An overview of dairy development in Tanzania

L.R. Kurwijila

Department of Animal Science and Production, Sokoine University of Agriculture
P.O. Box 3004, Morogoro, Tanzania

Dairy production systems
Animal health services delivery systems
Efficiency and economics of milk production
Milk production, supply and demand

History of organised milk marketing and processing
Current milk marketing and processing
Milk imports

Introduction

Tanzania, with an estimated human population of 29 million, is endowed with 88.6 million hectares of land suitable for agriculture, of which only 6% is currently cropped (MoAC/ SUA/ILRI 1998). About 60 million hectares of rangelands are ideal for livestock but only 40% of these lands can be used for livestock production due to tsetse infestation of the remaining rangelands. The carrying capacity of the rangelands has been estimated at 20 million animal units but in 1996 there were only 16 million animal units (MoAC 1997).

Tanzania has an estimated 3.87 million agricultural households, of which 17% are female headed. Most households (average size = five persons) are dependent on growing crops only, while 4 out of 10 also keep livestock. Only 0.4% of rural households are solely dependent on keeping livestock. Most households keep small herds of livestock (average number being 14). Of the 21 million agricultural household members, approximately 8.7 million (^>10 years old) work full time on the farm.

Although Tanzania ranks third in Africa after Ethiopia and Sudan in size of cattle population, productivity is relatively low. Livestock production as a whole contributes 18% of the total gross domestic product (GDP) and 30% of agricultural GDP. The dairy industry contributes 30% of the livestock GDP, beef contributes 40% and other livestock contribute 30% (MoAC 1997). A recent rapid appraisal study (MoAC/SUA/ILRI 1998) gave an updated assessment of the performance of the Tanzanian dairy industry. The population of livestock in Tanzania in 1995 was estimated at 15.6 million cattle (in about 1.114 million households), 10.7 million goats (in about 1.26 million households), 3.5 million sheep (in about 520 thousand households), 435 thousand pigs and 26 million poultry. Seven regions (Kigoma, Morogoro, Pwani/Dar, Lindi/Mtwara and Ruvuma) have insignificant cattle populations (<5 animals/km²) mostly due to tsetse infestation. Exotic dairy cattle and their crosses numbered about 246 thousand head, which includes estimates for Dar es Salaam but excludes dairy cattle kept in other urban centres.

Milk production has not kept pace with population growth, especially the urban population (Sumberg 1997). Total milk production from indigenous cattle and improved cattle is estimated at 643 thousand tonnes (79%) and 171 thousand tonnes (21%), respectively. Large-scale farms produce only about 30 million litres out of the 171 million litres produced by improved dairy cattle; smallholder cattle produce the rest. Most smallholder production is concentrated in the regions of Arusha and Kilimanjaro where approximately 66% of dairy cattle are located. Per capita milk availability varies widely geographically depending on local cattle populations and seasonally due to feed availability. The overall per capita milk availability is low (20–22 kg/annum) compared with Kenya (80 kg/annum), the average for Africa (35 kg/annum) and the world average (105 kg/annum). Constraints to increased dairy production have been cited in the Agricultural and Livestock Policy Document to be: i) poor nutrition; ii) diseases and parasites; iii) weak extension services; iv) inadequate supply of dairy stocks; v) inadequate research; vi) non-availability of credit services; vii) disorganised milk marketing; and (vii) poor processing facilities.

Against this background of opportunities and constraints, the Agriculture and Livestock Policy sets a target of increasing the per capita supply of milk to 26 kg/annum by the year 2000 implying a dairy herd increase to about 500 thousand head by the same year. To overcome the identified constraints and make use of available opportunities (suitable land, climate, a large cattle population, growing demand for milk and milk products etc.), the dairy industry needs to develop appropriate policies and development strategies within the framework of the macro-economic and the Agricultural and Livestock Policy environment prevailing in Tanzania. Over the years, the overall objectives of Tanzania’s dairy development policy have been attainment of national self-sufficiency in milk and dairy products and contribution to poverty alleviation.

The purpose of this paper is to give an update of the dairy industry in Tanzania including milk production systems, the efficiency and economics of milk production, impact of smallholder production on poverty alleviation, nutrition, the environment, dairy consumption and marketing. The paper concludes by looking at future prospects and constraints.

Milk production and marketing systems in Tanzania

Dairy production systems

A rapid appraisal study identified five dairy production systems that have evolved in Tanzania over time (MoAC/SUA/ILRI 1998). These are:

1. Smallholder dairy farming, integrated with perennial crops like banana and coffee, found in the northern regions (Kilimanjaro/Arusha), Kagera Region in the north-west and the southern highlands of Tanzania.
2. Smallholder dairy farming integrated with annual crops like maize and cereals found in the central part of Tanzania.
3. Specialised medium-scale dairy farms found near big urban centres such as Dar es Salaam, Tanga, Mwanza and Musoma. On these farms with 10 to 50 cows, milk production is the main economic activity. There is little crop cultivation and a limited level of mechanisation.
4. Peri-urban dairy is found in the coastal belt, mainly near Dar es Salaam, Tanga, Morogoro and other urban centres where many civil servants and businessmen have taken up dairying as a means of generating additional income.
5. The traditional, semi-sedentary system, which accounts for 75% of total milk production. However, this sector is relatively forgotten in dairy development policies, which generally aim at the crossbred cattle dairy farming. ‘Because of its size, this sub-sector represents the biggest potential for increasing milk production in Tanzania, yet very little effort has been directed at improving milk offtake from this sub sector’ (Kurwijila 1996; Kurwijila et al. 1997). The Austroproject Association is one of the exceptions, being an organisation that supports this group of mainly Maasai herders, in collecting and marketing their milk.
6. Parastatal large-scale dairy farms. The government through the dairy farming company (DAFCO), operated at least 7 dairy farms with a total of over 3000 dairy cattle. In spite of having the best dairy animals in the country, the performance of the DAFCO farms did not measure up to expectations due to a number of management problems. Milk production declined from 7.5 litres/cow per day in 1982 to 6.7 litres/cow per day in 1994 (Keregero 1988; Mtumwa and Mwasha 1995). Most of these farms have been privatised or are in the process of being privatised.

Animal health services delivery systems

Until recently, the delivery of animal health services was embedded in the agriculture extension system with the government paying for cost of extension personnel, transport and some drugs, especially those used for tick control. Following market liberalisation in the mid-1980s, the veterinary service has been increasingly run by the private sector. The government still pays the salaries of extension veterinary staff, and meets the costs of disease surveillance and vaccinations against epidemic and transboundary diseases such as CBPP (contagious bovine pleuropneumonia) and rinderpest. Due to the poor infrastructure of the animal health delivery system, especially in rural areas, the use of para-veterinary staff is encouraged.

Related to this is delivery of artificial insemination (AI) and breeding services. The government runs a national AI centre at Usaa River in Arusha but the service has not been very efficient with <5000 inseminations being recorded per year. Fully privatised veterinary and AI services are still confined to very few urban and peri-urban centres where farmers are accessible and able to pay for the services. Government policy is to move towards a private sector serviced and government regulated animal health delivery system within the next 10–15 years.

Efficiency and economics of milk production

The competitiveness of any dairy industry depends on the efficiency with which milk is produced. This may be measured in biological terms such as calving intervals, feed conversion efficiency and milk production/cow per day, which translate into cost of production per litre. Smallholder production reveals a similar trend to that shown by data from the Tanga Smallholder Dairy Development Programme (Msanga et al. 2001; Table 1). The general decline in performance of both first lactation heifers and multiparous cows is a reflection of reduction in use of several essential inputs (feeding, veterinary services etc.) and extension services as the number of farmers and cows increases in the dairy development programme.

Table 1. Milk production trend under Tanga Smallholder Development Programme (1990–95).

* LS means = least squares means; SE = standard error.
Adapted from Msanga et al. (2001).

The cost of production varies depending on the production system. It is reported to be lower in the rural based traditional system, where milk fetches as little as 80 Tanzanian shillings (TSh) per litre (US$ 1 = TSh 900 , November 2001), than in urban and peri-urban areas where milk production costs have been estimated to be in the range of TSh 165–200/litre (de Wolf 1999). In the southern highlands, smallholder dairy farmers are reportedly producing milk at TSh 60–80/litre (Mugittu 1999). The value of dairying extends beyond milk sales. Manure and heifers are particularly important outputs of the enterprise, especially in the zero grazing systems of the Kagera and Kilimanjaro coffee/banana economy where manure is ranked second after milk (Silas et al. 1998).

Milk production, supply and demand

Improvements in milk supply in Tanzania have largely been due to increases in cattle numbers rather than increases in productivity. The number of indigenous cattle increased by 20% between 1984 and 1997. The number of crossbred dairy cattle increased from 142 thousand to 250 thousand over the same period (an increase of 6% per annum). Although the improved dairy herd has grown at a rate of 6%, this has not had a big impact on per capita consumption because the dairy herd is still a very small proportion of the total herd. The relative growth rate in urban and peri-urban areas during the same period is reported to have been much higher. In Dar es Salaam, for example, the number of dairy cattle increased from about 2 thousand in 1984 to over 20 thousand by 1995. The spatial distribution of milk supply is skewed in favour of regions with high zebu and/or dairy cattle populations, such as Kilimanjaro, Arusha, Dar es Salaam/Coast, Mara, Mwanza, Kagera, Singida and the major urban centres. This is associated with much higher levels of per capita milk consumption in urban centres (30 litre/annum) than in rural areas (15–20 litres/annum).

It was estimated that by 1998 the traditional livestock sector was producing about 438 million litres of milk per year, while the commercial sector produced 250 million litres of milk. Though the offtake from the dairy herd contributes only about 20% of total milk production, it is estimated that it contributes 95% of the marketed milk. Over the last two decades, total milk production has increased at the relatively low rate of about 2.8% per annum, i.e. the same rate as population growth. Therefore, despite the large number of cattle in Tanzania, production of milk and milk products has not satisfied the demand, particularly in the urban market (Table 2).

Table 2. Milk production and consumption trends in Tanzania 1970–98.

Source: MALDC (1997–98 to 1998–99).

Tanzania’s per capita milk supply of 22 litres/annum is one of the lowest in sub-Saharan Africa. This is partly due to the predominance of the low milk producing zebu cattle (with yields of about 200 kg/annum) and a relatively small improved dairy herd producing below potential (with yields of about 1800 litres/cow per annum versus potential yields of 2500 litres/cow per annum), lack of milk marketing infrastructure, low purchasing power and the cultural food consumption habits of consumers.

According to the MoAC/SUA/ILRI (1998) study estimates, milk demand projections to the year 2010 (based on current consumption levels, urbanisation levels of 5% per annum, a population growth of 2.3% per annum, an overall income elasticity for dairy products of 0.8 and a modest real GDP growth of 1% per annum) indicate that demand could increase by 60% to 1.5 billion litres of milk annually (see Figure 1) or a per capita consumption of 44 and 30 litres/annum, respectively, in urban and rural areas.

Source: MoAC/SUA/ILRI (1998).
Figure 1. Milk demand projections for Tanzania to the year 2010.

Milk production (under the following assumptions: no change in current cattle herd productivity and structure; an increase in zebu cattle population of 1.7% per annum and a dairy herd expansion of 4.6% per annum) would increase by 43% to 1.33 billion litres/annum resulting in a shortfall of some 170 million litres/annum (466 thousand litres/day). Milk production would have to increase at the rate of 3% per annum to keep pace with demand. Should the economic performance of the economy improve by 2% GDP or more, the gap between supply and demand will be even greater, signifying an opportunity for smallholder dairy producers to use dairying as an attractive avenue for poverty alleviation. Policy guidelines are required to enable farmers to fully exploit this potential opportunity.

Milk collection, processing and marketing

Figure 2 illustrates the flow of milk in the Tanzanian market.

Sources: (a) MoAC/SUA/IRLI (1998); (b) Verwer (1999).
Figure 2. The flow of milk in the Tanzanian market.

History of organised milk marketing and processing

Most of the milk produced in the country is consumed at the farm level or sold to neighbours. The government’s policy is, however, to attempt to channel surplus milk to dairy plants for commercial processing, with a view to supplying urban markets with hygienic milk and milk products.

In the past, rural milk collection was organised by the processing plants. A network of collection routes, on the village feeder roads, was established by each plant. On these routes, collection centres equipped with cooling facilities were provided and operated by Tanzania Dairies Limited (TDL). In addition, a number of producers delivered their milk directly to the processing plants, earning a collection fee.

At this time, seven processing plants owned by TDL were processing milk. However, the ability of TDL to collect and process raw milk was very low and with ageing of plant machinery and milk collection infrastructure, the capacity to collect and process raw milk declined drastically over time. The effectiveness of milk collection depended on the availability of adequate transport, road conditions and the operation of milk cooling centres. Due to the ageing of machinery, poor maintenance, frequent breakdown of vehicles and unattractive official producer prices, less milk was collected by the plants leading to low capacity utilisation of the established dairy plants.

The share of local fresh milk processed by TDL reached its highest level in 1979, 14.3 million litres (35.64%) out of a total of 40.1 million litres processed (Lohay 1988). TDL relied heavily on the recombining of World Food Programme (WFP) milk powder and butter oil.

Current milk marketing and processing

The marketing policy has undergone significant changes as part of the overall process of structural adjustment. The marketing of milk and milk products in the formal sector was previously done by TDL, but most of the milk produced was sold directly to consumers. After liberalisation and privatisation of TDL, the private sector has been investing in collection, processing and marketing. This has resulted in improved availability of milk in urban centres and better prices for the producers, although consumer prices remain high.

Some parastatal organisations and private companies have established other small processing units. This has improved the total processing capacity from 290 thousand litres/day under TDL to the current level of 401 thousand litres/day (Table 3). However, the total daily intake is only about 80 to 90 thousand litres/day. During the dry season, milk intake from local sources decreases by as much as 30%. Some processors in Dar es Salaam use imported milk powder to fill the gap.

Table 3. Milk processing plants in existence after privatisation in 1995.

n.a. = data not available.
Updated from Kurwijila et al. (1997).

In spite of these positive developments, the marketing of milk is still dominated by informal milk marketing. It has been reported that less than 10% of milk produced in the country is marketed as processed milk and milk products. The market is highly fragmented. High milk producing areas are situated far away from milk centres in the major urban centres. The range of dairy products on the market is still very limited. Over 90% of the milk marketed informally is sold as raw milk by informal market intermediaries with all the attendant health risks (MoAC/SUA/ILRI 1998). In some towns like Mwanza, Tabora and Shinyanga, itinerant milk vendors supply nearly all the fresh milk consumed (Sumberg 1996; Stewart 2000; SUA/ILRI 2000).

Milk imports

During the 1970s and 1980s Tanzania enjoyed food commodity aid from the WFP, the EU and other bilateral sources. The largest amount of recombined milk received in a year was about 35 million litres of liquid milk equivalent (LME) in 1983 (Lohay 1988) which declined to about 7 million litres LME in 1993. The WFP/EU dairy commodity aid stopped in 1995. Since then milk imports have declined somewhat. In 1999, the Netherlands Economic Institute (NEI) estimated that 5 million litres LME of recombined milk were imported into Tanzania (NEI 1999). A recent detailed study of the Tanzania Revenue Authority’s data on dairy imports into Tanzania has shown that total milk imports between 1995 and 1998 amounted to 109.6 million litres LME, equivalent to 27.4 million litres LME per annum (Verwer 1999). This figure is similar to the TDL total import of 27.9 million litres in 1985. It appears therefore that in response to the market forces prevailing in Tanzania, other importers have moved in to fill the gap left by WFP/EU commodity aid. Currently imports come in through non-governmental organisations (NGOs) and religious organisations, and in the form of emergency relief aid from the EU’s European Commission Humanitarian Office (Verwer 1999).

The official government policy is to allow milk imports as long as proper taxes are paid. Recent outcries from the private milk-processing sector have forced the government to review this policy with a view to reviewing tax regimes vis-à-vis subsidised milk imports to protect the local industry against dumping.

Conclusions

• The dairy industry in Tanzania has come a long way. From the state-owned farms and processing plants of the 1970s and 1980s, the private sector including smallholder farmers is playing an increasingly important role in milk production, processing and marketing.
• Traditional dairy cattle still contribute a significant amount (over 75 of the estimated 886 million litres of milk produced and consumed).
• The contribution of the smallholder production is presently about 30% and is increasing, but accounts for over 85% of marketed milk.
• Total processing capacity is about 400 thousand litres/day, about 67% of the capacity required to supply Tanzania with about 500 thousand litres of milk/day in the 236 million litre/annum milk market. Current actual processing throughput is only about 80–90 thousand litres/day; this is achieved by about a dozen small-scale to medium-scale dairy processing plants.
• The per capita consumption remains low at about 22 litres/annum, but demand is conservatively estimated to grow to 1.33 billion litres, leaving a supply gap of about 170 million litres/annum (466 thousand litres/day) by the year 2010. Imports are currently estimated at 27 million litres LME/annum (74 thousand litres/day) and are projected to increase.
• The prognosis for the future of the dairy industry in Tanzania is good given the way dairying is spreading rapidly to non-traditional dairying areas in response to the economic opportunities it provides to milk producers and the growing domestic market demand.

References

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