10 reasons to visit The School of St Jude in Arusha, Tanzania, in 2014
Tanzania Dairy Development Conference. Arusha. 5-7 June 2002.
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Transcript of Tanzania Dairy Development Conference. Arusha. 5-7 June 2002.
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The competitiveness of smallholder dairy production in developing countries
with specific reference to Tanzania
Tanzania Dairy Development Conference.
Arusha. 5-7 June 2002.
A. Omore and S. Staal
International Livestock Research Institute, Nairobi
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• Dairy production and market trends in Tanzania
(since last dairy sub-sector appraisal by MOAC/SUA/ILRI)
and regionally
• Production costs
• Non marketable values
• Global competitiveness
Presentation Covers:
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• Good returns compared to most traditional agricultural commodities
• In come generation for poor producers and market intermediaries through participation in processing and marketing
• Food security, good nutrition, poverty reduction and environmental protection
Acknowledged benefits of smallholder dairying
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• Traditional consumption habits
• Agro-climate/milk production potential
• Proximity to consumers
• Output and Input Market Infrastructures
• Access to Vet Services
Factors determining adoption of dairying in developing countries
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Current trends of dairying in Tanzania
• Traditional consumption is mainly low-cost liquid or soured milk
• Two-thirds of dairy cattle found in Arusha & Kilimanjaro (good agro-climate)
• Significant numbers in (or near) Dar and other urban centres (proximity to consumers)
• Market dominated by small scale informal traders• Increasing contribution of marketed milk from zebu• Increasing local production and decreasing imports
since 1980
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Dairy Supply and demand projections in Tanzania
Basis/assumptions• Annual milk supply growth rate of 2.6% (1.7% for
traditional herd and 6% for the dairy herd), decreasing at 0.1%
• Demand growth of 4% annually – estimated from • population growth rate of 2.8% (2.6% for rural
and 5% for urban), decreasing at 0.05%; • Real GDP growth rate scenarios of 1% and 2%;• Urban/rural consumption ratios of 0.05• Income elasticity of demand for milk 0f 0.08
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700
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Year
1997 1998
1999 2000
2001 2002
2003 2004
2005 2006
2007 2008
2009 2010
2% GDP growth 1% GDP Growth Milk Production
Million
Litres
Milk/ Yr
Projections since last census and appraisal of Tanz. dairy sub-sector (‘97)
Source: MOAC/SUA ILRI, 1998
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Urban dairying
Dar-es-Salaam• Probably 80,000 heads• Small scale• Urban regulations not
enforced• More public land• Low peri-urban prod. &
poor infrastructure
Nairobi• Fewer farms & cattle• (10% of hh)• Relatively large scale• Mostly private land
• High peri-urban prod. & good infrastructure
Urban dairying likely to increase but will quickly reach its limits
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Cost of Production in Morogoro (2000 prices)
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50
100
150
200
250
300
SURUDE HPI Non-Project
TShs Market price
Cost per litre
Revenue/lt
Profit
Cost of Production
Source: A. Msangi, SUA, 2001
Cost components: Family & hired labour, drugs, vet services, repair & maintenance, conc. feeds and fixed costs
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Cost of Production
0
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Kiambu Nakuru Nyandarua
Market price
Cost per litre
Profit
KShs
Cost of Production in Kenya (1999 prices)
Revenue per lt
Cost components: Family & hired labour, drugs, vet services, repair & maintenance, conc. feeds & fodder, home consumed milk and fixed costs
Source: ILRI Collaborative research in Kenya (2001)
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Non-marketable smallholder production and value often not considered
• Manure – May equal up to 30% the value of milk produced
• Home consumption• Display of status• Insurance & financing
Non-cash income can be as high as 78% of annual income where local market linkages are weak and opportunities for labour are limited (Moll et al., 2001)
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Uganda3%
Ethiopia1%
Kenya70%
Tanzania7%
Zimbabwe & S Africa
19%
Dairy cattle population in eastern and southern Africa (‘000)
3,000 830
(300)
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Informal % Coops %SSA Kenya 88
Tanzania 98 4Uganda 90
L. America Mexico 33Nicaragua 86 4Costa Rica 44 54Brazil 44
S. Asia India 83 6Sri Lanka 40 7
Sources: ILRI Collaborative Research & FAO E-Conference
Current trends in dairy marketing % of domestically produced milk sold informally
Most consumers are reluctant to pay for “value-adding”
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Unlicensed mobile milk trader In Nairobi, Kenya
Group of licensed milk traders in Mwanza, Tanzania
Liquid milk traders in East Africa
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Soft Cheese ‘Wagashie’ in Kumasi, Ghana
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Fermented and sweetened milk sales in Bangladesh
Making and sale of curd
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Growing demand for milk and dairy products in developing countries due to more, richer people esp. in urban areas
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2000 2020Year
M. MT
Production to double: share from 36% to 52%.
Future trends in dairy marketing - To be mainly driven by “Dairy Revolution”
Source Delgado et al., 2001
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Developing countries SSA
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Per Capita Kg LME % Ann. Growth
Region 1983 1997 Est. 2020 ’97 to ‘20Developed 195 194 203 0.4
Developing 35 43 61 2.7
- L. America 93 112 127 1.8
- S Asia 46 62 78 (104) 3.0 (3.2)
- S S Africa 32 30 37 3.3
- S E Asia 10 12 18 2.9
- China 3 8 16 3.5
Source Delgado et al., 2001
Future trends in dairy marketing - To be mainly driven by “Dairy Revolution”
Increased production is expected to occur in same areas of increased demand. % imported to dev. countries will fall
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01020304050607080
1961
1964
1967
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
Years
Mil
lion
MT
per
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IndiaAustraliaNetherlandsNew ZealandUSA
Comparing production trends in India (a dev. country) with other developed
countries
Source: India NDDB and FAOStats
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China OE Asia India OS Asia SE Asia L. Amer WANA SS Africa
Region
% of Change inCow's milk Prod. Herd % Milking Productivity Interaction
% Sources of Change in Cow’s Milk Production by Region, 1985 and 1998
Source: Nicholson et al., ILRI MOSD Working Document No. 7
• Milk production growth in SSA is predominantly from increase in herd size and not productivity
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0
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Catt
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$ p
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Herd size (cattle per farm) Rural wage ($/month)
Competitiveness: Comparison of rural wage rates
Source: ILRI collaborative research on Trans-regional analysis of crop-livestock systems (2000)
• Smallholder dairying is labour-intensive• Local smallholder competitiveness partially dependent on
low labour costs
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Competitiveness: Comparison of costs & returns to dairy producers
Source: ILRI collaborative research in Kenya (1999) and Hall and Ehui (2000).
• Super-normal profits in small dairy farms in E. Africa indicate they’re more competitive than larger farms in Thailand
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Competitiveness: % of world milk & wheat production traded, by volume, 1975-1998
Source: Staal (2000), using FAOStats
• The need to transform and preserve animal products before they are traded presents an obstacle to increased trade in such products
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Comparison of farm-gate milk prices and approx. import parity prices
Source: Staal (2000)
• Local competitiveness with imports may vary considerably but generally indicate that local smallholders can compete effectively.
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Comparison of % of domestic milk availability that is imported
• Countries with strong traditions mainly demand fresh liquid milk thereby giving advantage to local producers
Source: Nicholson et al., 2001, using FAOStats
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Smallholder dairy producers in Tanzania and elsewhere in developing countries can effectively compete, mainly due to strong local demand. This can further be be enhanced by:
• Improving economies of scale (e.g., through collective action)
• Access to services and appropriate technologies
• Improving infrastructure
• Creating an overall enabling policy and institutional environment for all participants in the sector
Conclusion
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Thank you