Cover Image
close this bookStrategies for market orientation of small scale milk producers and their organisations. Proceedings of a worshop held at Mogororo Hotel, Mogororo, Tanzania, 20-24 March 1995. (1995)
close this folderOpening session
close this folderMarket orientation of small scale milk producers. Background and global issues
View the document(introduction...)
View the document1. Introduction
View the document2. Urbanisation and economic growth
View the document3. Demand and market - the link between producer and consumer
View the document5. How to promote a market oriented development - of the very complex dairy sector?

2. Urbanisation and economic growth

Urban populations in developing countries are expanding and expected to more than double by 2025 (see figure 5). Moreover, by 2025 it is expected that more than 50 % of the world's population will be living in cities of more than one million people. The exodus from rural to urban areas is most prominent in developing countries, as the industrialized countries have already reached this level of urbanization through a continuous development over the last century.


The effects of this urbanization are multiple. Rapidly-growing urban demand will be the major factor in shaping development of livestock production and marketing in the coming years. A significant increase in production, processing and marketing efficiency will be required to meet this rising demand from domestic resources. In the past, livestock development had not adequately taken the urban market into account and the interventions had not been market or demand driven but largely focused on production technology only. No major studies have been carried out to ascertain what opportunities, challenges or negative impacts urbanisation presents for animal agriculture and associated milk and meat marketing nor for the possibility of food security and food self-sufficiency, which is a priority for most developing countries. Food production is already insufficient to satisfy the needs of most parts of the developing world. For example in Africa, projections indicate a deficit widening from 14 million tonnes of food in 1990 to 125 million tonnes in 2025 (IFPRI, 1992).

Urban markets for food generally require a wide range of products, from expensive value-added foods to low cost commodities for lower income groups - see also figure 6. Livestock products fit into the upper end of the spectrum and consumption of these products rises with income. However, the high nutritive value of animal products should not be overlooked as they constitute an important source of vitamin, minerals and amino acids. Animal products should be seen as an important supplement to complement the diet of poor people, which is frequently based on one or two food crops.

Only in few developing countries have the meat and dairy industries reached a state of development to respond to the enormous challenge of providing safe, nutritious and regular supplies of livestock products to their rapidly expanding urban populations. Many developing countries have not been able to set up handling and processing facilities to cope with the fast pace of development at the urban level. Because they have not been able to convert local agricultural products into suitable foods for distribution in the cities, the food industry has depended increasingly on imported materials or products. Independent small-scale producers lack the economic strength to negotiate favourable terms for their business. Therefore, the means and ways to support farmer's organizations (societies, associations, cooperatives and unions as well as traditional community organizations) will have to be carefully addressed for the future benefit of farmers and the domestic livestock production.

Figure 6.

In recent years we have, however, seen a reduced role of imports of dairy commodities; the outlook is that this reduction will continue in the future. There are a number of reasons for the change in the role of dairy imports. Most importantly, there is a reduction in surplus dairy products in Western Europe and USA which, because of a change in policy and prices have increased. Food aid in the form of dairy commodities will not be as common and "dumping" of dairy products will occur more infrequently than in the past. A normalized exchange rate and the removal of subsidises in many developing countries has also increased the price on imported goods and made them relatively expensive. A growing interest in local milk production and to supply the market has become evident, although there is still a substantial import of dairy products in many African countries to satisfy the demand, mainly from the rapidly growing urban centres.

The high import has in the past encouraged governments (and donors) to invest in large scale milk production and industrial dairy plants around the major cities to supply the urban population with modem dairy products - Western style . These plants have, however, continued to depend on imported commodities for recombination and in most cases only a small part (in Tanzania less than 1 %) of the total dairy output was marketed through the large commercial processing plants operated by government parastatals. The provision of modem equipment to developing countries (without secured supply of spare parts and other services) has been a most wasteful feature of many development programmes. The system made little effort to promote an increased milk supply from rural small holders to the industrial plants. The traditional sector provided most of the total production. However, virtually nothing was channelled through the commercial factories but marketed and consumed within the local community. The traditional sector has, notwithstanding its major contribution to total milk production, been neglected. The rapidly growing demand in the expanding urban populations presents a great potential for development of the local dairy sector also because increased output will be absorbed by the market and not have a negative influence on the price

The rapidly growing urban populations in developing countries represent a strong demand for meat and milk now and in the future - a demand which could be met by developing the domestic resources in the majority of countries. This would benefit rural development and poverty alleviation through the creation of employment and income within the livestock sector and the service industry. Such an improvement of rural living conditions could possibly prevent, or at least reduce, migration of rural people to already overcrowded cities.