A SMALLHOLDER DAIRY FARM BUSINESS CASE IN A DEVELOPING COUNTRY - THE CASE
Sabelo V Nkambule (MSc. Agric Economics)
The initial hypothesis was that smallholder farmers sell all milk produced in the farm to the
informal market. If the hypothesis were true, then TechnoServe would focus on improving
efficiency of existing marketing system and farm productivity. If false, however, TechnoServe
would have to primarily concentrate on establishing a milk marketing model.
Before accepting or rejecting the hypothesis, we studied the current status of 10 smallholder
dairy farming in Shiselweni region - where there are up to 80 diary farmers who could benefit
from TechnoServe’s assistance.
The major finding is that in order for farmers to fully exploit the informal market, milk and sour
milk have to be hauled from surplus areas in small communities to deficit areas in other locations
within the Shiselweni region. Furthermore, excess milk would have to be sold to Parmalat
through a collection center if quality and volume requirements are met.
If a farmer with the potential to manage a milk distribution system could be identified, it is
recommended that TechnoServe should immediately implement the informal market milk
distribution model with the farmer prior to advocating investment in a full-scale cooling center.
If this condition is not met, TechnoServe’s involvement in smallholder dairy farming should be
reconsidered, otherwise it would be like ‘building a house on a weak foundation’.
PURPOSE OF OUR WORK IN DAIRY FARMING
•To improve milk production at all levels; from smallholder farms to
•Increase the number of smallholder and medium scale farms
•Demonstrate the financial viability of milk production to financial
• Interviewed 10 smallholder milk producers in the Shiselweni region
•Visited smallholder milk producers at farms to understand current
production and marketing pr