Economics of milk marketing in the Dar es Salaam region

Abstract

This paper reports the results of a field survey covering all links in the channels of milk marketing from producers to milk market agents in Dar-es-Salaam. The survey is part of a research project whose aim is to improve the welfare of smallholder dairy producers, processors, market agents and consumers by strategically identifying efficient and viable mechanisms and processes which deliver safe, consumers-preferred dairy products at low cost, and which provide higher and more reliable returns to smallholder dairy producers. The objective of this paper is to investigate the mechanisms and economics of milk marketing in Dar es Salaam with a view to assess the prospects and constraints existing in the system. Data on milk procurement, handling, sales, prices and associated variable and fixed costs were collected from 258 respondents composed of producers, vendors, collection centres and hawkers. Structure-Conduct-Performance analytical approach was used to assess the milk marketing channels. The survey revealed a highly competitive nature of milk marketing in Dar-es-Salaam where the number of middlemen compete in the procurement and sale of milk, leaving no room for monopoly and monopsony behaviour. The milk marketing business in Dar es Salaam has substantial returns and offers an important income opportunity for both producers and market agents. On the other hand the survey reveals that the system is seriously constrained by inefficient collection system, poor milk handling and processing techniques, which renders much milk spoiled and may result in reduced financial return in the long run. The findings of the survey suggest that returns to the producers and market agents as well as consumers satisfaction could be improved through adoption of improved milk handling and processing techniques, and improved marketing skills that can compete with beverages such as juices and soda.