Integrating smallholder dairy farmers into formal milk markets in Tanzania: Key lessons and policy implications

Abstract

There have been remarkable efforts to promote innovation and inclusive value chain development so as to facilitate the integration of smallholder dairy farmers into high value chains. In Tanzania this endeavour has mainly focused on enhancing linkages between small holder dairy farmers and milk processors. This article compares and contrast the way small scale dairy farmer-processor relationships affect chain upgrading in two milk shed areas in Tanzania. Findings reveal that well-managed dairy co-operatives are appropriate means for enhancing horizontal co-ordination in the dairy industry and could be more relevant for achieving the upgrading through efficient and effective management of production and marketing functions to make the entities more competitive and resilient to market shocks. Ensuring dedicated technical support towards identifying appropriate business models for more effective engagement with milk processors and other chain actors is the best strategy to enhance the performance of dairy co-operatives and promote farmers’ linkage to milk processing plants. The findings show that value chain champions can leverage livestock extension services and support smallholder dairy farmers to upgrade. Interventions pioneered by value chain champions are seen to be more effective when geared towards self-selected and committed dairy farmers than generic interventions targeting all smallholder dairy farmers.