Sunday, 18 March 2012

Pro-poor development vs protecting local industries - dairy in Southern and East Africa

Dairy industry players in Zambia are very concerned that the government is about to lift the ban on imports of milk, allowing cheap milk from Kenya and, to a lesser extent South Africa, to flood into the country. The poultry industry recently endured a similar tariff-removal shock and the agricultural community appears very unsettled. Zambian producers argue that they should be protected because it costs less to produce milk in Kenya because Kenya has better weather and environmental conditions.

It's a tough question. A lot of money has been invested over the past couple of decades to integrate smallholder producers into the dairy value chain in Kenya. Thousands and thousands of smallholder farmers produce milk that is collected and sold commercially. So, dairy is providing incomes, decent livelihoods and local economic development for the rural poor - a large and particularly vulnerable group in almost any sub-Saharan African country. And growing the market could provide an opportunity for even more people to build away from poverty. Unlike South Africa, where the dairy industry has in the past few years been overrun by the large multinational dairy companies squeezing family-farm producers to the point of bankruptcy, Kenya's dairy industry seems to be relatively pro-poor.

So, if Kenya is better-suited to produce milk than Zambia, as the Zambian producers argue, and Kenya's dairy value chain is pro-poor, expanding the Kenyan market share to include Zambia might be a good thing for poor people. But it will severely undermine the dairy industry in Zambia. But Zambia's dairy industry doesn't seem particularly pro-poor. In fact smallholder farmers in Zambia face a different struggle for access to markets for their produce (e.g. vegetables) because South African supermarkets have a strangle-hold on the retail sector and buy pretty much exclusively from South Africa.

It seems that it would be in the interests of smallholder farmer development and poverty alleviation in the region, not to mention Zambian consumers, to lift the trade barriers and allow Kenyan milk into Zambia. At the same time, perhaps Zambia should be considering protecting smallholder vegetable producers from South African imports?

Southern Africa (and East Africa, as Zambia falls on the overlap of the two) is a region of mostly small countries with small economies and crises of overwhelmingly rural poverty. Market-led, government supported development along the lines of integrating an increasing number of poor people into the market system (employment, small business development, etc.) is currently focused within countries. But markets doesn't stay within countries when the countries are small and trade is essential to survival, so how can pro-poor development in agriculture be limited to attempting to protect all domestic producers. If the region is to develop in a way that does not perpetuate and spread the ridiculous inequality that plagues South Africa and Namibia, a more regional perspective has got to be introduced with regard to smallholder farmers and what industries to support.

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