January 4, 2011

 

Tanzania's dairy sector grows rapidly amid industry problems

 

 

Though Tanzania's dairy industry is rapidly growing with high potential for milk output, there is a general lack of proper industry approach in its management and underutilisation of its installed capacities.

 

As a result, the industry entrepreneurs are coming in and going out of the sector very frequently. The situation is worsened by lack of capital and poor access to credits as well as lack of information on investment and available marketing opportunities.

 

The country's dairy industry is based in small holder producers, processors and traders with one to five dairy cattle per household, producing between two and 10 litres of milk per day.

 

Small scale producers from the traditional livestock keeping accounts for about 70% of annual production while commercial sector accounts for about 30%. The production units are small and scattered over wide areas and distances from major consumption centres.

 

This is further aggravated by poor transport infrastructure. Experiences elsewhere has shown that collection and marketing requires dairy farmers to be organised in producer groups or cooperative societies so as to take advantage of economies of scale in investments such as milk cooling centres and delivery of services such inputs supplies and extension services.

 

So far the most notable cooperative societies are the Tanga Fresh Limited which is a joint-venture between a group of Dutch farmers and Tanzania farmers cooperative, the Njolifa in Njombe District, which will soon make part of the new Njoluma region. It is run in partnership with Italian people.

 

The technology setback remains among major impediments in the growing dairy sector as well as its contribution to the national economy is still dismal compared to other sectors of the economy. Most of the cattle which are the main livestock species used for production of milk are indigenous, raised for multipurpose objectives.

 

Almost 700,000 are dairy cattle consisting of Friesian, Jersey, Ayrshire breeds and their crosses to the East African Zebu, predominant within the commercial sector. Kenya's dairy industry is one of the most vibrant in East Africa with more than 3.5 million.

 

Data shows that the dairy industry accounts for 1.5% total Gross Domestic Product (GDP) and source of income for over two million families. Industry players said that in order to improve farmers' earnings, cooperatives offer one of the best and most effective systems which can help to increase supply of dairy products to meet both domestic and export markets.

 

In an interview with the 'Daily News' in Dar es Salaam over the weekend, the Registrar and Chief Executive Officer for the Tanzania Dairy Board, Mr Charles Mutagwaba, said although the contribution of the dairy industry to the economy is still minimal, there are concerted efforts to revamp it.

 

He said government interventions in removing the VAT on all equipment used in dairy processing has been a major boost to the industry. "Stakeholders in the dairy industry should make use of the opportunity to increase investment in dairy products," he said.