Overview of the Tanzanian dairy industry challenges and opportunities

Charles M.D. Mutagwaba

CLEANED Project East Africa Stakeholder Consultation on Dairy and Environment Nairobi, Kenya, 18 September 2013

DAIRY DEVELOPMENT HISTORY1961-1965 private commercial farms and

processing plants dominated the industry. Farmers owned 25 – 40% shares in the milk processing plants which were run by zonal dairy Boards

1965 a dairy industry law was enacted that created a government controlled national dairy Board (NDB). The Board operated until 1973.

• 1974 a Livestock Development Authority (LIDA) was established and two subsidiary companies DAFCO and TDL were among several subsidiary companies that were established under LIDA.

• In mid 1980’s - The economic liberalization of the public institutions which led to privatization of all seven TDL milk processing plants.

• 1998 nearly all milk plants and some DAFCO farms as well had been privatized.

• Informal milk marketing of milk continued to dominate the market for liquid milk

• 1998 during the 2nd NDDC held in Arusha observed that the industry was uncoordinated and poorly organized need an organ or a Board as the Dairy Industry Act Cap 590 of 1965 was moribund and, there was no national institution to regulate and co-ordinate the orderly development of the industry.

• 2004 the dairy industry bill was enacted and provides for a dairy board

MILK PRODUCTION• Total milk production 2010/11

reported to 1.92 billion lts.(MLFD 2012/13)

• Total number of cattle 22.8 million (MLFD 2012/13)

• Number of improved Dairy cattle is about 740,000 kept by about 218,418 HH and produce 30% of total milk produced (NBS)

• 70% of total milk produced comes from local cattle kept by an estimated 1.6 million HH

…Milk production contd

• 70% of milk produced by traditional sector, 90% consumed on farm and 10 % sold (8% in informal market and 2% in formal market)

• 30% of milk produced from ‘dairy herd’, 30% consumed at home and 70% sold (60% informal market and 10% formal market)

Dairy Production systems

• Extensive, traditional cattle systems- Low input-low output system

• Intensive smallholder dairying

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Dairy Production Systems

• Large scale institutional and private commercial farms account for about 25 -30,000 dairy cattle and about 2-5% of milk production

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Cattle distribution• Seven

regions (SHY, MA, AR, TB, SG, MY, MR) account for 65% of total cattle population; MZ has >100 cattle /km2!

After Kurwijila, 2010

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Dairy cattle distribution

• Dairy cattle are concentrated in the cool highland regions of Kilimanjaro and Arusha, Southern Highlands (Mbeya and Iringa), as well as Tanga and Kagera

• Milk processing installations follow where improved cattle are

After Kurwijila, 2010

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Milk processing

Product movement

• Milk processing is mostly done ya Small units ..

• capacity ranging from 500 – 50,000 lt per day

• There 62 dairy processing units

• Milk processing capacity 380,500 lts/day

• Actual processing around 130,400 lts/day

After Kurwijila, 2010

MILK PROCESSING• Capacity utilisation 30% • Range of products - Fresh (20%),Mala (70%), Ghee

(7%), Siagi (2%) Jibini (1%)• Therefore, there is a shortage of value added

products• Shortage of value added products is covered by

imports• Tanzania imported US$ 5.0million worth of value

added products in 2006/07• IMPORTS: 25-30 million Liquid milk equivalents i.e.

For every packet of locally processed milk on Tanzania supermarket, there is one packet of imported milk!!

MILK CONSUMPTION

• Per capita milk consumption 45.0 lts/annum

• Recommended level is 200 lts per head per annum.

SUMMARY• Milk production generally low due

shortage of dairy cattle,• Seasonality in Milk Production (37-60%)

during the dry season• Very little milk gets collected and

processed due to unorganised farmers and scatterness of production units

• Per capita milk consumption very low, due to low production, high cost, and poor marketing

Challenges facing dairy value chains• Milk production relies on rain fed

agriculture and leading to huge seasonal fluctuations in production esp. from traditional herds

• Basing milk processing on traditional herd only not sustainable/competitive

• Diseases such as tick borne diseases that kill up to 40% of calves if regular spraying /dipping is not done

• Long calving intervals due to poor breeding practices

• Low milk production density makes milk collection uneconomical

• Poor milk handling equipment

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Dry season feeding of dairy cattle

Intensive fodder production based on napier/ guatemala and

Leguminous fodder trees such leuceana leaf meal supplementation

Hay making In plastic bag silage making Utilisation of crop residues

(India’s example!!) Adopting farmers Milk production

increased from 5-6 to 12 to 18 litres per cow per day.

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STRATEGIES NEEDED TO IMPROVE PERFORMANCE OF THE DAIRY

SECTOR

Strategy 1: increase milk production

- Improving skills of farmers on hygienic milk production and better animal husbandry. Farmer training using EA harmonised training manuals being

undertaken in Tanzania.

- Improving genetic potential of animals to increase production per cow. AI facilities being established in zonal centres in Tanzania

- Assuring milk market by improving milk collection and prompt payment for the milk. Milk pockets studies being undertaken to locate areas with collectable milk

Strategy 2: Improve milk processing

- Improving availability of finance for long term low interest loans- Investment in milk collection centres and transportation facilities- Market development by introducing new products- Lobby for favourable dairy business environment

Strategy 3: Expand market for dairy products

- Conducting regular milk promotion events

- Conduct generic and brand advertising in all media

- Start School milk feeding programme

Strategy 4: Strengthen dairy development institutions

• Strengthen grassroots farmers organisations

• Strengthening the Tanzania Dairy Board

• Strengthening the stakeholder organisations e.g. TAMPRODA and TAMPA at all levels for a stronger private sector public sector partnership

Strategy 4: CONTD

• Strengthen regional groups e.g. EADRAC (East African Dairy Regulatory Authorities Council) to be able to handle regional trade disputes before getting out of control

• Initiate regional milk products consumption promotion events to expand market for value added products.

Conclusions• There is no doubt, in my view, that

successful dairy production, processing and marketing is possible in many regions in Tanzania if the right approaches and required support for smallholders can be made

• Dairying can transform the lives of the poor faster than any other commodity.

• Attention to the entire value chain is important for success

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THANK YOU FOR YOUR ATTENTION