Ethiopia’s dairy market size to reach US$1.7B by 2034 – IMARC Group reports

ETHIOPIA – The Ethiopian dairy market size was valued at US$1.1 billion in 2025 is projected to reach US$1.7 billion by 2034, growing at a compound annual growth rate of 4.47% from 2026 to 2034, according to Imarc group reports

By product type, liquid milk dominates the market with a share of 43.2% in 2025, driven by rising consumer preference for fresh pasteurized products and expanding urban retail networks.

Oromia region leads the market with a share of 43.5% in 2025, supported by favorable agro-climatic conditions and proximity to major processing facilities.

The Ethiopian dairy industry is witnessing a healthy growth pace with an increased pace of government endeavours, urbanisation, and development in the processing sectors.

Investments in cross-breeding and processing units are boosting production and improving product quality. Health awareness and rising per capita incomes are changing consumption behaviour in the Ethiopian dairy market.

Developments in value chains, improvements in processing technology, and support from farmer cooperatives are simultaneously making Ethiopia a developing destination in the dairy industry in the Ethiopian dairy market share.

In December 2023, Ethiopia officially unveiled its National Dairy Development Strategy 2022–2031, a road map developed by the Ministry of Agriculture in collaboration with the International Livestock Research Institute (ILRI) and other partners to quadruple milk production by 2031 and strengthen dairy value chains nationwide. 

Concurrently, international investment flows are accelerating dairy sector modernization and capacity expansion in Ethiopia.

In February 2025, Ethiopian Investment Holdings (EIH) and the Ethiopian Agricultural Business Corporation (EABC) signed a US$600 million shareholders agreement with UK private‑equity firm Asset Green to develop an integrated dairy‑farming and processing project.

This will include large‑scale feed production and modern dairy operations, marking one of the largest foreign investments in the country’s agribusiness sector.

Recently, Holland Dairy, a major player in the country, launched a new banana yoghurt in Ethiopia, unveiling a Banana Yoghurt made with real Ethiopian bananas to blend local flavour and dairy innovation while supporting smallholder farmers.

Challenges

Limited availability and high costs of quality animal feed remain primary constraints affecting dairy productivity across Ethiopia. Smallholder farmers face significant challenges accessing improved forages, concentrate feeds, and agricultural by-products necessary for enhanced milk production.

Feed resource limitations contribute to seasonal production variability and constrain the ability of producers to fully capitalize on genetic improvements achieved through crossbreeding programs.

Additionally, underdeveloped market infrastructure, limited milk collection facilities, and insufficient cold chain networks impede dairy value chain efficiency.

Many rural and semi-urban areas lack adequate cooling and storage facilities, resulting in significant post-harvest losses. Transportation constraints and poor road connectivity further challenge the timely movement of perishable dairy products from production areas to processing facilities and consumer markets.

Concurrently, the predominance of indigenous cattle breeds constrains overall milk production potential across Ethiopia. Indigenous breeds produce significantly lower milk yields compared to crossbred animals.

While crossbreeding programs are expanding improved cattle populations, the transformation of the national herd remains a gradual process requiring sustained investment in artificial insemination services, veterinary care, and comprehensive farmer training programs.

To receive our email newsletters with the latest news and insights from Africa, the Middle East and around the world, SUBSCRIBE HERE