Making the Most of Human Capital in the
Tropics
Options in Dairy Processing and Marketing
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Given the important objective of providing livelihoods
to resource-poor people in developing countries, ILRI and its partners
measure the efficiency of dairy processing and marketing in both economic and
employment terms.
Given the important objective of providing livelihoods to resource-poor
people in developing countries, ILRI and its partners measure the efficiency
of dairy processing and marketing in both economic and employment terms.
Full-time jobs created per 100 litres of milk processed or handled in
developed countries look something like the following (these figures are
based on contributions in 2000 to Dairy Outlook):
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Country
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Jobs created per 100 litres of milk
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Belgium
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0.07
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New Zealand
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0.02
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Netherlands
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0.04
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In the Kenyan 'formal' dairy industry (pasteurized and packaged), we found
that about 0.2 to 0.4 jobs were generated per 100 litres handled daily.
However, in the 'informal' sector in both Kenya
and Tanzania
(raw milk handled by small vendors), the figure ranges from 2-3 people
employed full time for each 100 litres of milk handled daily. Further, we
found that the wages they are able to earn through milk vending are 50 to
100% higher than the national average, and well over the minimum wage.
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In the Kenyan 'formal' dairy industry (pasteurized and packaged), we found that
about 0.2 to 0.4 jobs were generated per 100 litres handled daily. However, in
the 'informal' sector in both Kenya
and Tanzania
(raw milk handled by small vendors), the figure ranges from 2-3 people employed
full time for each 100 litres of milk handled daily. Further, we found that the
wages they are able to earn through milk vending are 50 to 100% higher than the
national average, and well over the minimum wage.
In terms of economic efficiency, the informal sector still scores better, by
imposing a much smaller margin between the producer and consumer prices. The
informal sector in Kenya
pays a price to farmers that is up to 65% more than
that paid by processors, and consumers pay 20 to 50% less per litre for raw
milk than they pay for pasteurized, packaged milk. These are, of course,
different products: consumers boil milk before consumption to remove health
risks and prolong shelf-life, the costs of which would have to be added to the
price they pay.
We have thus found that in areas where people are resource-poor and so can't
pay high prices for processed milk, where opportunity costs for labour and
employment options are low, and where people traditionally prefer whole raw
milk, policies towards milk marketing need to weigh the potential benefits to
consumers of pasteurized milk channels against the potential benefits of
employment through raw milk channels (among other costs and benefits), where
more than 10 times the number of jobs can be created per unit of milk.
INTERNATIONAL LIVESTOCK RESEARCH
INSTITUTE
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Research in animal agriculture to reduce hunger, poverty and environmental
degradation in developing countries.
Box 30709, Nairobi, Kenya Phone
(254-20) 422-3000 Fax (254-20) 422-3001 Email ILRI-Kenya@cgiar.org
Web www.ilri.org