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Milk production and marketing in Tanga Region: Efficiency of farmer co-operatives versus private sector1

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Milk production and marketing in Tanga Region: Efficiency of farmer co-operatives versus private sector1


1. Introduction
2. Extension service
3. Assistance by TechnoServe
4. Observations and discussion.
5. Suggestions and conclusion
Reference


Zylstra2 L., Lyimo3 C., and Rutamu4 I.

2&4 Tanga Smallholder Dairy Development Programme
P.O. Box 1474 Tanga.
3 Dairy Practical Training Centre - Buhuri
P.O. Box 1483 Tanga.

Key words: Tanga region, milk marketing, cooperatives, dairy smallholder

Abstract

In Tanga region, a fast expanding smallholder dairy production sub-sector has evolved in mid-eighties to cater for an unsatisfied demand for milk and milk products in urban and peri-urban areas. With increasing herd in the region, surplus milk has to find access to a market for dairy development to be successful and sustainable. This paper examines the position of dairy production and marketing in Tanga region to-date and discusses the efficiency of farmer cooperatives, pros and cons, the role of private sector in milk marketing and gives suggestions for further improvement.

1. Introduction

Tanga Region, in the north eastern part of Tanzania, has a total area of 26,870 sq km, whereby 75 % is arable land, while 18 % is cultivated. Tanga region has a fairly distributed rainfall (average 1223 mm/year) except for Handeni District (875 mm/year). The average household size is 5.1. while the population density is 47 people per sq km. The rural and urban population is 85 % and 15 % respectively (National Population Census, 1988).

Tanga Region has six Districts, ie Handeni, Lushoto, Tanga, Muheza, Korogwe and Pangani.

Tanga region like many other regions in Tanzania has no history of keeping dairy cattle. In late seventies and early eighties there were several large scale dairy farms such as Azimio, Mgwisha, Kange Buhuri and Tanga Dairy. Most of these farms were heavily financed by Dutch Government (SDEP, 1990). However by mid and late eighties more support was given to small scale dairy farmers because they were more efficient than the parastatal owned large scale farms.

When the Small Holder Dairy Extension Project (SDEP) now transformed into Tanga Small Holder Dairy Development Programme (TSDDP) started in 1985, it served five (5) reporting farmers, who owned seven (7) dairy cattle and were advised by three (3) dairy extensionists and 2 senior staff (Swai et al, 1992). At this moment the picture looks quite different after a steady expansion of the programme. Currently 35 extensionists provide service to 1850 reporting farmers with 5800 dairy cattle. These figures exclude few large scale farms operating at a very low level and farmers not reporting to the programme as well as pastoralists.

Such a dramatic expansion was made possible through enthusiasm of the farmers and by the support provided by the Royal Netherlands government, and the World Food Programme (WFP).

To have a strong dairy industry in any place, there is a necessary minimum level of infrastructural development. In this case a stable extension service, sufficient drug and vet services, availability of, good quality heifers and bulls, cattle feed supply and a efficient milk marketing system. If such specific inputs are available and if final markets provide farmers with good and reliable prices it is assumed that production will take care of itself. It is further assumed that a critical mass of dairy farmers is needed in order to encourage entrepreneurs to supply infrastructure on a sustainable basis. This critical mass should include medium scale and business oriented farmers who will benefit low income producers by stimulating the provision of essential services at reasonable prices.

2. Extension service

The government provides staff of sufficient quality. The programme supports the staff by providing working gear, short updating courses and seminars.

Crossbred heifers.

Formerly the programme depended on Mruazi Heifer Breeding Unit for heifer supply. However in recent years the quality of Mruazi heifers deteriorated tremendously. As a result the programme decided to buy heifers from other sources such as private smallholder farmers within and outside the programme area as well as Kenya. In addition, agreements were made with other two commercial farms (Mkwaja and Mzeri) to produce crossbred heifers.

Artificial Insemination (AI).

A study done by TSDDP and reported by Rutamu et al, 1994 indicate that the present level of dairy industry development do not support a commercially run AI service. Nevertheless, AI is practised in Tanga Urban, with the aim of producing good quality bulls for distribution to the rural areas. Bull mothers are selected on milk production traits, while imported, progeny tested, semen is used. Male off-springs are sold to individual farmers for slightly subsidized prices.

Cattle feed supply

After the failure of Government Institutions like National Milling Cooperation to supply cattle feeds the programme contracted private entrepreneurs to supply cattle feeds, which appears to be a very profitable trade.

Veterinary Services

In recent years the government withdrew and later declared that it will not deal with routine marketing of veterinary drugs. Although some practitioners started on their own, TSDDP encourage others by providing a short loan as a working capital.

Milk marketing in Tanga Region:

How could there be a milk marketing problem in Tanga Region when the region harbours a multi million dollar Tanzania Dairies Limited (T.D.L.) dairy plant with a capacity of 40,000 Itr. per day?

It may have been the parastatal structure, the management that claimed there was no market for milk in Tanga or the expensive over capacity that caused dairy farmers not to rely on TDL as a secure market outlet. Whatever the reason dairy farming without a secure market outlet is a rather useless activity.

Under the wings of the programme (TSDDP) the first milk collecting centre in Amani came into operation in 1991. The collected milk was delivered to TDL-Tanga although the TDL milk price was modest. Farmers in other programme areas organised themselves in order to start milk collection. Presently five primary cooperative societies of dairy farmers form the apex organisation - Tanga Dairies Cooperative Union (TDCU) Three years were spent on negotiations on taking-over the partly cannibalised TDL dairy plant. The negotiations went through periods of high hopes and deep despairs and the end results was nil. In June '94 TDL - Tanga took the unilateral decision not to receive farmers milk any longer.

In this emergency situation the hardly organised TDCU, with guidance of TSDDP and TechnoServe, started coordinating the milk marketing. A building was hired in Tanga and from July onwards milk is collected in Shume, Lushoto, Muheza, Amani and Tanga.

Operational Results July-December, 1994 and Jan. 1995

1. (a) Milk intake (kgs)

COOPERATIVE

JULY-DEC., 1994

JAN., 1995

UWAMA - Amani

136,851.5

24,882.5

CHAWAMU - Muheza

153,669.5

31,797.0

UWATA - Tanga

268,748.9

63,736.0

UWALU - Lushoto

19,575.0

6,403.0

UWASHU - Shume

49,779.0

7,054.0

UWAKO - KOROGWE

-

-

MADAFCO - Maramba

-

-

WAWAPA - Pangani

-

-

TOTAL

628,620.9

133,872.5

(b) Income and expenditure (TDCU)

 

JULY-DEC. 1994

JAN. 1995

Sales

169,029,470.90

41,235,610.00

Variable cost

114,538,468.30

35,915,577.20

Gross Profit

24,491,002.60

5,320,032.80

Operational costs

27,693,208.20

4,913,654.85

Net Profit

(3,202,205.40)

406,377.95

2. Current milk prices.Tsh/ per Itr.

(a) Buying

 

TDCU

FARMER

UWAMA

170

160

CHAWAMU

170

160

UWATA

175 + 28 bonus

172 + 28 bonus

UWALU

-

130

UWASHU

-

130

(b) Selling

Fresh milk (DSM)

= 250/-

Fresh milk Tanga

= 220/-

Cultured milk (0.5 litre)

= 140/- whole sale

Cultured milk (0.5 litre)

= 150/- retail

Cultured milk (unpacked)

= 130/-

3. Assistance by TechnoServe

The Arusha based American NGO, Technoserve (TNS) was hired on a one year contract to train committees of primary societies, guide the TDCU organisation and activities and make sure a uniform bookkeeping system is introduced. The contract between TSDDP and TNS was not extended.

Organisational structure

The idea is that each primary cooperative operates the milk collection centre (MCC) independently. If a local market exists, the milk collection centre also sells to consumers directly. The apex organisation TDCU takes the responsibility to market all surplus milk.

So far TDCU processes 'surplus' milk into cultured milk and sells milk to Dar es Salaam. TDCU is still too young to have established a proper management structure. In order to deal with daily management and marketing problems a Technical Committee was called into existence. The Technical Committee is formed by the chairmen of the three 'surplus' producing MCCs, the Regional Livestock Development Officer, the Project Adviser of TSDDP and the manager of TDCU So far the Technical Committee meets weekly. Criticism on the existence of the Technical Committee is that a Technical Committee is not part of the official cooperative structure. Milk marketing however needs strong, decisive and knowledgable management. Elected committee members can so far not provide this necessities.

Ownership issues

TSDDP has a hire-purchase contract with TDCU for the milk cooling and processing equipment financed by TSDDP (US $ 55,000). Equipment remains property of TSDDP till full payment is effected.

TDCU will officially own the milk collecting centre's financed by WFP and TSDDP. Primary societies can also rent a building from other parties or construct a centre at their own cost and consequently own it.

TDCU rents buildings and equipment to the primary societies (rent payment on monthly bases).

Staff position.

TDCU:

- Manager (1)
- Watchman (2)
- Milk sales/ Milk processing (6)
- Dutch student dairy technology (temporary) (1)

Average staff position Milk Collecting Centres.

- Milk reception/Milk sales (3)
- Watchman (2)

4. Observations and discussion.

- In most cases committee members are elected on grounds of their status in the community and not on the basis of their dairy farmers's skills or commercial in-sight.

- Often committee members have not enough been exposed to larger scale commercial activities and therefore lack experience to oversee capital intensive milk marketing activities.

- The division between the responsibilities of the hired management and the committee is not clear.

- The hired management has often not enough freedom to act. Interference of unskilled committee members delays progress.

- A groups of people has its own dynamics; status, suspicion, jealousy tend to overrule commercial principles.

- A 'successful' coop. activity attracts uninvited interference. TDCU had to deal with an inefficient coop. department, the health department, the tax department and last but not least, a revolting farmers committee.

- Without the pushy 'unofficial' Technical committee the results of the milk marketing activities would not be there.

5. Suggestions and conclusion

An organisation like TDCU can only be efficient when the management has freedom to act. The owners of TDCU, the farmers, should lay out the policy and make certain the control on the management (e.g. by hiring external accountants/experts).

If TDCU can not guarantee stronger, decisive independent management, which follows the TDCU policy, then the TDCU milk marketing activities will prove to be unsustainable. In that case another form of organisation, which can ensure an un interrupted management will have to be found. Possibilities are: TDCU remains owner and agrees on a management contract with a private party; TDCU sells the whole business to a private party; TDCU is transformed into a trust or any other organisational form which ensures stability in policy and management.

Reference

National Population Census, 1988

Rutamu, I.B, Minja F.N, Munster B.H M.v, Schoonman, L., Swai, E. and Zylstra, L. 1994. The Sustainability of heifer in trust credit scheme: The Tanga experience. TSAP CONFERENCE -ARUSHA, August, 1994.

S.D.E.P Progress Report 1989/Year Plan 1990

Swai, E., Minja, F.N., and Zylstra, 1. 1992 . A case study on Smallholder Dairy Development Programme in Tanga. Workshop on Future of Livestock Industries in Eastern and Southern Africa. Harare July 1992.

DISCUSSION

Q. F.P. Lekule

First I would like to commend the Tanza group for the excellent work on record keeping & evaluation which is necessary for project evaluation.

I would like to ask a question regarding metching resources to livestock numbers. Normally when a project starts the performance improves overtime but eventually performance goes down as feed resources become limiting. How do you ensure that you do not supply more animals that will outstrip the resources.

Response:

Infrastructural development is important: ie. drugs, marketing, roads, feeds etc. Once the infrastructure is in place, then farmers can keep as many animals as they can afford.

Q. Wilson Mteti

Why did the Tanga people decide to use the Cooperative Societies act to establish Dairy Cooperative Societies & Union, instead of the Dairy Industry Act No. 82 of 1965 (cap 598) which is much more clear and elaborate on the Dairy Industry.

Response:

No answer. The presenters know nothing about the Dairy Industry Act.

Q. Dr. Ghamunga Sudi

Formation of primary Cooperatives and The Tanga Dairy Cooperative Union have been formed by the Project. When will the farmers feel free to run these organisations since farmers would feel they belong to the project and the project will not last for ever.

Response

The project is under the Regional Livestock Development Officer has played 100% role in the formation of Cooperatives but farmers should control the management of the purchasing, processing and sale of milk products.

Q. Dr. Gary Mullins,

Does the fact that TDCU is selling 3000 Its of milk every other day to Dar es Salaam Does it mean that the Tanga milk market is saturated?

Response:

Milk is being sent to Dar es Salaam because that is where the best market is located. There is still room for expansion of the milk market in Tanga.

Q. Antony Okwenye

It was stated that since July 1994 TDCU has been involved in milk marketing almost by accident, what was TDCU supposed to do in the first place.

Response:

TDCU was expected to take over TDL and to develop a milk collection infrastructure in addition to other duties.


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