Module 4 - Smallholder Dairy Production

Smallholder dairy production is common in many parts of the developing world, providing an important source of nutrition and income to millions of households. Income from such production often accrues to women, who use it to provide better nutrition and education for their children. Projections for future growth in demand for livestock products show good growth prospects for the dairy industry. Public support is often needed to put in place appropriate policies, establish marketing chains, and provide services for growth of smallholder dairying.

Globally, there are about 300 million rural and periurban poor whose livelihoods depend on the daily income and nutrition they receive from milk production. In India, about 40 million landless poor families get a major part of their income from milk. Since there are fewer economies of scale involved in dairy production than in some other livestock production systems, the strong concentration of production evident in the pig and poultry sector is not yet seen in the dairy sector. Markets in developing countries are secure, as demand for milk and milk products is expected to increase by more than 3 percent annually over the next 10 to 20 years (Delgado et al. 1999). Per capita milk consumption will then still be only one-fourth of the per capita consumption in the industrial countries.

Smallholder Dairy Development

Smallholder dairy production takes many forms and is often combined with cottage industry (small household) processing activities. Smallholder dairy production is mostly carried out by the family, with some very limited hired labor. Examples of smallholder dairy production are the mixed farms in Central America with 25 cattle; small mixed farms in the highlands of Ethiopia with one or two cows; rice farms in the Punjab of India with 10 buffaloes; and Sahelian pastoralists with herds of up to 100 animals.

Although future regional market developments are difficult to predict, it seems that developing countries have a good chance of benefiting from new market opportunities. Milk production growth in developed countries is constrained by limited land and water availability and increasingly by strict environmental legislation and reforms in subsidies provided to the dairy industry. Because of the comparative advantage of temperate climates, production expansion is most likely to come from North America, the Southern Cone of South America, and areas such as the Ukraine, though there remain opportunities for growth in other areas, such as China, India, and East Africa (box 4.12).