Agribusiness Firms and Rural Dairy Development. A Case of FrieslandCampina Dairy Development Programme in Nigeria

Abstract

Rural development interventions funded by private agribusiness firms may positively or negatively affect rural farmers' welfare. A positive effect is that such interventions may provide farmers with market access. The negative effect could be that such firms may be solely motivated by profit and may exploit the farmers. In this paper, we explore the role of FrieslandCampina Dairy Development Programme, a multinational firm with headquarters in Europe, in improving the welfare of rural dairy farmers in Nigeria. We use a two-wave panel survey of 122 programme participants and 95 non-participants. We focus on two outcome measures – annual dairy income and daily milk yield - and use a pooled ordinary least squares method to understand the programme effect. We also explore the mechanism of effect by assessing the programme effects on farmers' sustainable dairy management practices using a negative binomial regression method. Our results suggest that the programme has positive welfare effects on farmers. We attribute these effects to farmers' access to reliable markets offered by the programme and the informal business arrangement between the farmers and the agribusiness firm. Potential policy implications include that governments should encourage other private agribusiness firms to set up similar development programmes.