Your SlideShare is downloading. ×
Smallholder Dairy Development: Implications for Livelihoods
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Smallholder Dairy Development: Implications for Livelihoods

2,865
views

Published on

Presentation by Dr Steve Staal, Director of ILRI's Market Opportunities research theme, at the 10th World Conference of Animal Production held in Cape Town, South Africa, 23-28 November 2008.

Presentation by Dr Steve Staal, Director of ILRI's Market Opportunities research theme, at the 10th World Conference of Animal Production held in Cape Town, South Africa, 23-28 November 2008.

Published in: Business, Technology

0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
2,865
On Slideshare
0
From Embeds
0
Number of Embeds
5
Actions
Shares
0
Downloads
133
Comments
0
Likes
1
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. Smallholder Dairy Development: Implications for Livelihoods Steven J. Staal International Livestock Research Institute Symposium on Dairy Production in Difficult Environments World Congress on Animal Production, Cape Town 26 th Nov, 2008
  • 2. Outline Overview of milk market and consumption patterns in key dairy countries Evidence towards driving factors in dairy development Competitiveness of smallholders dairy producers Employment/livelihood implications Comparing poor/smallholder with rich/large dairy systems
  • 3. Dairy growth in key regions Annual growth rate Annual growth rate (%) in Total Annual growth rate (%) Annual growth rate (%) in Total Consumptio in Human Annual growth rate (%) in Region Period Production n Population (%) in Income Urbanisation Central Africa 2000-2003 0.3 0.3 2.7 6.7 3.8 1990-1999 1.5 1.5 2.9 1.8 4 East Africa 2000-2003 9.2 2.8 2.7 7.5 5.4 1990-1999 2.4 2.3 2.5 5.9 5.7 Southern Africa 2000-2003 -0.6 0.9 2 5.9 2.9 1990-1999 1 2.3 2.5 4.3 3.9 West Africa 2000-2003 2 1.7 2.7 6 4.4 1990-1999 2.2 2.4 2.9 5.5 5 India 2000-2003 1.8 2.4 1.6 7.9 2.4 1990-1999 4.1 4.3 1.8 8.1 2.7 Bangladesh 2000-2003 0.8 -0.6 1.9 7.8 3.6 1990-1999 0.3 -1.9 2.1 7 4
  • 4. Key Dairy Markets mostly Informal Informal market share % SSA Kenya 88 Tanzania 98 Uganda 90 L. America Mexico 33 Nicaragua 86 Costa Rica 44 Brazil 44 S. Asia India 85 Sri Lanka 40 Pakistan 98 Primary market for both small producers and poor consumers Sources: ILRI Collaborative Research & FAO E-Conference
  • 5. Comparison of % imports in countries with strong vs. weak dairy traditions % of dairy imported 100% Countries with strong Countries with weak 80% dairy traditions dairy traditions 60% 40% 20% 0% So n a m Pa a Th ia Et i a Ug a re da p. Vi nd ka ia ny a i i al r Ind op Na es Re st an K o an la ge Ke m ki ai on hi iL Ni et a, Ind Sr Source: FAO data % of dairy imports Implication: imports cannot easily compete with traditional products
  • 6. Analysis of trends in dairy development in S Asia and E Africa Statistical analysis of dairy development trends in these two key dairy regions S Asia: 5 countries E&S Africa: 10 countries Associated milk production trends since 1970 with indicators of Economic growth Policies Ag growth Source: StaaI et al, PPLPI Working Paper, 2008
  • 7. Determinants of change in milk production: parameter estimates for East Africa Variable Coefficients Milk producer's price/import price NS Openness (Trade as %) of GDP -0.24*** GDP growth 0.23* Domestic demand (Mt) NS Share of formally processed milk in total output (%) -0.30*** GDP per capita (2000 US $) 0.40*** Number of TV sets per capita 0.03** Life expectancy (years) 1.03*** R&D in agriculture per hectare ($) NS Yield (lt/milking animal) 0.36** Milking animals, cows and buffalos (heads) NS Formal market associated with lower dairy development Note: a/ (*), (**) and (***) statistically significant at the 10%, 5% and 1% respectively.
  • 8. Determinants of change in milk production: parameter estimates for South Asia Variable Coefficients Milk producer's price/import price NS Openness (Trade as % of GDP) NS GDP growth (%) 0.733** Domestic demand (litres) 0.21** GDP per capita (2000 US$) NS Number of tractors per hectare 0.23*** Telephone mainlines (per 1,000 people) -0.16** Share of formally processed milk in total output (%) NS Milking animals, cows and buffalos (heads) 0.19** Yield (lt/milking animal) 0.23** No apparent relationship between main market channel and dairy development Note: a/ (*), (**) and (***) statistically significant at the 10%, 5% and 1% respectively.
  • 9. India: district level analysis of dairy development Index hybrid cows-milking buffalos per worker Estimated coefficient Fertilizer per hectare of crops (kgs) 0.07** Road density (km per hectare) -0.07* Population density -0.02 Crop area under irrigation (%) 0.15** GDP per capita 0.19 Urbanization (%) 0.93 Annual growth of GDP per capita -0.01 Rural workers/population -0.44** Literacy rate (%) -0.03 Milking cows/total cattle 0.06 Rain (mm per year) 0.06* 1982, 1987, and 1992, 250 districts across India
  • 10. India: cooperatives and dairy development Liters of milk to coops per milking cow Number of hybrid cows and milking buffalos per worker 0.8 600 0.7 500 0.6 400 0.5 0.4 300 0.3 200 0.2 100 0.1 0 0 Punjab Haryana Uttar Pradesh Maharashtra Gujarat Karnataka Andhra Pradesh Rajasthan The results suggest that there is a small but positive relationship between milk procured by cooperatives and the indicator of dairy development. However, not consistent – key dairy states of Punjab, Haryana and Uttar Pradesh have relatively low levels of dairy cooperative activity.
  • 11. Economies of scale in dairy production Can smallholder farmers compete against larger neighbors? Several studies (IFPRI, ILRI) using stochastic frontier analysis to examine economies of scale (Bangladesh, India, Kenya, Thailand, Brazil)
  • 12. Yield gaps in dairy cattle in SSA A. Exotic Cattle B. Crossbred Cattle 6000 6000 Milk Yield per Lactation (Kg) Milk Yield per Lactation (Kg) 5000 5000 4000 4000 208.5% 90.2% 157.0% 3000 3000 2000 2000 312.6% 1000 132.0% 65.1% 1000 0 Southern Africa West and Central East Africa Africa Southern Africa West and Central East Africa Africa Grade cattle Crossbred cattle
  • 13. Costs and Revenues - Kenya All forms of production profitable: zero grazing to extensive grazin
  • 14. India (Punjab, Haryana, Gujarat) Average Yield Per Animal 10 9.7 8.4 7.6 7.6 7.4 7.8 8 6.2 6.3 6 Rs./Lit. 4 2 0 Small Medium Large Commercial North West Source: Sharma and Delgado, 2003
  • 15. India: Average profit per liter of milk (with family labor) 0.7 0.5 Rs/litre 0.3 0.1 -0.1 <=20 20-40 40-80 80-150 >150 Avg. Farm scale - liters of milk/day Source: Sharma and Delgado, 2003
  • 16. India: Mean Farm Efficiency by Size group 0.94 0.9 0.87 0.86 0.83 0.85 0.80 0.7 Index 0.5 0.3 0.1 <=20 21-40 41-80 81-150 >150 Average Farm scale - liters of milk/day Key distinguishing factors: information** and credit* Does not include most non-market benefits Source: Sharma and Delgado, 2003
  • 17. Opportunity costs of labor and herd size: comparison of typical herd size and rural wage rates, 12 selected countries in SSA, Asia and LA 120 250 100 200 Cattle numbers 80 $ per month 150 60 100 40 50 20 0 0 Th nd nd C ivia os ivia Ta pal ag a Ta nia ia a r Ta ya Th a os ica a ca bi ad ani ny ic an la la n e a um R R as l l Ke Ke Bo Bo ai ai N nz nz nz ta ta ol C C M Herd size (cattle per farm) Rural wage ($/month) Source: Project on Transregonal Analysis of Crop-Livestock intensification, ILRI 2002
  • 18. Major source of rural employment In Kenya, about 50% of smallholder farmers (1-3) cows employ a full time laborer
  • 19. Not just farmers: employment in indigenous markets Number of jobs created per 100 litres milk handled daily No. of direct Main milk full-time jobs product Kenya mobile traders 1.7 Liquid Bangladesh sweet makers 5.6 Trad. sweets Ghana milk/snack retailer 10.0 Milk snacks More than 5 times the no. employed in formal sector Most pay higher than minimum wage
  • 20. Capital costs? - financing and insurance roles of livestock Limited or no smallholder access to formal insurance (health, household) nor to formal credit. Dairy cattle can provide both. E.g forced savings - lower milk price to accumulate payment Opportunity costs of capital - Smallholders may also have few alternative inflation-proof savings/investment opportunities. Financing Sale of animals to meet planned lumpy expenditures Value accrues at sale Insurance Keeping of animals to meet emergency expenditures Value accrues daily
  • 21. Returns to cattle production with and without non-market benefits – Western Kenya US$/yr Benefits of finance and insurance are based on 1400 contingent valuation of Willingness To Pay 1200 Increase in 1000 “profit” due 18% 15% 14% 800 to finance 600 and insurance 400 benefits 200 0 Extensive dairy Semi-intensive dairy Intensive dairy Source: Without With Without With Without With Ouma 2003 Total revenue Total costs Profits Tested using tobit analysis of age of sale of culled cow What is competitiveness?
  • 22. Scarce nutrients – farm and family Farm nutrients – problem is nutrient deficits, not surpluses West Kenya – only farms with cattle had positive (small) nutrient balances Central Kenya - more than 40% of fodder materials gathered from off-farm – nutrient channel Family nutrition – problem is under nutrition, not over nutrition Coastal and Central Kenya – hhs with cattle have significantly lower % of children exhibiting stunting (height for age) a measure of long-term under nutrition (Nicholson et al 2002)
  • 23. Large/formal/rich vs small/ informal/poor dairy systems Large/formal/rich Small/informal/poor Few outputs/objectives, Multiple outputs/objectives, enterprise model farm-household model Production Often subsidized Few subsidies, may be taxed profile indirectly Capital intensive Labor intensive Strong economies of scale Weak economies of scale Human over-nutrition, Human under-nutrition, Nutrient and threat to human health (?) sustaining human health nutrition profile System nutrient surpluses, System nutrient deficits, threat to environment sustaining natural resources
  • 24. Large/formal/rich vs small/ informal/poor dairy systems (cont) Large/formal/rich Small/informal/poor Value added products, Low cost products, highly processed traditional processing Demand and product profile High relative demand for Low relative demand for food safety/quality food safety/quality Highly regulated and Largely unregulated, monitored unrecorded Policy profile Over-represented: loud voice Invisible: little voice in in domestic and international domestic or international policy policy Growth and Stagnant future prospects (??) Growing future prospects (?? opportunity profile
  • 25. Aims of smallholder dairy production? It’s about Milk Competitiveness, even in very difficult environs Best use of underutilized local resources – connected to crops But It’s also about People (in difficult environments) Employment Both on farm and along supply chain Livelihoods Assets and nutrients