Dairy markets and child nutrition in the developing world

Dairy is an exceptionally nutrient-dense food of immense importance to healthy growth in early childhood. However, dairy consumption among young children is strikingly low in many parts of Africa and Asia. This paper attempts to explain this puzzle, focusing on the obvious roles of income/wealth and prices, and the less well understood roles of lactose intolerance, cattle ownership, nutritional knowledge, water quality, and refrigeration. We find evidence suggesting that all of these factors might account for differences in dairy consumption across countries, although the disparity in dairy prices between low and high consumption countries is particularly large and puzzling, given the tradability and relative affordability of powdered milk. We therefore develop a novel trade analysis to understand why dairy prices are so high, especially relative to staple cereals, and illustrate how comparative (dis)advantage in dairy is often poorly aligned with pricing policies. We conclude the paper by highlighting unresolved research questions in this complex puzzle, including the need to learn from countries that have been able to drastically improve dairy consumption, including those with little tradition of dairy consumption such as Thailand and Vietnam.