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Workshop: Opportunities in the lucrative dairy sector underutilised

WHILE Tanzania has a competitive advantage of a large livestock sector, opportunities within the dairy sector are still underutilized.

The coordinator of the private sector desk in the Ministry of Livestock and Fisheries Stephen Michael says that dairy is a key sector in Tanzania, contributing 30 per cent of domestic production in the livestock sector and about 1.2 per cent of national Gross Domestic Product (GDP).

The government has prioritized the dairy sector as a driver of industrialisation, food and nutrition security and income.

Addressing a one-day workshop organised by the Agricultural Non State Actors Forum (ANSAF) in collaboration with TrustAfrica and the Ministry of Livestock and Fisheries held in Morogoro Region recently, Michael said that productivity remains the biggest challenge in the sector limiting potential growth, particularly for smallholders.

He said the stakeholder’s workshop aimed at sharing research findings and provide an opportunity for them to critically appraise the policy environment and investment situation in the livestock sector and at the same time explore prospects for developing collaborative advocacy work for better outcome.

According to him, weak consumption plus raw milk input supply leads to poor processor utilization, driving down profitability to smallholder farmers.

“The government in collaboration with diary stakeholders has planned to come up with strategies to improve the sector as a driver to industrialisation, food and nutrition, security and income to smallholder producers with the aim of increasing productivity, quality of the sector,” he said.

According to research findings, strong demand should be viable, but to strengthen the sector and drive processor utilisation interventions are needed to unlock demand potential.

The research study aimed at conducting a sector analysis, including price, cost, revenue, profitability and human capital chains in Tanzania’s dairy sector, with the aim of advocating changes through critical analysis and evidences.

Acting Director for Livestock Crop, Safety and Nutrition Gabriel Bura said that a supportive diary industry policy is necessary to ensure that the sector achieves positive influence outcomes in low income households.

He said that in spite of a rapid increase in the number of small scale milk producers and expanding demand for milk in Tanzania, dairy industry in the country seems to be lagging behind. National milk consumption is insufficient when compared to neighbours, saying this is according to World Health Organisation (WHO) guidelines.

Farmer productivity is low as such, low volume of output leads to impaired livelihoods even with a higher farm gate price. Inefficiencies across the value chain drive up viable prices for unprocessed milk and eventually processed milk, including high costs of packaging and transport, and poor infrastructure.

Weak consumption plus insufficient raw milk input supply leads to poor processor utilisation, driving down profitability. Deogratius Mlay of the Tanzania Dairy Board said that productivity remains the biggest challenge in the sector, limiting potential growth, particularly for smallholder farmers.

At the workshop various stakeholders urged the government to put more efforts in investing in the sectors to boost production to small producers.

Germana Laswai from Sokoine University of Agriculture (SUA) said that the diary sector should be improved by collaborating stakeholders, farmers and process with government in setting reasonable price to farmers and processors.

“There is the need to improve diary industry to achieve industrialization agenda. The government should put in place a good environment for farmers to increase production and for the benefit of national economy,” he said. Significant extra demand should be possible in Tanzania, consumption is below WHO recommended volumes of 200 litres per capital and regional average of 74 litres per capital.

Driving sufficient demand in Tanzania will require intervention to address today’s low levels of consumption and prevalence of unprocessed milk sales. He pointed out that improving productivity for farmers, will lead to lower overall costs per litre and higher farmer incomes.

Although a price floor for milk may appear appealing, output rather than yield is the greater sensitivity driver of farmer livelihoods. Low levels of utilisation driven by a combination of market uncertainty (given low demand) combined with difficulty sourcing sufficient quantity of inputs.

Tanzania’s dairy sector comprises primarily of smallscale producers producing low volumes of milk for domestic consumption. The livestock sector contributes 7.6 per cent to GDP where 30 per cent of the livestock sector GDP comes from the dairy value chain.

Currently Tanzania produces over 2.7 billion litres of milk, since 2008, dairy production has grown on an average of 5.3 per cent per annul. The value chain is dominated by small-scale producers primarily producing milk for domestic consumption.

In addition to local production, Tanzania imports about 24 million litres of liquid milk, in 2016 Local demand for unprocessed milk is low, with milk consumption per capital estimated at 49 litres, while FAO recommends per capital consumption of 200 litres.

Tanzania’s dairy sector has experienced steady growth over the past decade, with the indigenous breeds contributing 70 per cent of the total production. Milk production has been increasing in the country over the last decade primarily due to increased cattle population.

Production from improved breeds has also increased over recent years. National consumption for milk is low relative to neighbours and WHO guidelines, while informal sales capturing a significant share of demand. He said unlike neighbouring East African countries,

Tanzania does not have milk drinking consumption culture, where processors have been taking steps to drive demand, including promoting school milk drinking programmes, but utilisation is still low. The Project Manager from Nronga Women Dairy Cooperative, Ms Helen Usiri said that high prices, limited transport and storage costs are among challenges facing the dairy sector in Tanzania.

“We need support from the government and livestock stakeholders to push the sector for industrialisation. We want to have reasonable prices that would help to boost the sector for the development of all users and for economic benefits,” Ms Usiri emphasized.

SPEAKING with groups of company Chief Executive Officers ...

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Author: FATMA ABDU

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