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Processor Linkages and Farm Household Productivity: Evidence from Dairy Hubs in East Africa

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  • Immaculate Omondi
  • Elizaphan J. O. Rao
  • Aziz A. Karimov
  • Isabelle Baltenweck

Abstract

Linking smallholder farmers to large enterprises could be a powerful mechanism to improve input and output markets as well as other productivity‐enhancing services for liquidity constrained smallholders. Dairy hubs promoted by East African Dairy Development project are collective farmer‐owned milk bulking and/or chilling plants through which farmers get access to output markets and inputs as well as other services necessary for their dairy enterprises. The hubs act as a linkage between large processors and smallholder dairy farmers. They enable farmers to supply milk to large dairy processors who are emerging key players in the East African dairy industry. In addition to the different forms of linkages with large processors, these hubs also differ in their level of growth toward sustainability. In light of this background, this work aims to provide evidence on the effects, at farm level, of different types of linkages between smallholder dairy farmers and large processors through dairy hubs. The study uses cross‐sectional survey data collected from 993 smallholder livestock keeping households living within the dairy hubs’ catchment areas in Kenya and Uganda. Statistical tests on technical efficiency estimates from dairy farm enterprises were conducted in order to provide evidence of the effects of the types of processor linkages on the performance of the dairy farm enterprises. The results provide evidence of no strong influence at farm levels that can be attributed to different forms of linkages with processor that dairy hubs adopt. Moreover, though hub sustainability is directly linked to the producer organization's efficiency level, our results show that it does not sufficiently translate to more productive farmers. These findings call for concerted efforts by development agents in the dairy sector, policy makers, and even large processors to intervene in order to support improved farm performance. As evident from the study, one direct policy tool at the disposal of these agents is extension messages. [EconLit citations D24; L25; Q12].

Suggested Citation

  • Immaculate Omondi & Elizaphan J. O. Rao & Aziz A. Karimov & Isabelle Baltenweck, 2017. "Processor Linkages and Farm Household Productivity: Evidence from Dairy Hubs in East Africa," Agribusiness, John Wiley & Sons, Ltd., vol. 33(4), pages 586-599, September.
    • Handle: RePEc:wly:agribz:v:33:y:2017:i:4:p:586-599
    DOI: 10.1002/agr.21492
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    References listed on IDEAS

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    1. Atiase, Victor Yawo & Kolade, Oluwaseun & Liedong, Tahiru Azaaviele, 2020. "The emergence and strategy of tech hubs in Africa: Implications for knowledge production and value creation," Technological Forecasting and Social Change, Elsevier, vol. 161(C).
    2. Abel Ezeoha & Akinyinka Akinyoade & Ifediora Amobi & Ogbuagu Ekumankama & Paul Kamau & Agnieszka Kazimierczuk & Catherine Mukoko & Ifeanyi Okoye & Chibuike Uche, 2022. "Multinationals, Capital Export, and the Inclusive Development Debate in Developing Countries: The Nigerian Insight," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 34(5), pages 2224-2250, October.
    3. Caetano Luiz Beber & Sebastian Lakner & Ioannis Skevas, 2021. "Organizational forms and technical efficiency of the dairy processing industry in Southern Brazil," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 9(1), pages 1-22, December.
    4. David L. Ortega & Vincenzina Caputo & Mywish Maredia, 2023. "Effectiveness of nutritional information in increasing demand for enriched yoghurt among poor households in Kenya: Implications for agribusiness marketing strategies," Agribusiness, John Wiley & Sons, Ltd., vol. 39(1), pages 285-290, January.
    5. Sirak Bahta & Amos Omore & Darek Baker & Iheanacho Okike & Berhanu Gebremedhin & Francis Wanyoike, 0. "An Analysis of Technical Efficiency in the Presence of Developments Toward Commercialization: Evidence from Tanzania’s Milk Producers," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 0, pages 1-24.
    6. Sirak Bahta & Amos Omore & Darek Baker & Iheanacho Okike & Berhanu Gebremedhin & Francis Wanyoike, 2021. "An Analysis of Technical Efficiency in the Presence of Developments Toward Commercialization: Evidence from Tanzania’s Milk Producers," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 33(3), pages 502-525, June.
    7. Bjorn Van Campenhout & Bart Minten & Johan F. M. Swinnen, 2021. "Leading the way – foreign direct investment and dairy value chain upgrading in Uganda," Agricultural Economics, International Association of Agricultural Economists, vol. 52(4), pages 607-631, July.
    8. Ullah, Ayat & Arshad, Muhammad & Kächele, Harald & Khan, Ayesha & Mahmood, Nasir & Müller, Klaus, 2020. "Information asymmetry, input markets, adoption of innovations and agricultural land use in Khyber Pakhtunkhwa, Pakistan," Land Use Policy, Elsevier, vol. 90(C).

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