Milk marketing and processing options for smallholder dairy co-operative organisations: The case of Serengeti and Mwakaleli dairy co-operatives in Tanzania.

1. Introduction
2. The Serengeti dairy co-operative society, Bunda district
3. The Mwakaleli dairy co-operative society (MDCS)
4. Conclusions
5. Acknowledgement

R.L. Kurwijila,
Dairy Technology Laboratory,
Department of Animal Science and Production,
Sokoine University of Agriculture,
Morogoro, Tanzania.

1. Introduction

The co-operative movement in Tanzania has traditionally been based on the major cash crops, namely cotton and coffee. The co-operative movement has undergone upheavals in the post independence era. The most significant was the abolishment of all co-operative unions in 1975 in favour of state managed crop authorities. Co-operatives were re-established in 1984. They retained their traditional roles until when the new Co-operative Act of 1991 was put in force. The new law for the first time provided for formation of commodity related co-operatives. Since then livestock farmers in various parts of the country have strived to form primary co-operative societies related to livestock production and marketing. Most of them are still in their infancy if not formative stages. The Mwakaleli Dairy Co-operative Society (MDCS) in Rungwe District of Mbeya Region in the southern Highlands of Tanzania belongs to this group. .

On the other hand the Serengeti Dairy Co-operative Society (SDCS) at Bunda on the shores of Lake Victoria provides an example of an association that was formed as early as 1966 and survived the upheavals of the co-operative movement in Tanzania and is still operative to date. These two primary co-operatives provide contrasting examples of dairy co-operatives. While Serengeti dairy cooperative is based on marketing milk from the mixed farming, marginal land based traditional livestock keepers, Mwakaleli dairy co-operative Society is based on intensive, small holder dairy producers owning purebred and crossbred dairy cattle reared in a highly populated, high agricultural potential highland area.

While both are involved in milk marketing, Serengeti dairy co-operative is more merchant oriented and less development oriented than the Mwakaleli Dairy co-operative Society in their outlook towards the business of milk production and marketing.

The purpose of this paper is to give an in-depth analysis of the milk marketing and processing potentials for the two contrasting situations. The analysis is based on data gathered by the author through outreach activities related to dairy industry operations in Tanzania in the last five years. It is hoped that the rationale of proposed activity options may be adaptively applied in, similar situations elsewhere in Tanzania and in Eastern and Southern Africa.

2. The Serengeti dairy co-operative society, Bunda district

Bunda forms the South-Western part of Mara region. The District has three administrative divisions: Serengeti, Kenkombyo and Nansimo bordering Ukerewe Island on the Eastern shores of Lake Victoria. The district has a total of 276 villages. It is made up of largely flat land lying about 1200 metres above sea level.

The Mwanza-Musoma tarmac road passes through the district at Bunda town - the district headquarters. Other all weather roads include the Bunda - Kisorya road (89 km) and the Bunda Nyamswa - Ikizu road. Bunda town is thus accessible by bus and other motoriscd transport throughout the year.

The district has a population of about 230,000 people of which 90% live in the rural areas and increasing at a rate of 2.7%.

2.1 Cattle population and milk production potential

The cattle population is predominantly of zebu type. Table 1 shows the cattle distribution and projections by divisions according to the 1984 Livestock census.

Table 1: Cattle population by Divisions in Bunda District (1984 Census)

Division	Cattle population
	1984	1992	2000
Serengeti	148,605	100,000	124,000
Kenkombyo	21,507	40,000	60,000
Nansimo	16,989	30,000	40,000
Total	187,101	170,000	224,000

Source: MALD (1984)

Due to cattle migrations from the Kenyan border which occurred in the recent past, Serengeti was estimated to have lost about 50,000 head of cattle while Kenkombyo and Nansimo have attracted most of the immigrating cows. Cattle populations are estimated to be increasing at the rate of about 1% reaching 224,000 by the year 2000.

The District had about 50 head of improved dairy cattle around Bunda town by 1992. The Heifer Project International (HPI) started efforts in 1992 to introduced 10 heifers through the Lutheran Church at Bunda and distributed them on the basis of the Heifer in Trust Scheme (HIT). Ten animals were to be distributed to 10 farmers each year over the next three years. Overall the population of improved dairy cattle is negligible implying that traditional cattle provide >99% of raw milk supplies in the district. The Serengeti Dairy Co-operative Society has not directed efforts towards modernizing milk production, concerning themselves instead with collecting milk from its members and non members alike. Thus, the milk production potential remains little developed to date.

2.2 Milk production

On the basis of the cattle population, the estimated milk production in 1984, 1992 and projections for the year 2000 are shown in Table 2.

Table 2: Annual milk production projections in Bunda District.

Division	Milk Production
	1984	1992	2000
Serengeti	2,775,200	1,867,500	2,315,700
Kenkombyo	401,640	747,000	1,120,500
Nansimo	317,269	560,520	747,000
Total	3,494,109	3,174,750	4,183,200

The estimated amount of milk produced in the District was about 3.2 million litres in 1992 or a per capita supply of 14 litres per annum for the district.

2.3 SDCS Milk Marketing and Processing Activities

Since its formation SDCS has bought milk for bulking and sale without any further processing. The only form of processing carried out is production of naturally fermented milk which is sold at the same price as the raw milk. The society carries out its activities in a rented building and has managed to buy a 7 ton Isuzu lorry on credit and repaid the credit on schedule.

Table 3 shows the society's milk collection record during 1989/1990 for which data is available. The milk collection figures at Bunda also show a strong seasonal variation indicating feed availability as the single most important factor limiting milk production from the traditional zebu cattle.

2.4 Problems of the Society

Although the society has established an organised, self sustaining milk collection and marketing systems at Bunda, the society is facing strong competition from milk vendors, who are operating at Bunda in disregard of the societies by-laws which prohibited such practice. Worse still most of the milk vendors allegedly, diluted milk with water and sold it to unsuspecting consumers.

Although the society has lactometers to check for adulteration for milk brought by various milk supplies, the District Health Department lacked regular control of quality of milk sold by milk vendors in Bunda town.

Table 3: Serengeti Dairy Co-operative milk collection record 1990/1991.

Month	Total (pints)	Daily average (pints)	% total
89 April	33871	1129	13
May	36326	1172	14
June	40154	1338	15
July	21993	709	8
August	4485	145	2
September	1815	59	0.7
October	1103	36	0.4
November	7906	264	3
December	24522	791	9
90 January	39847	1285	15
February	32891	1134	12
March	19415	626	7
	264,328		99.1

*Less than 100% because of recording up.

2.5 Options for milk collection processing and marketing systems in Bunda District.

Bunda town lies in an area which was previously served by Tanzania Dairy Limited milk collection system and cooling centres which are currently unoperational. There is thus a considerable number of farmers for whom TDL once offered a reliable outlet for their surplus milk but now this is no longer the case.

Interviews held with the District Dairy Extension Officer revealed that since the collapse of TDL milk collection system, milk vendors have been very active bringing in milk from areas such as:

- Gutta on the Bunda Kisorya road;
- Migungani
- Bunda store
- Mcharo
- Manyamanyama
- Tamau and
- Balibi

Milk vendors operate only within a 20 km radius along good roads. The rest of the milk shed is left unattended. This include supplies from a number of villages such as:

A number of villages such as:

- Zangeta
- Kinyambwiga and
- Kabassa were cited as having milk disposal problems particularly during the rainy season.

These villages can only be reached by a 4WD vehicle during the rainy season.

The existing Serengeti Dairy Co-operative Society provides a firm basis on which to operate a decentralised milk marketing and processing system. The activities of the Serengeti Dairy Cooperative Society can be enhanced to serve more farmers by enabling it to:

a) Widen its milk collection radius around Bunda town. Currently farmers bring milk on foot and by bicycles. Also some hawkers have been contracted to deliver milk to the society. In order to make it an attractive outlet for milk the society, had effective September 1, 1991. increased its producer price of milk to 100 shs per litre from 40sh per litre (20 sh per pint).

b) Acquire milk cooling facilities in order to accumulate enough quantities for delivery to TDL/s Musoma dairy plant (if this is revived) or

c) Acquire milk cooling, and processing equipment for cream separation, ghee preparation, fermented milk manufacture and possibly milk pasteurization in bulk quantities.

2.6 Viability of Dairy Co-operative milk marketing and processing at Bunda.

Option 1: Milk collection and cooling, selling some raw milk in Bunda, delivering excess milk to TDL.

Milk collection:

- Society member suppliers
- Milk collection agents - bicycles
- Society's own vehicle - 4WD pick up.

Milk cooling - TDL relocates one of its serviceable cooling unit to Bunda for hire to SDCs.

The estimated milk production in the district is 3.2 million litres (Table 2). Assuming as for Musoma that 1/3 of the morning milk (30% of the total milk) is available for marketing gives 1,000,000 million litres per annum.

Presently the co-operative society gets up to 132,000 litres of milk per annum (Table 2) which is 17% of the estimated marketable milk. It should be possible for the society to capture at least 20% of the marketable milk if the following measures are adopted (pre-requisites).

1) All milk vendors, whether supplying milk to the society or not, are subjected to a milk quality control inspection. at prescribed milk testing points placed strategically on all major routes entering Bunda.

2) The society sub-contracts individual milk vendors to supply milk by providing them with bicycles and four, 15 litres milk cans which eventually become their property if they continuously render such service for a specified minimum period (eg. 4 years).

3) The society acquires a versatile 4WD pick-up vehicle for milk deliveries to TDL Musoma plant. This will widen its milk collection radius beyond the 20 km limit in which milk vendors are likely to continue to operate.

If the society can capture at least 20% of the marketable milk surplus, this will mean an annual in flow of milk in the tune of 384,000 litres of milk per annum distributed as shown in Table 4.

Table: 4: Projected milk supply to Bunda co-operative society

Month	%	Milk supply by 1997
		Per annum	Per day
April	13	49,920	1664
May	14	53,760	1734
June	15	57,600	1920
July	8	30,720	991
August	2	7,680	256
September	1	3,840	128
October	1	3,840	128
November	3.	11,520	372
December	9	34,560	1115
January	15	57,500	1920
February	12	46,080	1588
March	7	26,880	867
Total	100	384,000

From the Table 4 it appears that milk deliveries to Musoma may be done economically. only from December to July. From August to November because of the small quantities available, all milk collection should be distributed within Bunda town.

Table 5 shows the equipment and labour that would be required to run activities of a small scale milk procesing unit at SDCS

Table 5: Inputs required for SDCS at 1992 prices

Equipment Inputs required	Estimated Cost
Purchase of milk cans (401) 30*@ 30,000/=	900,000
Purchase 10 bicycles @ 35,000/=	350,000
Purchase 40, milk cans (151) @ 20,000/=	8,000,000
Purchase 1 4WD pickup vehicle	800,000
Complete one processing Hall	1,500,000
Cooling machine installation	300,000
Subtotal	11,850,000
Labour input
1 Manager @ 15,000 x 12	180,000
1 Technicians @ 10,000 x 12	120,000
1 Driver @ 8,000 x 12	96,000
1 Cleaner @ 6,000 x 12	72,000
1 Watchman @ 5,000 x 12	60,000
Subtotal 2	528,000
Grand total	12,378,000

*SDCS has already about 30 milk cans
SDCS will borrow the money on soft term loan (20% interest)

Table 6: Projected Milk sales at SDCS at 1992 prices

Month	Milk purchases per day (Litres)	Value per month (T.shs)	Milk sales per day (litres)	Value of milk sales @ 120/= litre (T.Shs)
April	1664	4,992,000	1660	5,976,000
May	1734	5,375,400	1730	6,435,600
June	1920	5,760,000	1920	6,912,000
July	991	3,072,100	990	3,682,800
August	256	793,600	250	930,000
September	128	38,400	125	450,000
October	128	38,400	125	450,000
November	372	111,600	370	1,332,000
December	1115	3,456,500	1110	4,129,200
January	1920	5,952,000	1920	6,912,000
February	1588	4,605,200	1580	5,498,400
March	867	2,687,700	860	3,199,200
		38,232,900		45,907,200

Table 7: Cash flow analysis for milk collection, cooling and marketing at Bunda

Month	April	May	June	July	Aug	Sept	Oct	Nov	Dec	Jan	Fob	March
Revenue	5976000	6435600	6912000	3682800	930000	450000	450000	1332000	4129200	6912000	5498400	3199200 = 45907200
Running costs
Milk purchase	3993600	4300320	4608000	2457680	634880	307200	307200	892800	2765200	4761600	3684160	2150160
Salaries	528000	528000	528000	528000	528000	528000	528000	528000	528000	528000	528000	528000
Loan interest	300000	300000	300000	300000	300000	300000	300000	300000	300000	300000	300000	300000
Cooling centre running costs	50000	50000	50000	50000	50000	50000	50000	50000	50000	50000	50000	50000
Depreciation Building Equipment	100000	100000	100000	100000	100000	100000	100000	100000	100000	100000	100000	100000
Total costs	4971600	5278320	5586000	3435680	1612890	1285200	1285200	1870800	3743200	5739600	4662160	03128160
Net cash (low	100-1400	1157280	1326000	247120	-682890	-835200	-835200	-538800	386000	1172400	836240	71040

Option 2: Milk collection, cooling, cream separation, butter production/ghee making, cultured milk production pasteurized milk (3.2% BF standardised).

The product mix

In the event that SDCS continues to operate completely independent of any TDL operations, then a small scale milk processing plant could be set up at Bunda.

In view of the fluctuating milk supply the product mix will have to be changing according to availability of milk. Table 7 shows what could be done throughout the year.

Table 8: Product mix at SDCS milk collection and processing plant.

Month	Milk available		Product mix
			Ghee %	Sour milk %	3.2% BF Fresh milk %
April	1664	-	24	6	70
May	1734	-	24	6	70
June	1920	-	24	6	70
July	991	-	24	6	90
August	256	-	30	0	70
September	128	-	30	0	70
October	128	-	30	0	70
November	372	-	30	0	70
December	1115	-	24	6	70
January	1920	-	24	6	70
February	1588	-	24	6	70
March	867	-	24	6	70

From the above product mix the quantity of milk to be used in the production of different products would be as shown in Table 8.

The rationale of the product mix is as follows:

- When "plenty" of milk is available at least 70% should be directed to liquid milk output required by children, women and other nutritionally vulnerable groups.

- The amount of cream separated and therefore ghee produced will depend on the amount of skim milk required in the standardization of milk from 4.5% BF to 3.2% butterfat which is roughly 7 parts whole milk and 3 parts skim milk.

Production of sour milk should be suspended during August to November when raw milk supplies arc lowest.

On the basis of the quantities of milk available for the manufacture of the different products, the quantities of milk required will be as shown in Table 9. The quantity of ghee, sour milk and liquid milk processed will be as shown in Table 10.

The assumptions used to arrive at the product quantities are:

a) 7 litres of skim milk and 1 litre cream arc obtained from the separation of 8 litres raw milk.

b) 25 litres of raw milk produce 1kg of ghee

c) Skim milk produced is mixed with the raw milk in roughly 3:7 ratio to produce standardised liquid milk of 3.2% BF.

d) If ghee is made via butter there will be sour buttermilk as a by-product at the rate of 1.8 litres Buttermilk for every 1 kg ghee or 1.5 litres Buttermilk if allowance is made for wastage.

Table 9: Quantities of raw milk to be used for different product manufacture.

Months	Milk available	Quantity of milk for
		Ghee	Sour milk	Liquid milk
April	1664	400	100	1164
May	1734	416	104	1214
June	1920	461	115	1344
July	991	238	59	694
August	256	77	-	179
September	128	38	-	90
October	128	38	-	90
November	372	112	-	260
December	1115	268	67	780
January	1920	461	115	1344
February	1588	381	95	1112
March	867	208	52	697

Table 10. Projected quantities of products to be produced at SDCS milk collection and processing unit (per day)

Month	Product mix
	Ghee	Butter milk	Sour milk	Liquid milk
April	16.0	24	100	1514
May	16.6	25	104	1578
June	18.4	27.7	115	1747
July	9.5	14	59	902
August	3.1	4.6	-	246
September	1.5	2.3	-	123
October	1.5	2.3	-	123
November	4.5	6.7	-	358
December	10.7	16	67	235
January	18.4	27.7	115	1747
February	15.2	22.8	95	1445
March	8.0	12.5	52	789

3. The Mwakaleli dairy co-operative society (MDCS)

The Mwakaleli Dairy Farmers Co-operative Society is situated the Mwakaleli Rift Valley in Rungwe District, 30 km from the district Headquarters, Tukuyu and about 300 km from Mbeya regional town. It lies at an altitude of 1400 - 1700 m.a.s.l with average annual rainfall of 1800 mm. Diurnal temperatures vary from 11.6 to 24.6 °C (Maganga and Matumla, 1992). The Society has about 70 members.

3.1 Cattle population and milk production potential

Unlike Serengeti dairy co-operative, MDCS farmers own mostly purebred and cross bred dairy cattle. The first 22 head of cattle were introduced in 1978/79 through the Uyole Agricultural centre (Maganga and Matumla, 1992). Since then dairy cattle numbers and dairy farmers have increased to over 800 by 1992, thanks to assistance rendered by UAC, the Swiss Government assisted Small Scale Dairy Development Project (SSDDP) and the Danish Volunteer Service (DVS) and Kitulo (DAFCO) dairy farm (Kifaro, Personal communication).

Table 11 shows the average amount of milk marketed through MDCS per day between 1987 and 1990.

Table 11: Raw milk supplied and marketed by MDCS 1987 - 1990 (Adapted from Maganga and Matumla, 1992)

Month	Year 1987 daily supply (litres)	1988 daily supply (litres)	1989 daily supply (litres)	1990 daily supply (litres)
January	197	248	351	435
February	275	280	428	430
March	337	347	451	484
April	360	342	452	543
May	351	345	360	613
June	350	350	450	603
July	336	330	477	536
August	336	337	444	581
September	348	350	458	500
October	308	300	467	500
November	300	253	467	500
December	290	245	436	438
Annual total	104,550	113,560	159,400	187,400

3.2 MDCS Milk Marketing and Processing Activities

Table 11 shows that milk production in the Mwakaleli valley has steadily increased over the years with cows averaging about 9.7 litres per day (Kifaro, 1986). This in turn has caused problems in the disposal of surplus milk through and outside the society's marketing activities. The main activity of the society has been:

a) the collection and marketing of milk from its members
b) purchase and selling of animal feeds to members
c) offering veterinary services to members

Through these activities the society has managed to construct a small building and purchase transport vehicles (i.e. a 1 ton pickup and a 3ton light truck) for ferrying the milk and other inputs.

3.3 Problems of the Society

According to Maganga and Matumla (1992), the main problems facing MDCS was:

a) Dependence on daily transport of milk to consumers in Tukuyu and Kyela (100 km)
b) Lack of milk preservation facilities including cooling and milk processing facilities.

Several donors have been approached for assistance and the author of this article was asked to give technical advise which is reproduced with modifications for further discussion and purpose of this workshop.

3.4 Options for milk collection processing and marketing systems at Mwakaleli Dairy Cooperative Society in Rungwe District.

From the milk marketing data for 1990-1991, marketable milk surplus amounted to 400 - 600 litres per day only. This small amount of milk is not economical to transport daily over long distances (100 km to Tukuyu and 300 km to Mbeya). Bulking the milk and collecting every other day (3 times per week) would mean that about 1000 - 1500 litres of milk would be available per trip. The situation at Mwakaleli therefore seems to be calling for strengthening the milk cooling, cold storage and delivery capacity. MDCS has a surface cooler (capacity up to 2000 litres per day) connected to an existing ICE BANK. This facility, when functioning well should be capable of cooling all incoming milk to < 10°C within a short time.

Options for handling the milk at Mwakaleli or any other place with similar situation could be:

a) Maintain the milk cool in a double jacketed insulated tank of 1500 - 2500 litre capacity through circulation of chilled water from the existing ice bank. A refrigerated milk tanker of 3000 litre capacity would pick up the chilled milk every other day to Mbeya TDL plant or other market outlets.

b) In the absence of a refrigerated road tanker, one could do with two deep freezer to be used in freezing ice packs which could then be used to maintain the milk cool while being transported in an insulated box body truck.

c) Milk processing: In order to supplement the marketing of raw milk and to build up capacity for taking care of surplus milk above the demand for liquid milk, MDCS could establish a small line for processing up to 300 litres of milk into butter and a type of culture milk (Mala/Mtindi) similar to the one made by Nnronga Womens group in Hai District, Kilimamnjaro region. Required equipment could be made locally (e.g.) by CAMARTEC, Arusha or Institute of Production Innovation of University of Dar es Salaam. Incubation could be done in 45 litre aluminium cans. A large factory in Harare Zimbawe is successfully using this simple method for youghurt manufacture. The butter could essential be made from cream obtained from skimming of (some) milk for purposes of standardising the milk meant for the cultured milk manufacture. There should, therefore, be no problem in utilisation of the skim milk.

Table summarises the equipment that would be required for the two options supplemented by option C

Table 12: Milk marketing and processing options for Mwakaleli Dairy Co-operative, Tukuyu, Mbeya

Option	Equipment required	Function of equipment
A.	Ice bank Machine	Provide chilled water for surface cooler
	Chilled water pump	For chilled water circulation in the milk vat
	Insulated, stainless steel milk vat with agitator (1500 2500 litres)	For bulking and storing raw milk
	Insulated milk tank mounted on 3 ton truck (3000 litre)	Transporting and keeping chilled milk cool to Mbeya
	2 Deep freezers	For butter storage
B.	Ice bank machine	Provide chilled water for surface cooler
	2 Deep freezers	Production of ice packs, butter storage
	45 litre Aluminium cans	Vessel for milk transport to Mbeya
	Ice packs	Keeping milk cool during transportation to Mbeya, Volume of milk reduced approx. 30%
C. (in combination with option a) or b).	Insulated community charcoal stove	Boiling milk for culture milk manufacture
	Cement water trough	For cooling of the hot milk in milk cans
	Plastic sachet seamer	For sealing cultured milk in 1/2 litre packets

4. Conclusions

In the case of Tanzania, the non-functioning of the parastatal milk processing plants is a challenge for milk producers to get organised in milk marketing organisation in order to market their produce particulary where their access to markets is made difficult by a number of bottlenecks such as distance to markets. Milk processing, if well organised and a good choice is made as to the technology and products to be made, can greatly enhance the farmers access to markets and improve incomes.

5. Acknowledgement

The author wishes to thank Dr. F.M. Turuka of the Department of Agricultural Economics and Agribusiness for valuable comments on the manuscript.

DISCUSSION

Qn. L.L. Ngigwana

Which option between A, B, C and D has been adopted by the Mwakaleli Dairy Cooperative Society for Marketing of milk as recommended in your studies.

Response: Kurwijila

The donor has availed/provided equipment for the cheapest option B. There are however some organizational problems in the .Society which need to be settled before a few other equipment are supplied by the donor to enable some processing to start.