Developing and strengthening Dairy value chains in Tanzania: What are critical success factors? Kurwijila ,L.R. Department of Animal, Aquaculture & Range Sciences Sokoine University of Agriculture 08/06/2019 Tanzania Dairy Development Conference, 30 May 2018 2018, Arusha Tanzania

Presentation Outline Introduction Current status of dairy industry in Tanzania Milk production Seasonality Milk marketing Milk processing Milk consumption and demand Dairy Industry Development challenges Opportunities for dairy Development Key success factors and prioritisation of interventions Conclusion 08/06/2019 Tanzania Dairy Development Conference, 30 May 2018 2018, Arusha Tanzania

Introduction … Dairy Development efforts/initiatives (1980-1990s). Dairy industry contribution: 30% of the livestock GDP or 1.2% of total national GDP) and food and nutrition security (47 litres per capita) (TLMI, 2015, MALF, 2016). Employment generation (farm production, marketing and trade; processing, retailing, inputs supply and advisory services) Wealth creation ( 350,000-450,000 Tshs per milking cow per year Industrialisation (185 MCC, 82 factories) Dairy Development efforts/initiatives (1980-1990s). 08/06/2019 Tanzania Dairy Development Conference, 30 May 2018 2018, Arusha Tanzania

Introduction Tanzania has a huge cattle population (28 Million). 782,995 dairy cattle (2016/2017); 1.104 million 2018 Dairy cattle concentrated in the cool, highland regions (48%) 08/06/2019 Tanzania Dairy Development Conference, 30 May 2018 2018, Arusha Tanzania

Cattle distribution 08/06/2019 Tanzania Dairy Development Conference, 30 May 2018 2018, Arusha Tanzania

Status of dairy Industry Milk production increasing slowly due mainly to increase in cattle numbers rather than productivity per cow 08/06/2019 Tanzania Dairy Development Conference, 30 May 2018 2018, Arusha Tanzania

Milk production milk production highly seasonal especially from traditional cattle herds 08/06/2019 Tanzania Dairy Development Conference, 30 May 2018 2018, Arusha Tanzania

Milk marketing challenges Milk marketing outlets (NBS, 2003) Milk Buyer % % milk Vol. Neighbours 86.1 85.8 Local market 5.5 5.9 Secondary market 0.5 3.2 Processors 1.4 2.9 Large scale farms 0.2 0.9 Trader at farm 4.5 0.7 Other 1.7 0.6 TOTAL 100.0 Dominant direct milk sales to consumers by producers create diseconomies of scale Challenge how do we convert the 97% “raw milk” consumers to processed milk consumers? 08/06/2019 Tanzania Dairy Development Conference, 30 May 2018 2018, Arusha Tanzania

Milk marketing challenges- inadequate milk collection infrastructure source :TDB data 2012; ( - )=+ incomplete data 08/06/2019 Tanzania Dairy Development Conference, 30 May 2018 2018, Arusha Tanzania

Inadequate milk collection vis à vis processing investments 08/06/2019 Tanzania Dairy Development Conference, 30 May 2018 2018, Arusha Tanzania

Milk processing Challenge: many small scale processing units. A challenge or strength or opportunity? Should we consolidate small units into bigger ones ; example of Klimanjaro?? 08/06/2019 Tanzania Dairy Development Conference, 30 May 2018 2018, Arusha Tanzania

Milk processing in Tanzania… 82 milk plants processing 154,100 liters per day out of 757,550 litres/day liters per day of installed capacity (2018). Under capacity utilization is a challenge for local processors 08/06/2019 Tanzania Dairy Development Conference, 30 May 2018 2018, Arusha Tanzania

Many processing plants.. but Low capacity utilisation= high unit cost & uncompetitiveness 08/06/2019 Meatu Milk Factory Expansion Feasibility Report

Consumer demand analysis Market for processed milk and milk products estimated at 112,771,374 litres per annum including imports (68,775,066 litres-ESRF/TAMPA 2016 study); 2014 Total Milk processed (l/day) 166,620 Less: Azam Dairies 45,000 Local milk processed (l/day) 121,620 Local milk processed (l/yr) 44,391,300 Add: total milk imports (l/yr) 68,775,066 Total Supply of marketable milk (l/yr) 113,166,366 Less: Exports 394,992 Total Domestic Consumption processed milk & Milk products(Demand)(l/yr) 112,771,374 08/06/2019 Tanzania Dairy Development Conference, 30 May 2018 2018, Arusha Tanzania

Opportunity: Meeting the demand supply gap Projections indicate demand to 2020 outstrips supply Source: SUA/MoAC/ILRI, 1998 Dairying in EA is the most important agric. sector commodity for GDP gains in the medium term (ASARECA/IFPRI report) 08/06/2019 Tanzania Dairy Development Conference, 30 May 2018 2018, Arusha Tanzania

The competition Informal market: A competition? Competition from imports is high (61%) of the domestic market) Locally produced products command a very low share (<30%) of all value added products. the leading 5 processing companies in terms of liters of milk processed per day, account for 57per cent of the total amount of milk processed per day 08/06/2019 Tanzania Dairy Development Conference, 30 May 2018 2018, Arusha Tanzania

The Competition Import source countries include regional leading countries such as KE, UG, ZA and European countries, Middle East Countries 08/06/2019 Tanzania Dairy Development Conference, 30 May 2018 2018, Arusha Tanzania

Challenges to growing the dairy industry Dairy heifers: 11,000 vs demand for 80,000 per annum Inadequate feed supply in both quality and quantity Inadequate and inefficient extension services Inadequate milk collection infrastructure. Inadequate technical capacities in human resources at various levels Weak farmer and other stakeholder institutions High cost of doing business /unfriendly policies/regulatory environment 08/06/2019 Tanzania Dairy Development Conference, 30 May 2018 2018, Arusha Tanzania

Opportunities Increasing and urbanizing population High economic growth of 6-7% in the last 10-15 years Large indigenous cattle population which provides a foundation for crossbreeding of dairy cattle Available idle capacity in milk processing Political stability and peace 08/06/2019 Tanzania Dairy Development Conference, 30 May 2018 2018, Arusha Tanzania

Critical success factors Critical success factors include having high number of dairy animals kept by a significant number of well skilled and dedicated farmers who have access to modern technologies, are well organised and supported by efficient extension service delivery , access to credit, inputs and output markets and a friendly policy and regulatory environment. 08/06/2019 Tanzania Dairy Development Conference, 30 May 2018 2018, Arusha Tanzania

Conclusion Dairy development in Tanzania is promising but facing a number of challenges that need to be addressed on the basis of critical success factors that include technical, organisational , policy and regulatory issues. 08/06/2019 Tanzania Dairy Development Conference, 30 May 2018 2018, Arusha Tanzania

Thank you for you attention 08/06/2019 Tanzania Dairy Development Conference, 30 May 2018 2018, Arusha Tanzania