key bottlenecks that should be addressed to revitalise the businesses.ResultsMapping of the bones and tallow value chainsResults revealed that the bones and tallow value chains in Somaliland are relatively short (Figure 2) and are operated by self-help groups involved in cottage processing of bones and tallow. The main players are Bilan Soap Company, involved in the processing of soap from tallow; and Future Way Enterprise, involved in crafting of trinkets and ornaments from livestock bones. The activities of the two groups are coordinated by SOMDA.It is important to note that the bones and tallow value chains serve a unique niche in the livestock sector where marginalised communities, women and youth work. In this regard, the value chains play a role in employment creation and income generation. In addition, they contribute to create cleaner environments by making use of livestock byproducts that often pile up as landfill.Challenges and opportunities of the bones and tallow value chainsThe SWOT analysis highlighted a number of strengths and weaknesses for both enterprises. Potential opportunities that could significantly contribute to strengthening of the businesses were also identified.1. Business strengths• The soap production process largely relies on naturalinputs, such as camel tallow and natural fragrance andcolorants. This is preferred by consumers and has thepotential to attract more buyers if final products arestandardised and certified.• Sufficient supplies of raw materials (livestock bonesand tallow) are available in the local market andat a short distance. The development of exportslaughterhouses currently taking place will alsoincrease the availability of these materials.• There is good-will from other value chain actorswithin the market. The soap business has reliablewholesalers who collect and deliver products toretail outlets located all over Somaliland. More oftenthan not, the wholesalers pay upfront, thus relievingthe business from cash flow problems. This marketingmodel also reduces overall marketing costs.• The vertical integration between the soap processingand bone crafting businesses is designed to reducethe overall operational costs of the two ventures. Thebones, which are waste from soap processing, are aninput for the handicraft businesses.2.  Weaknesses• The business plans for the two enterprises are notwell formulated. The business plan for soap processing(Bilan business plan) is not well developed and doesnot include all required information about productioncosts, need of cash-flow and marketing strategy. Onthe other hand, the bone crafting venture (FutureWay) does not have a business plan at all.Figure 2. Bone and tallow value chains mapping in Hargeisa (Somaliland)ILRI Research Brief — February 2019 3• There was lack of growth oriented marketing strategy for the bone crafting business; while the soap business relied on only three wholesale outlets, which poses a potential risk.• There is lack of trained human resource which has an impact on the quality of products, affecting their value on international markets.• The businesses had limited options to finance growth, particularly in the acquisition of equipment and machinery. This curtailed their capacity to produce outputs that are of consistent standard and quality. Most importantly, the soap business was unable to respond to occasional upsurge in demand due to constraints in production.• Production workshops are located in a residential area with increasing pressure from residents to have them relocated due to pollution.3.  Opportunities• Somali consumers generally prefer buying local products when available with good quality. There is also encouragement from the government to promote local production and decrease imports, thus relieving  pressure on the demand for foreign currency.• There is demand in import countries—mainly the United Kingdom and United States of America—for hand-made and environmental friendly/organic jewellery made from livestock bones. Previous export experiences from Somalia and Kenya have shown that demand exists, but there is need for consistency in quality.• The businesses exhibit positive environmental impact by turning bones and horns, which would have otherwise ended up as waste in landfills, into value added products. This has increased buyers’ interest and attracted support from the government and other development partners.• Both value chains are short (few actors are involved). This offers opportunities for timely delivery of raw materials and lower transaction costs, often translating into lower prices of final products.• There is growth in trade of processed meat products, both for local use and exports, which ensures raw material availability.• Mobile phone and social media usage is growing fast. This facilitates communication and information sharing, as well as quicker modes of payment.• Increasing demand for animal feed provides an option for further diversification of the business by inclusion of bone meal as part of the product portfolio.• The establishment of the national standards body—the Somaliland Quality Control Commission (SQCC)—provides an opportunity to develop and promote product and process standards that will lead to production of better quality, standardised products, contributing to increased market opportunities.4.  Threats• More often than not, the main input used in soap processing (tallow) becomes a key source of food for majority of the low income households in the Somali ecosystem during periods of stress (drought). The competing use of tallow for soap production leads to reduction in supplies and increase in price, and in the process exposes the company to cyclic shocks. Due to ongoing changes in climate and the increasing frequency of extreme climatic events (like droughts), such supply shocks will most likely increase in frequency and intensity.• There is high competition from imported products (soap and jewels), particularly from Asia, China and India.• The ease of entry into the bone crafting and soap processing businesses due to low entry barriers provides a potential risk of rapid change in market structure and loss of market share.ConclusionsThe bone and tallow value chains in Somaliland are short, use low value inputs, produce relatively low valued products and involve participants from minority pastoralist groups (women and youth). These value chains offer an opportunity for inclusive economic growth that encompasses the most vulnerable groups in Somaliland and directly and/or indirectly generate additional revenues for the pastoralists. The value chains have directly employed more than 150 people in the past, sustaining around 1000 people (average of six per household). The tallow/soap value chain is worth USD150,000 of income to severely disadvantaged groups living in both urban and pastoral areas.However, the two value chains have failed to exploit the various opportunities for growth due to a number of constraints that include low quality of final products, lack of access to working and investment capital and inconsistent supply of raw materials.Strengthening of these promising value chains will require the following interventions: i. Capacity development of value chain actors to improve their skills and allow development of quality products. ii. Enhancing access to working and investment capital through financial institutions or donors to allow acquisition of necessary equipment to upgrade the quality and quantity of products.  iii. Review and/or develop new business plans that include a clear strategy for sustainable growth of existing businesses.ILRI Research Brief — February 20194  This publication is copyrighted by the International Livestock Research Institute (ILRI). It is licensed for use under the Creative Commons Attribution 4.0 International Licence.    February 2019ContactNadhem Mitmet ILRI, Kenya N.Mtimet@cgiar.orgILRI thanks all donors that globally support its work through their contributions to the CGIAR Trust FundPatron: Professor Peter C Doherty AC, FAA, FRS Animal scientist, Nobel Prize Laureate for Physiology or Medicine–1996Box 30709, Nairobi 00100 Kenya Phone  +254 20 422 3000 Fax      +254 20 422 3001 Email ilri-kenya@cgiar.orgilri.org better lives through livestock  ILRI is a CGIAR research centreBox 5689, Addis Ababa, Ethiopia Phone +251 11 617 2000 Fax +251 11 667 6923 Email ilri-ethiopia@cgiar.org ILRI has offices in East Africa • South Asia • Southeast and East Asia • Southern Africa • West AfricaAcknowledgementThis report is a product of a collaborative effort between the International Livestock Research Institute (ILRI), Terra Nuova and the IGAD Sheikh Technical Veterinary School (ISTVS). We acknowledge and are grateful to the Danish International Development Agency for funding this study.DisclaimerThe contents of this report are the sole responsibility of Terra Nuova, ISTVS and ILRI, and can under no circumstances be regarded as reflecting the position of the Danish government.This research brief is based on a recently published open access journal paper titled An assessment of the livestock byproducts value chains in Somaliland: the case of bones and tallow. https://doi.org/10.1186/s13570-018-0130-8Photo credit:  Page 1: SOMDA/Said I. Farah AuthorsFrancis Wanyoike and Nadhem Mtimet work for the International Livestock Research Institute.Lawrence Godiah Mugunieri and Ibrahim Gulaid  work for Terra Nuova.Enock Kiptoo works for IGAD Sheikh Technical Veterinary School.

A review of the bones and tallow value chains in Somaliland

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A review of the bones and tallow value chains in Somaliland

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