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Dairy & Ruminant

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Animal Health

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Livestock Production
Thursday, March 13, 2008 4:52:13 PM
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Competitiveness framework for Asian smallholder dairy development 

Phil Psilos



The short-term boom in world dairy prices combined with long-term growth prospects for dairy products in Asia present a promising opportunity for strategies to include and upgrade smallholder participation in these markets. However, opportunities do not guarantee outcome and this framework can help smallholder dairy to respond to these opportunities and challenges.


To select the right element of models that can help smallholder dairy to respond to market challenges, one has to know what factors in the models are needed to improve. The three goals served by the competitiveness framework are 'Prioritisation', 'Informed collaboration', and 'Targetting models'. 


In the framework, issues that smallholder dairy faces are categorised into a standard set of performance/competitiveness drivers that fall into five areas. Each issue is then evaluated whether it is subject to various influences and whether it can be controlled.


Models are then evaluated for their effectiveness in addressing the constraints of the environment so as to find out what elements of models is helpful to specific challenges and new policies and innovations will be based on it.


Steps in prioritising performance-competitiveness drivers

The framework includes three steps in prioritising the drivers and they are,


1) Understand whether opportunities and constraints can be controlled or influenced by various organisations.


2) Determine the influence of organisations on the competitive position of the value chain.


3) Assign each issue a level of importance compared to other factors.


Some research has demonstrated that the attractiveness of smallholder dairy as a remunerative option declines quickly with rising rural wage rates. A study has discovered the following points, which provides insight into anticipating industry trajectories.


1) Smallholder dairy is labour intensive and arises where other remunerative options for labour are small.


2) Herd sizes rise with rising rural wage rates and greater access to remunerative opportunities for family labour.


3) High value of manure as fertilizer input, particularly in dense, low-yield subsistence environment(s), sustains smallholder dairying.


4) Dairy provides savings and capital accumulation mechanisms for smallholders that may lose attractiveness as other formal-sector options become more widely available.


5) The attractiveness of dairying as a remunerative activity appears to depend on low labour opportunity costs and lack of access to other savings and investment vehicles.


For more of the article, please click here 


Article made possible through the contribution of Food and Agriculture Organisation of the United Nations.

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