Presentation by Isabelle Baltenweck to the 6th African Dairy Conference & Exhibition, Kigali, Rwanda, May 19-21, 2010.

1. Competitiveness of smallholder dairy farmers in East Africa ESADA Conference, Kigali, 19th May 2010 Isabelle Baltenweck International Livestock Research Institute

2. Issues Small scale dairy farms dominate production in most developing countries, including in East Africa Can they compete internationally? What factors influence competitiveness? What is competitiveness?

3. Outline Increasing demand for milk and smallholders’ opportunities to meet the demand Importance of smallholders in total livestock (milk) production Dairy: milk.. and other benefits Competitiveness: prices and costs of production Conclusions 3

4. The near future: the Livestock Revolution Expanding populations, incomes and urban households across developing countries particularly in Asia This is driving increased demand for livestock products, including milk Much greater demand growth than for most crop products

5. Percentage Increase in Total Demand for Livestock Products 1993 – 2020 Developed countries Developing countries % increase in demand

7. Increase in production will thus occur mostly near where increase in demand occurs

8. As a consequence, Developing Countries will produce 52% of global milk in 2020, up from 32% in 1993

12. Home consumption

13. Display of status

14. Insurance & financingNon-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)

15. Key Dairy Markets mostly Informal 10 Traditional 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

17. Competitiveness: farm- gate prices 13 Average milk prices by buyer ($ cent per litre)- 2008 data

18. Competitiveness: costs of producing milk (US$) 14 IFCN data: globally, average cost of milk production ranges from $0.14 to $0.60, with weighted average of $0.28. Africa has the lowest and Western Europe the highest costs.

19. Breakdown of various costs Labour constitutes the highest cost of production in Uganda & Rwanda, while animal health cost takes the largest share in Kenya

20. 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 Employment Both on farm and along supply chain Livelihoods Assets and nutrients

22. Improving economies of scale (e.g. through collective action)

23. Access to services and appropriate technologies

24. Improving infrastructure