Milk producers' choices of dairy marketing channels: case studies of Mali and Cameroon

In sub-Saharan Africa, local milk production is increasingly gaining attention and support as a poverty alleviator, an employment creator, and a key to strengthening food security and self-sufficiency. Therefore, milk producers play a major role in the development of dairy supply chains to African cities, especially in light of the rapid population growth, urbanization, and rural exodus happening on the continent. However, most activities within the dairy sector occur in informal settings where transactions take place outside formal arrangements, i.e. they are unregistered, unregulated, and unsupervised. The informal marketing channels are generally free of quality protocols and hygiene standards, creating issues of food safety and traceability for consumers. Many local and international initiatives have invested in the creation and promotion of formal marketing channels in sub-Saharan Africa, especially for perishable products such as milk. Yet, informal channels remain the predominant marketing outlets for dairy producers. Understanding producers’ choice of formal and/or informal channels can provide guidance to ongoing and future projects that wish to engage local producers in the formal supply chains. This dissertation sheds light on the rationales of urban and peri-urban dairy producers in two sub-Saharan African cities and identifies factors that influence their marketing decisions. In the cities of Bamako (Mali) and Bamenda (Cameroon), milk is produced in both urban and peri-urban areas. In 2017 and 2018, fieldwork was conducted in both locations to gather information from households who produced and sold milk in the last year. While both economies bear resemblances, it became apparent that their dairy sectors differed greatly. In Bamenda, the formal dairy market had completely disappeared half a year prior to fieldwork, when the last milk processing center closed its doors. Consequently, the analyses for Bamako and Bamenda are distinct but both focus on milk producers’ choices vis-à-vis their dairy markets. For the case of Bamako, both formal and informal marketing channels were present. This dissertation first presents a marketing channel choice analysis based on producers’ characteristics, production systems, and institutional factors. A bivariate probit model with sample selection allows us to investigate the determinants that affect 165 milk producers’ decision to use the formal marketing channel and then the intensity at which the formal marketing channel is used. Subsequently, a mixed-methods approach is used to examine the incentives of each marketing channel and quantify the respective transaction and socio-cultural costs associated. These studies present some policy implications for the development of formal marketing channels, which have the potential to ensure greater quantities and safer milk to Malians. For the case of Bamenda, we explored milk producers’ choice to remain in the milk business after the departure of the formal marketing channel. In total, 320 households were interviewed, of which 198 were still selling milk and 122 had stopped after the closure of the milk processing center. We used logit models to identify the farm-level determinants that potentially explain dairy producers’ choice of approach and also looked into the shortcomings of the remaining informal channel. Since the dairy sector in Bamenda is characterized by two main groups, i.e. pastoral/traditional “Mbororo” producers and sedentary/semi-intensive “Grassfielder” producers, our analysis and results revealed general as well as group-specific effects. This research also highlights some valuable lessons about risk-behaviors of smallholders and shortsighted development policies. Despite their disparities, both case studies are reviewed and compared in the dissertation’s discussion. To a reasonable extent, our results from Mali and Cameroon are broadened to general (and increasingly pressing) issues of local milk production and dairy marketing in sub-Saharan Africa.