Smallholder dairying under transactions costs in East Africa
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Permanent link to cite or share this item: http://hdl.handle.net/10568/49907
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In peri-urban areas of the world where cattle are present, dairy farming has typically been part of the adjustment in production patterns of smallholders faced with shrinking arable land, higher population density and rising wage rates. In sub-Saharan Africa, where the economic viability of smallholder agriculture has come under increasing pressure, smallholder peri-urban dairy development has not been widespread outside of the East African highlands. Understanding the nature of constraints limiting smallholder peri-urban dairying so as to promote this activity and improve the livelihoods of smallholders is, therefore, a key public policy issue for African countries. It is argued that dairying is vital to future viability of many small farms in East Africa and that high transactions costs for dairy production and marketing limit participation by asset- and information-poor smallholders. Case studies from Kenya and Ethiopia illustrate the role of dairy cooperatives in reducing transactions costs. Analysis of the determinants of producer prices received by a sample of dairy producers near Addis Ababa suggests that different levels of access to infrastructure, assets, and information explain why they contemporaneously accept widely different producer prices for fluid milk.
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