Analysis of Market Participation Behavior Among Smallholder Dairy Farmers in Uganda

Market participation of smallholder farming has gained priority in the policy agenda of many developing countries as an engine for economic growth. In Uganda, smallholder dairy farming has been adopted as a strategy for the country’s economic transformation through commercialization but efforts to improve dairy market sales have not been successful. Without appropriate interventions, Uganda may fail to take advantage of the anticipated increase in demand for livestock products. A study to analyze determinants of dairy farmers’ market participation and percentage of milk sales was therefore undertaken in Uganda’s three main milk producing regions. Multistage sampling and purposive sampling procedures were used to select a study sample of 171 representative dairy farming households, with at least one milking cow based on data derived from the REPEAT Survey of 2012. Data was analyzed by descriptive statistics and Heckman two-stage selection econometric model. Results show that milk market entry decision was significantly influenced by improved lactating cows (1%), number of lactating cows (1%), milk yield (1%), information access (5%), access to veterinary services (5%) and children less than 6 years (10%). Percentage of milk sales was influenced by information access (1%), number of lactating cows (5%), improved milking breeds (5%) and quantity of milk consumed. Three variables critical to policy intervention in enhancing smallholder dairy farmer participation and intensification are number of lactating cows, improved lactating cows and information access. Quantity of milk consumed suggests supplementation of milk with other protein foods among dairy farmers in Uganda.