Integrating informal milk markets into formal value chains in Eastern and Central Africa

The informal dairy industry in the East and Central Africa region plays a dominant role in milk marketing, handling over 80-90% of all milk sold. The sector provides millions of poor consumers with a nutritious, affordable product and employs thousands of traders and service providers.

Evidence shows that formal milk markets will grow only as household incomes increase, and they are therefore expected to predominate for many years to come, given trends in demand. Besides the price advantage, other factors underlying the high demand are the income and relatively high-value employment.

Pro-actively engaging actors in the informal dairy sector to integrate it into the formal dairy value chain requires both appropriate changes in policy (mind-set and/or written), and developing appropriate policy implementation instruments for relevant institutions. This is necessary because whereas concerned institutions may appreciate the change needed, how to go about it is usually a bottleneck.

This project proposes to develop appropriate milk quality assurance standards and institutional approaches towards integrating informal milk markets into the formal value chains. These approaches will be piloted in the East African Community (EAC) member countries first before adapting them for other countries covered by ASARECA (Association for Strengthening Agricultural Research in Eastern and Central Africa).

The specific approach proposed here involves piloting a training and certification scheme as a dairy business development service. Some countries (e.g. Kenya) have made some progress in this area while others require support to enable them develop and/or adapt such instruments.

The pilot testing is being complemented by dialogue mainly through the East Africa Dairy Regulatory Authorities Council (EADRAC) to pursue options for rationalization and harmonization of dairy policies throughout the region, learning symposia to exchange lessons and assessment of impacts of policy changes.

OUTPUT 1: Appropriate policy implementation instruments for integrating informal milk markets into the formal value chain developed and pilot tested in East Africa

Overall objective: To establish a training and certification dairy business development service (BDS) quality assurance scheme for market chain actors in selected dairy value chains in Tanzania
Specific objectives
  1. Training and certification of BDS scheme designed
  2. Training adapted materials made available for training of market chain actors
  3. Capacity for accreditation and certification developed
  4. Guidelines for quality assurance improved
  5. Trained milk handlers and traders certified
  6. Promotion of training and certification BDS provision
  7. Monitoring and evaluation of the training and certification BDS pilot designed and implemented

OUTPUT 2: Advocacy for appropriate dairy policy implementation facilitated
Overall objective: To facilitate relevant national and regional institutions in Eastern and Central Africa to reach consensus on priority actions to integrate informal milk market chain actors into formal value chains.
Specific objectives
  1. Facilitate dialogue within EADRAC member states and between EADRAC and the EAC secretariat to reach consensus on options for policies, regulations and procedures.
  2. Lobby relevant advocacy groups and policymakers on formulation of a dairy policy (Rwanda).
  3. Lobby relevant advocacy groups and policymakers on development of policy implementation instruments (Tanzania) linked to the training and certification pilot.
  4. Lobby for the enactment of the Kenya dairy policy with other stakeholders.
OUTPUT 3: Dairy policy changes and implementation processes in Eastern and Central Africa analyzed and documented (Focus on a South-South informal dairy symposium)
Overall objective: A symposium to share lessons on opportunities for transforming the informal sector in emerging dairy markets.
Specific objectives
Case studies presented and specific strategies and recommendations developed on the following issues:
  1. Importance of informal dairy sector and quality and safety challenges
  2. Training and certification to improve milk quality and business performance
  3. Informal sector governance: Different models for dairy boards and enabling policy environments
  4. Innovation in products and developing dairy markets
  5. Barriers to transformation of the informal sector and investments for value addition


OUTPUT 4: Assessment of impacts of changes in dairy policy in East Africa

Overall objective: To analyze the complementary initiatives aimed at reducing non-tariff trade barriers (NTBs) and quantifying their welfare impacts.

Specific objectives

  1. Describe the policy initiatives related NTBs since 2004.
  2. Collect relevant data required to measure the extent of NTBs on trade at regional and national levels.
  3. Quantify the regional economic impacts of the policy changes related to NTBs.
  4. Quantify interactions between tariff barriers and NTBs.
  5. Synthesize the information in a regional report.
  6. Disseminate the results of the policy analysis.