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The potential of Dairy Market Hubs to improve smallholder farmers’ income in Tanzania

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Poster prepared by Irene Bayiyana, Aloyce Hepelwa, Elizaphan J.O. Rao and Kenneth Mdadila for the Maziwa Zaidi Policy Forum, Dar es Salaam, 23-24 May 2017

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The potential of Dairy Market Hubs to improve smallholder farmers’ income in Tanzania

  1. 1. Maziwa Zaidi (More Milk) in Tanzania The potential of Dairy Market Hubs to improve smallholder farmers’ income in Tanzania Irene Bayiyana1; Aloyce Hepelwa1; Elizaphan J.O. Rao2 and Kenneth Mdadila1 1University of Dar es Salaam; 2International Livestock Research Institute Key messages • Dairy in Tanzania is characterized by low growth in productivity – 4.4% per annum, due to animal health, reproductive challenges, and limited access to quality and affordable inputs and services. • Establishing dairy business hubs (DBHs) addresses this by upgrading the value chain – clustering dairy services around a milk buyer under contractual agreements. This ensures efficient access to inputs, services and milk markets. • Possible effects include increased use of inputs and technologies, improved dairy and household income and reduced poverty. Opportunities to invest and scale • Support livestock producer groups across high potential dairy areas to move towards forming DBHs – identifying actors and facilitating business linkages with these actors. • Use ‘loyalty programs’ such as inputs and service provision and payment for the same via check-off that attract household participation in hubs. • Explore mechanisms to establish DBHs in the marginalized extensive areas (e.g., DBHs around milk traders) with limited collective action; scale up experiences of milk traders-based approaches to hub establishment. • Public-private sector investment in getting milk producers and value chain actors together to engage with processors. Thus, the need to strengthen public-private sector co-operation so that the private sector can have a conducive environment for investment. Pictures Key results • Participation in DMHs increased dairy income by at least 7.94 percentage point on average, for the period 2014 to 2016. • Milk sales, milk prices and herd size also had positive influence on dairy income • Participation encouraged by group membership and through provision of inputs and services. This document is licensed for use under the Creative Commons Attribution 4.0 International Licence. April 2017 March2017 Objectives and approach A study was carried out to analyze the effects of DBHs on household income. It used primary data collected from 461 smallholder dairy farmers in Tanga and Morogoro. It applied quasi experimental methods combining propensity score matching and difference-in-difference (DiD) to estimate treatment effects. Maziwa Zaidi thanks all donors and organizations which globally support the work of ILRI and its partners through their contributions to the CGIAR system Figure 1: Illustration of a Dairy Market Hub to provide inputs and services on credit without collective bulking and marketing Dairy Income (Dependent variable) Coefficient Standard errors Participation 1.36*** 0.50 Milk sales 1.15*** 0.21 Milk Price 1.51** 0.21 Improved breeds -0.04 0.68 Cows owned 1.68*** 0.24 % change in dairy income Treated farmers 1.83 Control farmers -6.11 Average treatment effect 7.94

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