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Small-scale dairy for enhancing income and employment

(by Steven J. Staal, ILRI, Kenya)

Slide 1

Small-scale Dairy for Enhancing Income and Employment

Steven J. Staal
International Livestock Research Institute
FAO-APHCA-AGAP Workshop on Small-Scale Dairy
Chiang Mai
Sept 2004

Slide 2

Outline of presentation

  • Small scale dairy for food, income and employment

    • Competitiveness and economies of scale

    • Nutrients for the land

    • Nutrition for the family

    • Milk markets and consumption in developing countries

  • Comparing large vs small scale systems

  • The Joint FAO-ILRI Small Scale Dairy Program

  • Lessons for Asia

    • The Livestock Revolution

    • Competitiveness of small-scale producers

    • Issues

Slide 3

Characteristics of small-scale dairy production

  • Small scale dairy farms dominate production in most developing countries

    • A few cows, often 2-5

    • Landless, small land holdings, or grazing on larger holdings or on common properties

    • Sometimes intensive, usually low-input low-output

    • Often linked to crops

    • Rely on family labour, but use hired labouras well

Slide 4

Small-scale profitability: Average profit per liter of milk in India

Source: Sharma and Delgado, 2003

Not only family labour: in Kenya
50% of small dairy farms
hire long term labourers

Slide 5

Cattle assets - 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.

  • Financing

    • Sale of animals to meet planned lumpy expenditures

    • Value accrues at sale

  • Insurance

    • Keeping of animals to meet emergency expenditures

    • Value accrues daily Milk revenue Sale of animals

Slide 6

Dairy production's role in sustaining mixed small farming

Slide 7

Scarce nutrients - farm and family

  • Farm nutrients - problem is nutrient deficits, not surpluses (examples from Kenya)

    • only farms with cattle had positive (small) nutrient balances

    • more than 40% of fodder materials gathered from off-farm - nutrient channel

  • Family nutrition - problem is under nutrition, not over nutrition

    • households with cattle have significantly lower % of children exhibiting stunting (height for age) a measure of long-term under nutrition

Slide 8

Traditional dairy markets and actors

  • Informal/unorganised

    • Liquid, often raw, milk and traditional products

    • Sometimes formal - may pay taxes, licenses

    • Wide variety of actors

      • Direct sales

      • Small-scale traders

      • Traditional processors

      • Small-scale retailers

    • Generation of rural/urban employment

Slide 9

Informal dairy markets globally

Informal market share %

S. Asia



Sri Lanka











L. America





Costa Rica




  • Primary market for both small producers and poor consumers

Sources: ILRI Collaborative Research & FAO E-Conference

Slide 10

Large-scale vs small-scale dairy systems



Production profile

Few outputs/objectives, enterprise model

Multiple outputs/objectives, farm-household model

Capital intensive

Labor intensive

Strong economies of scale

Weak economies of scale

Nutrient and nutrition profile

Human over-nutrition, threat to human health (?)

Human under-nutrition, sustaining human health

System nutrient surpluses, threat to environment

System nutrient deficits, sustaining natural resources

Slide 11

Large-scale vs small-scale dairy systems (cont)



Demand and product profile

Value added products, highly processed

Low cost products, traditional processing

High relative demand for food safety/quality

Low relative demand for food safety/quality

Policy profile

Highly regulated and monitored

Largely unregulated, unrecorded

Over-represented: loud voice in domestic and international policy

Invisible: little voice in domestic or international policy

Often subsidized

Few subsidies, may be taxed indirectly

Slide 12

Joint FAO-ILRI Small-scale Dairy Programme

  • Focus on small scale and traditional markets for milk and dairy products

    • Employment in small-scale markets

    • Testing implementation of LPS milk preservation technology in Kenya

    • Identification of milk market losses

    • Developing training materials for small scale milk market agents

    • Developing dairy information platforms

Slide 13

ILRI-FAO study on employment in traditional markets

Number of jobs created per 100 litres milk handled daily

No. of direct full-time jobs

Main milk product

Kenya mobile traders



Bangladesh sweet makers


Traditional sweets

Ghana milk/snack retailer


Milk snacks

  • At least double the no. employed in formal sector

  • More women employed than in formal

Slide 14

ILRI-FAO development of training materials for small scale market agents technology/guideline development

  • Based on ILRI research identifying quality and risk issues in markets

  • Development of appropriate technologies, training and guidelines for small market agents

Slide 15

ILRI-FAO development of dairy information platforms

  • Market level information

    • Web-based information platform for FAO Prevention of Food Losses Project

  • Farm level information

    • Web-based information and decision support platform for ILRI-DFID Dairy Toolbox

  • Exploring options for wider Africa-Asia dairy information platform

Slide 16

Asia now and in near future: the livestock revolution

  • Expanding populations, incomes and urban households across developing countries particularly in Asia

  • This is driving greatly increased demand for livestock products, including milk

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

Slide 17

Percentage increase in total demand for livestock products
1993 - 2020

Slide 18

Dairy productivity growth in Asia:

Sources of change in cow milk production, 1985-1998

% of change in cow's milk production

Asia productivity growth strong in some regions

Source: ILRI using FAO statistics

Slide 19

Can small farmers compete?
Farm efficiency by farm size in India

Source: Sharma and Delgado, 2003

Slide 20

Impact of opportunity costs of labor:

comparison of typical herd size and rural wage rates, 12 selected countries in SSA, Asia and LA

Slide 21

Issues for small-scale dairy in Asia

  • Livestock revolution presents huge opportunities

  • Smallholders can compete, and provide multiple benefits

  • Traditional markets will continue to play large role in South Asia

  • Imports pose threat in SE Asia

Slide 22

Thank you

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