Returns to smallholder dairying in the Kilimanjaro region, Tanzania

Tanzania is a net importer of dairy products despite its large cattle herd and successive government efforts to promote dairying. This paper draws on survey data to examine the financial attractiveness of dairying to smallholders in an area of high dairy potential on the slopes of Mount Kilimanjaro. On mixed farms in which coffee and bananas are the other main enterprises, producers keep small herds of mainly crossbred and grade cattle, mostly fed in stalls on cut forage and crop residues. Using a herd model, a benefit‐cost analysis of dairying was carried out. This showed that at prevailing prices, returns to dairying were around 20%. There was, however, no difference in the returns gained by the larger scale farmers who had more of the grade cows and managed them intensively, compared to those using a less intensive system with lower potential stock. Moreover, the profitability of dairying for the former was underwritten by subsidies on inputs and fuel which are difficult to justify. Policy has apparently over‐emphasised improving yields and the development of intensive dairying, and has not been sufficiently concerned with keeping down the costs of dairying.