Drivers of dairy farmers’ engagement in informal milk markets: Policy implications for developing countries

Abstract

Persistent engagement of dairy farmers in informal milk markets poses economic and health challenges while limiting the supply of raw milk to processing plants that heavily rely on smallholder dairy farmers. Consequently, this results in a decline of domestically processed milk products, job losses throughout the dairy value chain, and a transition to becoming net importers of milk and milk products. Based on these challenges, a systematic review of scholarly articles was conducted to find out factors influencing dairy farmers' engagement in informal milk markets. PRISMA approach was employed, where fifteen articles that met the inclusion criteria were analysed after a thorough screening process. The findings show informalities in milk markets is more prevalent in developing countries, particularly in Africa and Asia. The study revealed four major categories of drivers that influence dairy farmers' engagement in informal milk markets, namely market factors, production factors, farmers-related factors and support service-related factors. In addition, the study employed Pareto analysis, where market and production related factors were prioritized for interventions to enhance reduction of 80% of the challenges limiting dairy farmers' engagement in formal markets. The study contributes towards understanding the factors influencing smallholder dairy farmers' decisions to engage in informal milk markets, which is instrumental in designing policy actions and transition programs for farmers’ engagement in high-value markets. Unlike the previous studies, this paper extends the literature beyond country-specific factors focusing on the extent of the challenge in developing countries.