Milk production and marketing in organized smallholder dairy value chains: A case study of dairy development programme schemes in Zimbabwe.

Abstract

At the attainment of Zimbabwe’s independence, the government of Zimbabwe established the smallholder dairy development programme to encourage smallholder farmers to participate in organized value chains. Although now more than three decades since the government established this programme, smallholder contribution to formal markets remains very low at 5%. The objectives of this study were to (1) analyze the trends in smallholder milk production and marketing including the effect of policies since the introduction of the smallholder dairy development programme in 1983 (2) determine the main factors influencing milk production in the smallholder dairy value chain (3) analyze the factors affecting milk market participation (4) determine ex-ante the potential effect of introducing an animal production and forage centre (APFC), and (5) assess the role of farmers’ cooperatives in the commercialization of milk in the smallholder dairy value chain. Four dairy schemes were purposively selected and 185 farmers selected through simple random sampling were interviewed using a pretested structured questionnaire. The analysis of variance results indicate that policies had an effect on national and smallholder milk production. The results indicate that the Milk Collection Centre (MCC) is the main market for milk produced in the organized smallholder dairy value chains. Multiple linear regression analysis showed independent variables that were significant in influencing milk production were household size, age and dairy farming experience of the head of household, number of milking cows, and cost of concentrates. The first-stage Heckman model showed determinants of milk market participation to be total number of dairy cows owned, educational level and age of household head, household size, access to information and extension services, and agro-ecological region. The second-stage Heckman model indicates the determinants of volume of milk sales to the MCC to be the total number of dairy cows owned, distance to the MCC, age of household head, land holding size, access to extension services and agro-ecological region. Ex-ante benefit cost analysis of the APFC indicate that such a centre would be profitable with a benefit cost ratio of 5.4:1. Farmers’ organization through the milk collection centres was found to be essential in making farmers’ access to information and lucrative milk markets. The Tobit model indicates access to information, distance to the MCC and producer price of milk paid by the MCC were the major determinants of the commercialization of milk sold to the MCC. The study recommends that policies to improve milk production should include interventions that target the provision of appropriate and adequate training in milk production. Policy interventions also need to target increasing the number of dairy cows for smallholder dairy producers, targeting young and educated farmers located in high potential agro-ecological regions I and II, and ensuring market access. These should be provided with adequate and appropriate information and extension packages in order to enhance milk market participation and volume of sales. The APFC is a new concept for the smallholder organized dairy value chains, and policy interventions should be directed at piloting the concept in order to assess its feasibility and contribution to milk production. Establishing sub-centre MCC within easy reach of farmers would enhance commercialization of the milk if favourable market and price policies are developed and implemented. Keywords: dairy development, organized, smallholder, value chain.