ANALYSIS OF URBAN AND PERI-URBAN DAIRY MARKETING: THE CASE OF SOUTHERN ZONE OF TIGRAY REGION, ETHIOPIA

Abstract

The study was conducted in Enda-Mekhoni and Raya-Alamata Districts of the Southern Zone of Tigray Region with the specific objectives to analyze factors determining urban and peri-urban dairy producers’ milk market participation, milk sales volume and the choices of milk market outlets. It also analyzed the milk market structure, conduct and performance, and identified the major dairy production and marketing constraints in the study areas. The study used both primary and secondary data sources. Cross-sectional data were collected from 184 urban and peri-urban dairy producers, and 14 milk traders/ business firms, which comprised of two dairy cooperatives, seven cafés/restaurants/hotels and five private milk processors. To analyze data, both descriptive statistics and econometric models were employed. The results of descriptive statistics revealed that 61% of the total sampled households were milk market participants while the remaining 39% were non-participants. Results also confirmed that education level of the head, access to credit, membership to an organization and access to market information were found to be significantly different between milk market participants and non-participants. Analysis of milk market structure also confirmed that the milk markets in the study areas were found to be strongly oligopolistic. The results also revealed that feed shortage, higher cost of crossbreeds, frequent drought, shortage of capital, low productivity of local cows, lack of water, shortage of land and lack of dairy inputs were the major dairy production constraints facing urban and peri-urban dairy producers. Moreover, informal markets, seasonality in milk production and the demand for its products, poor institutional support, lack of marketplace and milk cooling and processing machines, lack of market information, default problem and insufficient dairy cooperatives were among the major dairy marketing constraints in the study areas. Results of the double hurdle model further indicated that education level of the head, market information, distance to market, number of milking cows and farm income significantly determined both the probability of milk market participation and its sales volume. Besides, number of children under six years old significantly influenced milk market participation, whereas volume of milk output, access to credit, access to extension services and membership to an organization significantly affected milk sales volume. Results of the multivariate probit model also show that the household’s decision to the choices of milk market outlets is significantly determined by the household characteristics such as sex of the head, age of the head, education level of the head, family size and number of children below six years old. Moreover, economic and institutional factors such as volume of milk output, membership to an organization, market information, market distance and non/off-farm predominantly determined the likelihood of the household’s decision to the choices of milk market outlets. Results of the econometric models further show that policies and strategies should focus on strengthening and improving the existing market information systems and other institutional arrangements to persistently boost the emerging smallholder farmers’ milk market participation in the study areas. Moreover, local administrative bodies should give due emphasis towards adult education, family planning and the establishment of local milk markets such as dairy cooperatives and milk collection centers to promote sustainable milk market participation through supplying large volume of milk to the formal and modern dairy market outlets