Background

In both India and East Africa some 80-90% of milk is handled by the informal, un-organized dairy sector. This is a major source of employment for poor farmers, traditional processors, transporters and vendors and an important source of low cost but high quality animal protein for poor consumers.

To place these markets in context, it should be noted that India now has the world’s largest dairy industry and the 80% share handled by the informal sector is approximately equivalent in volume to the entire dairy industry of the USA.

Some 100 million rural farmers are employed in dairy in India, most depending on the informal sector to market their milk, which is estimated to employ a further 2 million people as vendors, traders and traditional processors.

In Kenya, which has the largest dairy herd in Africa, including South Africa, about 1.6 million rural smallholder households depend on dairy production for their main livelihood, and dairy is the largest agricultural sub-sector by contribution to GDP, larger than horticulture, tea or coffee. Again, the large majority of these producers depend on the informal sector market, which employs over 30,000 people along the supply chain.

Livelihoods

Despite their immense contribution to livelihoods, informal milk marketing systems have historically suffered neglect and opposition from decision-makers and development agents, often because of concerns over quality and safety.

Attempts to impose modern cold-chain and pasteurization based systems have more often than not failed due to high costs they impose on consumers and producers, and unreliable electricity, infrastructure and maintenance.

Yet the need remains to upgrade informal milk market systems to improve quality and safety at a time of increasing consumer attention, and to preserve the multiple livelihoods linked to them. But recent years have seen exciting change and new opportunities.

In East Africa recognition of the informal dairy sector is now well established, and decision-makers and development agents in the region have begun to engage in a proactive, constructive manner to upgrade informal milk markets.

Innovative approaches

Innovative approaches include a training and certification scheme for milk traders led by the Kenya Dairy Board; collaboration between the Uganda Dairy Development Authority and a development project to develop similar services and entrench them within milk marketing hubs managed by farmer groups; and a recent similar initiative from the Tanzanian Dairy Board project in collaboration with regional researchers.

Research associated with these initiatives has shown that such schemes not only improve the quality of milk supplied, but also lower the trader transaction costs and thus price of milk to consumers, and improve the price paid to producers.

In India, where the informal milk sector is the largest in the world, there is a small but growing appreciation that more constructive engagement with this sector may be needed.

A project led by Capitalization of Livestock Programme Experiences India in Andhra Pradesh was the first to test approaches to train and develop the capacity of small milk traders, typically ignored and without any training in milk handling or hygiene.

Nationally, there is increased realization that the co-operative model, highly successful in some places, is not universally applicable which has led not just to the growth of the formal private sector, but also experimentation with new models for organizing producers to link more effectively with the dominant informal sector. Recently, research has suggested the potential of the largely neglected traditional unorganized dairy sector.

In northeast India in particular, where Anand-model co-operative schemes initiated in the 1980s have systematically failed, and only 3% of locally produced milk enters any formal market channel, a model of demand-driven training and certification of the dominant small-scale traders and traditional cottage processors is being explored, linked to social marketing to enhance demand for quality milk. This is being undertaken in close collaboration with state decision-makers, NGOs, farmer and trader associations and researchers.

In East Africa key players have been meeting regularly over the last three years to share lessons on these issues under an association formed to facilitate exchange of new approaches and to harmonize policies, the East Africa Dairy Regulators Association Council (EADRAC).

With the nascent development of awareness in India of possibilities for upgrading informal markets, this South-South Dairy Symposium was envisaged as an important event to allow the sharing of lessons with key players from East Africa engaged in similar milk marketing systems, which would be of immense benefit to both sides and the researchers involved.

Learning interactions between Indian and East African dairy actors have, in the past, addressed production and marketing by smallholders (in a 2001 South-South event), but not explicitly the commercial and policy issues surrounding the informal sector.