Dairy production is an important component of livestock farming in Ethiopia. The huge and
diverse livestock population, varied and favourable agro-ecology for dairying, increasing
demand for dairy products in urban and peri-urban areas, long-standing culture of dairy
products consumption, and favourable policy are indicators of the importance and potential
of dairying in the country. However, productivity of dairy animals in general is limited. This
results in shortage of supply of dairy products and requires the country to spend hard
currency to import dairy products from abroad. It is, therefore, essential to explore the
existing dairy production environment, analyse constraints of dairy production, identify
opportunities for dairy development, and devise pertinent and workable strategies for
sustainable market-oriented dairy development in the country. The Improving Productivity
and Market Success (IPMS) of Ethiopian farmers’ project implemented a series of thesis studies
across its Pilot Learning Woredas (PLWs) and other sites in three Regional States representing
different agro-ecologies and production systems to address the issue. The woredas included
Bure, Fogera and Metema in Amhara Region, Shashemene and Mieso in Oromia Region, and
Hawassa, Yirgalem/Dale and Dilla in Southern Nations, Nationalities and Peoples (SNNP)
Region. This working paper is a synthesis of these studies and includes a description and
performance of the dairy production systems, marketing/processing and input and service
supply systems. It also suggests the ways forward for sustainable market-oriented dairy
development in the country. To complement the synthesis, the paper also uses some selected
findings of the project interventions on value chain development in 10 PLWs in four Zones.