Department of Agricultural, Food, and Resource Economics Feed the Future Innovation Lab for Food Security Policy

Ryan Vroegindewey, Robert Richardson, and Véronique Thériault, 2020. Analysis of the Determinants of Milk Producers' Participation in Output Markets, FSP Research Paper 178

Abstract

Substantial growth in the market supply of Malian milk will be necessary to meet the rising demand for dairy products while also improving the livelihoods of milk producers and strengthening the competitiveness of the Malian dairy sector against imports. The objective of this paper is to understand the barriers that constrain Malian milk producers from entering and supplying markets, and to identify policy measures that can boost such market participation. We investigate this question by applying Cragg’s two-tiered model to data from a population-based survey, the 2014 Mali Living Standards Measurement Study-Integrated Survey on Agriculture.

Our four key findings are robust to alternative model specifications. First, despite the great yield- enhancing potential of mixed-bred dairy cattle, adoption of this technology has been extremely limited in Mali. The Malian government should continue to increase producer access to mixed-bred cattle. Second, improvements to the health and nutrition of dairy herds also have great potential to improve market participation through increased productivity. Thus, policy should also aim to improve producer access to pest and disease control, zero-grazing technologies, and year-round water sources, and feed. Third, gender has great influence on a household’s participation in milk markets: female decision-makers market more than twice the volumes of males, other factors held constant. This suggests that milk commercialization policies could make substantial gains by better inclusion of female producers. Fourth, Malian milk producers are responsive to price incentives, despite the considerable asset specificity and transaction costs that are present in milk marketing. This implies that macroeconomic policies, such as stronger import duties that increase the domestic price of fresh milk relative to that of imported substitutes, should have a positive pull on milk supply. This result also underlines the importance of market price information. The Malian government should prioritize the inclusion of milk prices in its regular market monitoring and information products.