A TOOL FOR IMPROVEMENT OF TRADITIONAL MILK PROCESSING

Abstract
This study analysed the economics of milk production, processing and marketing
under the smallholder Milk Cooperative Producers’ Association Limited (MILCOPAL).
It is a contribution to knowledge in the area of pastoral milk cooperatives in Kaduna
State. The specific objectives of the study were, to describe the socioeconomic
characteristics of the pastoralists milk producers and suppliers in the smallholder dairy
cooperatives, determine the efficiency of resource-use and profitability of milk
production, describe the method of milk procurement and processing. The study also
determined the efficiency of resource-use, marketing margin and profitability of
yoghurt production by the MILCOPAL and identified the problems associated with milk
production, processing and marketing under the smallholder Milk Cooperative.

A field survey was conducted in Kaduna state from January 2004 to May 2005. The
analytical techniques used for the study were the descriptive statistics, production
function analysis, net farm income analysis and marketing margin analysis. Also, four
hypotheses were tested.

The results revealed that, pastoralists in the programme were grouped into milk
producers and suppliers. The results of the socioeconomic characteristics of the
producers revealed that their average age was 48 years, with an average herd size of
61 animals and up to 35 years cattle rearing experience. Results of the socioeconomic
characteristics of the milk suppliers, revealed their average age as 30 years, 51%
supplied less than 10 litres of fresh milk weekly and they all sold their milk to
MILCOPAL at N30.00 per litre.

With respect to the resource-use efficiency and profitability in pastoral milk production,
the “Cobb-Douglas” regression results showed that three variables - number of
lactating cows, feed and labour were significant at 1% level of probability. Also the
Fratio was significant at 1% level. This led to the rejection of the hypothesis of the
study, which stated that there is no relationship between milk production and inputs
used.
Problems associated with milk production, collection, processing and marketing, range
from insufficient supplementary feed during the dry season and its expensive nature,
low producer prices for milk, insecurity, high prices of drugs and vaccines, problems of
low milk yield. Problems of MILCOPAL include; poor road network, high cost of
transportation, fresh milk adulteration, seasonality of demand and production,
diversion of milk when supply was lean, high cost of production, power failure, lack of
modern processing and storage equipments.

ii
 CHAPTER ONE

1.0 INTRODUCTION

Agriculture plays a key role in the Nigerian economy, employing two thirds of
the labour force and accounting for over 40% of the G.D.P (CBN, 1999). The
livestock population comprises about 14 million cattle, 34 million goats, 22
million sheep and about 100million poultry (Yahuza, 2001). Other livestock
species of economic importance are donkeys, pigs and camels. Cattle
represent one of the most economically significant group within the livestock
sub-sector.

The livestock sub-sector is dominated by traditional systems of production and

marketing. Transhumane pastoralists in the north of the country, rear a very
high proportion of the cattle herd and many sheep and goats (Shu’aibu, 1999).
Accurate statistics on livestock production and marketing are not available, to
make detailed projections of the supply and demand of the livestock sub-
sector. It is clear, however, that over the last two decades the supply of meat,
milk and eggs have failed to keep pace with the increasing population
(Yahuza, 2001).

Milk accounts for 16% of the total value of all food products from livestock in
sub Saharan Africa, estimated at US $18.3 million in 1986 (FAO, 1986).
Despite this contribution, sub Saharan Africa has failed to attain self
sufficiency in dairy products. This is particularly true in Nigeria where the
growth in livestock production has been insufficient to meet consumption level.

The supply of animal products has been declining over the past years, while
demand has been increasing, as a result of increases in population,
urbanization and income. Consequently, Nigeria has become a net importer of
livestock and livestock products. Recent statistics on the importation of dairy
products in Nigeria are not easy to come by. Restrictions placed on imports
of animal products and other food stuffs in the 1980s, coupled with the

1
introduction of the Structural Adjustment Programme (SAP), which saw a
massive devaluation of the Nigerian currency, initially reduced the importation
of meat and dairy products. According to Danbaba (2001), for Nigeria the
largest decline in imports occurred in 1982, which coincides with a substantial
devaluation of the Naira.

However, during the period between 1995 and 1999, expenditure on the
importation of food and live animals tended to increase from N88, 349.90 to
N103, 489.90 billion (CBN, 1999). Recent ban on the importation of food items
by the government however, increased the prices of dairy products and has
significantly reduced the importation of milk powder on which the local cottage
industries depend. This makes the small holder cooperative dairy production a
more suitable alternative for milk production.

1.1 Importance of Milk in Nigerian Diet

The livestock resource survey carried out by the Federal Department of

Livestock and Pest Control Services in 1990, put the cattle population in
Nigeria at 13.9 million (Resource Inventory Management - RIM, 1990). 13.5
million (96%) of the cattle are in the hands of the pastoral Fulani. This pastoral
herd is the most important domestic source of milk in Nigeria. They are
characterised by movement of their herds to the south during the dry season in
search of feed and water and back to their base in the north during the wet
season (Awogbade, 1981, Adesipe, 1986 and Isma’il, 1995).

Milk the "... most nutritious food known to man". (Michael et al 1991) is
important in the diet and culture of the Fulani. Fresh, boiled or curdled, milk is
consumed by the Fulani and by the rural and urban population. The Fulani
women monopolize the local dairy production in Nigeria, although they own
only a few of the family's cattle (Adholla-Migot and Little 1980). Pastoral
women sell milk and cooked millet balls called Fura in Northern Nigeria and
Southern part largely settled by the Hausawa.

2
The wives of the Pastoralists usually process fresh milk into various traditional
milk products. These include: nono (sour milk), Kindirmo (sour yoghurt),
Manshanu (local butter) cuku (Fulani Cheese) and Wara (Yoruba cheese).
These products are usually hawked around the local area by women or are
sold in specific locations such as markets in certain towns. The traditional
system of production which is the single most important source of local dairy
products is faced with problems of product wastage and deterioration in quality
due to the scattered nature of the producers and the poor product handling
equipments (Isma’il, 1995).

The federal government made several attempts in the past to reduce the
problems of dairy production, by establishing dairy plants in different parts of
the country. These dairy plants have cattle ranches close to them so that their
raw materials for production can be obtained. Most of these dairy plants were
closed down due to reduction in the availability of raw materials and their high
cost of purchase (Danbaba, 2001).

1.2 Historical Background of Dairy Development in Nigeria

Before independence in 1960, dairying in Nigeria was influenced by the

colonial experience, which placed complete reliance on large government
farms to meet the growing demands of the cities. Therefore, the then
veterinary department set up a milk processing plant at Vom (near Jos) in
1939, originally to produce butter and later to produce cheese (walker 1981
and Yahuza 2001). A similar scheme was launched at Kano in 1940. After
independence, as part of government’s strategy to encourage the
development of the dairy industry, several dairyprocessing plants were
established throughout the country. Among these were, Madara Limited in
Jos, Plateau State, and Agege Dairy Farm, near Lagos. Other government
dairy farms were established at Ibadan, Kaduna, Maiduguri, Minna, Ilorin and
Kano.

3
The dairy industry represents an important component of the agricultural
sector of the economy with great economic, nutritional and social implications
(Olaloku, 1976 and Yahuza, 2001). The industry provides a means of
livelihood for a significant proportion of rural pastoral families in Nigeria.
Through their production activities and marketing segments, dairy processing
plants, provide employment and value added services to milk. Currently,
however, very few of the 63 known milk processing plants are operating at
more than 20% of their installed capacity (Yahuza, 2001; 2002). According to
Nwoko (1986), Maiduguri dairy plant operates at 25%, Ilorin plant 10%, Nigeria
dairy company Kaduna 18% and Madara limited Jos at 20% of their installed
capacity. At present, the market has been taken over by "cottage" outfits that
process and market yoghurt and other dairy products in urban areas, using
milk powder as a raw material, despite the ban placed on imports by the
government (Yahuza, 2001).

Therefore, the dairy industry is facing a serious challenge of meeting the daily
nutritional requirement of Nigerians. The gap between supply and demand for
dairy products is widening as a result of increase in population, per capita
income and urbanization. Imports that used to bridge part of the gap have
been declining. Consequently, local collection, processing and marketing of
milk is becoming increasingly competitive.

1.3 Problem Statement

Despite the importance of pastoral herd in the provision of the nutritional

requirements of Nigerians, the pastoral milk production is still bedeviled with
some problems. These problems make it difficult for local production to meet
up with demand. Output of milk from the national herd for the period between
2001 and 2003 was 515,291; 535,911 and 557,347 thousand tonnes; this by
far is below the nutritional requirements of Nigerians (Yahuza, 2001).

It is difficult to estimate level of consumption of dairy products especially in the

rural areas where proper records are not kept or market channels are not

4
followed. However, Nuru (1990) estimated the consumption of dairy products
at 10-20 kg/head/year. This implies that about 2 million metric tonnes is
required to feed the Nigerian population of about 120 million people. There is
therefore, a shortage of supply to meet even the present low level of
consumption. Ideally each person should have 115kg of dairy products per
year (Nuru, 1990).

There is a need for research to identify the problems associated with the
smallholder milk production, which is the single most important source of
domestic milk production in the country. This will go a long way towards
solving our problem of insufficiency in dairy production.

Among the problems cited in literatures include: Low milk output of Fulani
cows. The local Fulani cow yields on the average 0.7 litres of milk per day
during lactation (World Bank 1993). This value is low compared to what is
obtained in other places. In Bangladesh average yield is 1.19 litres (Saha and
Haque, 2001) while in Cameroon it is 2.46 litres on average (Njire et al, 2001)
and in Tanzania it is 2.68 litres on the average (Kurwijila 2001). Less than 3%
of the local cattle stock in Nigeria has been artificially inseminated to improve
their genotype (Michael et al, 1991).

Other problems are poor quality grass especially during the dry season,
unsanitary methods of milk handling, inefficient milk collection schemes,
competition between itinerant milk collectors and official milk collectors, faulty
product pricing, poor management policies and lack of economic incentives
from the government hamper the expansion of Nigeria's dairy industry.

Lack of sufficient storage and processing, equipments breakdown of the

cooling system, breakdown of processing plants, erratic supply of pasteurized
milk by the Fulani producers, adverse markets and bad management hamper
the performance of the dairy farms located in some urban centres in Nigeria
(Awogbade, 1983; Ismail, 1995; and Yahuza, 2001). Competition with

5
imported powdered and condensed milk is another challenge, which the local
dairy industry has to overcome.

Although through research and genetic improvement of the local cow, the
Fulani can raise their output, most of the dairy companies who collect milk for
processing in the urban areas find it difficult to reach the scattered producers
in the rural areas. The dairy farms in Nigeria are not well equipped for door-to-
door milk collection from the pastoralists or door to door distribution to
consumers.

To bridge the gap between supply and demand for dairy products so that
majority of people can have it at affordable prices, the federal government
established many research institutions and government parastatals with
mandates for livestock production such as: The National Veterinary Research
Institute (NVRI) Vom, National Animal Production Research Institute (NAPRI)
Shika and the National Livestock Project Division (NLPD) Kaduna. Despite
their efforts toward making Nigeria self reliant in animal products production,
the problems enumerated above still exist.

The introduction of the Structural Adjustment Programme (SAP) which

requires looking inwards for raw materials for production, coupled with the
funding received by the National Livestock Projects Division (NLPD) from the
World Bank led to the incorporation of a pilot dairy project in Kaduna state
(NLPD, 1992; 2000; World Bank, 1993). The programme mobilized
pastoralists to form Village Milk Producer Cooperative Associations Limited
(VMPCAL), so that they can pool their milk together for processing in the dairy
plant. It was aimed at keeping the pastoralists in one place, providing market
for their products and making the products readily available to consumers at
affordable prices (Yahuza, 2001; 2002).

The small scale producers, their cooperative associations and the dairy plant
of the Milk Producers’ Cooperative Association Limited (MILCOPAL) formed

6
the specific area for this study. The reason for choosing this area is to find out
whether the cooperative system of milk production, processing and marketing
is the solution for our dependence on imported dairy products, as witnessed in
the Gujarat state of India under the Annand Milk Union Limited (AMUL) and in
the smallholder dairy cooperatives in Tanzania and Bangladesh (Kurup, 2001;
Kurwijila, 2001; Saha and Haque, 2001). Economic analysis of the dairy
cooperative setting will assist in providing relevant information on better ways
of managing them. It will also provide relevant information on how the
programme can be replicated in other states of the federation.

This study is, therefore, aimed at studying how resources are used in milk
production by the pastoralists that are participating in the pilot dairy
programme of MILCOPAL. Such a study is necessary in order to find how the
programme has affected the lives of the various members of the cooperative
and the consumers of such dairy products.

The questions this study addressed were:

i) What are the socioeconomic characteristics of the pastoral milk
producers and suppliers participating in the dairy cooperatives?
ii) How efficient are resources allocated in the production of milk by the
pastoralists participating in the dairy cooperatives production system?
iii) What are the methods used in milk procurement and processing in the
cooperative system? iv) How efficient are resources allocated in the
processing of milk into yoghurt by MILCOPAL?
v) What is the rate of performance and profitability of yoghurt marketing in
the study area?
vi) What are the problems associated with milk production, processing and
marketing under the cooperative system?

7
 1.4 Objectives of the Study

The broad objective of this study was to determine the resource-use efficiency
in milk production, processing and marketing under the smallholder dairy
cooperative system.
The specific objectives were to:
i) describe the socioeconomic characteristics of the pastoralist milk
producers and suppliers in the smallholder dairy cooperatives.
ii) determine the efficiency of resource-use in milk production by the
smallholder pastoralists.
iii) describe the methods of milk procurement and processing under the
smallholder dairy cooperative system.
iv) determine the efficiency of resource-use in milk processing into yoghurt
by the MILCOPAL.
v) evaluate the marketing margin and profitability of yoghurt marketing in
the study area.
vi) identify the problems associated with milk production, collection,
processing and marketing under the cooperative system.

1.5 Justification of the Study

Milk is the most frequently used cattle product, however; many families cannot
get enough milk for daily nourishment (Onor, 1999). Demand for milk and
other dairy products can be further increased through measures aimed at
reducing cost of production. Such reduction in cost can be attained through
the efficient use of resources. This will result in improving the protein intake of
Nigerians irrespective of their positions.

This study therefore, aims at contributing to the available knowledge in the

area of cooperative formation among the pastoralists using Kaduna state as a
case study. The study will provide important information on areas that need be
improved in the cooperative system of milk production in the study area. The
choice of Kaduna state has some advantages because it harbours a very large

8
proportion of livestock (1.007 million head of cattle) in Nigeria (Danbaba,
2001). It is also the first and only place where the pilot smallholder dairy
cooperative production programme is established. Hence, with solutions found
to the problems of cooperative dairy production in Kaduna state, productivity of
a large population of livestock could be improved. Also experiences from this
study could assist in providing needed information to other areas where such
cooperative programmes are to be established. This will ensure better profit
for the producers and the availability of dairy products to consumers at
affordable prices.

1.6 Study Hypotheses

The following null hypotheses were tested based on the stated objectives.
i) There is no relationship between milk production and inputs
used. ii) There is no relationship between yoghurt production and
inputs used. iii) Milk production is not profitable. iv) Yoghurt
production is not profitable.

9
 CHAPTER TWO

LITERATURE REVIEW

2.1 Dairy Development in Nigeria

The various activities of the Nigerian dairy industry (viz. Milk production,
importation, processing, marketing and consumption) have been going on in
the country for over 60 years. These activities are, however, unorganised
except for the relatively few processing firms that produce and market
reconstituted milk products (Yahuza, 2001). Despite the unorganised nature
of the dairy industry, it represents an important component of the agricultural
sector of the economy with great economic, nutritional and social implications
(Yahuza, 2001).

The industry provides a means of livelihood for a significant proportion of rural

pastoral families in the sub humid and semi-arid ecological zones of Nigeria.
According to FAO (1988), an estimated 183, 000 rural households derived
some income from the dairy industry in 1986. The dairy industry, through
commercial dairy processing plants and marketing segments, provide
employment and value.

Improvement of the living standard of Nigerians has been the major focus of
various national development plans. Consequently, the dairy industry, through
which better nutrition can be provided to the citizens was given adequate
attention in these national development plans (Danbaba, 2001). In some
selected areas, the government established dairy farms with local and
imported breeds of cattle. In addition, milk collection centres including mobile
collection points were established (Ismail, 1995).

2.2 Milk Production from the Traditional Herds

Legend says the Fulani originated from the Arabian Peninsula (de St Croix
1945), and migrated south-west to Senegambia. From Senegambia, they

10
moved eastward, crossing several Sahelian and Sudanian zones, to the Red
Sea (Frantz 1981). The Fulani of Nigeria are a part of this migrant, ethnic
population having common occupational and biogenetic characteristics.
Lightskinned with curly hair, the Fulani have pointed nose, thin lips, and
slender statue (Stenning 1959).

The Fulani are endogamous as well as polygamous. Celibacy is

uncommon among the Fulani, who marry in their twenties. Divorce is
also rare. As a result of polygamy and early marriages, the Fulani have
high fertility. Despite high infant mortality, the population of the Fulani is
growing fast, although slower than the national average. Household
size is about six, with a near balanced sex-ratio. Age distribution is
baseheavy, with children dominating. The Fulani are governed by a
political structure consisting of the ethnic group, the clan, the lineage,
the family, and the Ruga. Leadership among the Fulani is less
aristocratic. The family is a herd-owning unit, united by common
territory and occupation. Their herding system, involves frequent
pastoral movement (Ismail 1995).

The pastoral herd is the most important source of domestic milk in Nigeria.
According to Yahuza (2001), five major production systems found in sub
Saharan Africa are Pastoralism, agro-pastoralism, mixed farming, intensive
dairy farming and peri-urban milk production. However, four major production
systems can be identified in Nigeria according to Yahuza, (2001). They
include: pastoral systems, usually carried out by the Fulani who control at least
95% of the cattle population. The Fulani are mostly semi settled, moving to
locations where seasonal water supplies make pasture available during the dry
season. However, some Fulani are nomadic and are constantly on the move in
search of water and pasture. They keep large herds and depend on milk and
dairy products for sustenance. Some settled Fulanis also exist.

On the basis of cattle population figures for 1990 and an estimated growth rate
of 4%, the total cattle population in Nigeria is expected to reach 25.1 million by
the end of 2005. Based on the productivity of the cattle population under the
traditional system of production (253 kg of milk/ year), it is therefore estimated
that domestic milk production in 2005 will reach 606,827,000 tonnes (Livestock
sub sector review report, 1992). In addition to the supply of milk from the

11
national herd, an insignificant quantity of milk is supplied by the commercial
dairy farms. Several processed dairy products are imported into Nigeria.
These include evaporated milk, powdered milk, butter, cheese and cream.

2.3 The Fulani Herding System

Having raised livestock for centuries, the Fulani have evolved a herding
system that withstands time, weather, social change, and government
intervention. The movement of the Fulani over the years has led to a pastoral
calendar in which the location and the grazing habits of the Fulani can be
predicted.

The name Fulani has become synonymous with grazing and cattle ownership.
Fulbeness, pulaaku, is determined by the extent of Fulani involvement in
herding. The primary occupation of the Fulani is herding, followed by farming.
Less than a tenth of the Fulani have jobs other than herding or farming.
Nonherding jobs are seasonal and opportunistic. For example, during the
wetseason, the Fulani take advantage of the abundant rain and manure to
plant corn, millet, sorghum, and home gardens in their backyards and engage
in bee keeping activities (Ismail 1995). The Fulani use farming to absorb the
excess of labour during the wet-season, to reduce dependence on farmers, to
counter food shortages during an impending drought, and to get farm stubble
for their animals.

The household is the simplest, full-time, cattle-breeding unit. Every member of

the household contributes to, and benefits from, raising animals (Stenning
1959). Labour is specialized. By assigning labour to gender and age groups,
the pastoral Fulani optimize their production methods (Isma’il 1995). Although
the Fulani share the herding task, men's work differs from women's, as adult's
work differs from children's. Regardless of age or gender, a member of the
household learns all the herding skills.

12
The management of the herd devolves on the men, but children, in their
capacity as apprentices, also contribute to the labour-force. Men, who ensure
the corporate existence of the family, are the primary household providers.
They protect the animals from carnivores and raiding tribes or thieves. They
take the animals to long-distance pasturelands. Men also find fodder, dig
wells, and make weapons such as guns, knives, swords, herding sticks, and
bows and arrows. Among the Fulani, the adult males find the grazing-sites,
build the camps and the fences, and perform soil and water tests (Riesman,
1977; Fricke, 1979; and Michael et al 1991,).

Culinary responsibility falls on the women who process and cook the food.
Girls and women weave mats, spin cotton into thread, make household
decorations, and collect herbs and vegetables. They buy food from the market,
churn the milk, make the butter, sell milk and butter, and do craft work such as
decorating calabashes (Riesman 1977 and Fricke 1979). Women also grow
vegetables, and raise poultry and non-ruminant stock. Women and girls clean
the compound. They look after the disabled animals, fetch water, collect
firewood, collect wild-food, help in making temporary shelter, and bear and
nurture the children (de St Croix 1945; Vengroff 1980; and Awogbade 1983).

Without a specific retirement age, most Fulani continue herding well past the
middle age. When a pastoral Fulani man becomes old and incapable of
performing the rigorous herding task, he relinquishes the responsibility to his
sons (Fricke 1979). He then settles in the camp and acts as the chief adviser
on family and herding matters. His wealth of experience makes him the trainer
of the emerging household heads. An important function of the elderly in the
Fulani society is making decisions about grazing movement.

The Fulani movement varies according to individual circumstances, dictated by

the seasonal distribution of grass and water. Mobility is necessary because
pastoral resources are non-static and access to them requires movement. The
pastoralists move to avoid harmful insects, abominable weather, livestock

13
thieves, tax assessors, and hostile social environment (de St Croix, 1945;
Gulliver, 1952; Konczacki, 1978; Fricke 1979; Salzman, 1980 and Awogbade,
1983).

Animals raised under sedentary conditions are more likely to be hit by natural
or artificial disasters. To avoid the transmission of epizootic diseases among
the herds, the Fulani steer clear of the herds suspected of carrying diseases
(Riesman 1977; Sandford 1982; Meir 1987; and Ellis and Swift 1988). By
extensive spatial grazing, the pastoralists optimize spatial resource use, allow
the soil to rejuvenate, and prevent permanent land damage (Bennet 1990).

Migration starts with a reconnaissance by the household head or his

appointee, who, in deploying the herd, primarily considers water, grass,
market, safety, diseases, access to roads, and socioecological conditions,
though not necessarily in that order (Niamir 1990). It is not, however,
uncommon for a pastoralist to base his choice of a location or migratory route
on triviality such as closeness to a suitor (Stenning 1959). For collective
security, the Fulani man will also consult his neighbours, relatives, and close
friends from several camping groups before he moves (Gulliver 1952; and
Waters-Bayer et al 1986).

The weather dictates the actual time of departure, but an imminent danger can
hasten the out-migration. As the day of the exodus nears, the Fulani women
start washing the pots, mortars, pestles, calabashes, and beds and bedding.
The Fulani men begin packing household goods, dismantling the makeshift
camps, and preparing the pack bulls. A team is sent to the new site to build the
stockades, tithe poles, and beehive huts. Sometimes, the team also digs a
well.

Early in the morning, on the day of moving, the Fulani load the household
utensils on the backs of the pack bulls. The elderly, the children, the disabled

14
persons, and the sick animals with a chance of recovery ride on the bull's back
(Fricke 1979). The eight-kilometre-an-hour foot journey begins.

Using a cane, sign language, and verbal command, the Fulani drive the
animals to the new camp. During the journey, the Fulani instruct their animal to
lie, slow, swim, sleep, or stand still (de St Croix 1945). With faster animals
occupying the front row, a migrating herd comprising of several family units
move in a column of up to five meters wide and two kilometers long. By the
time this column passes a given point, everything that stands at that point is
destroyed (Fricke, 1979 and Vengroff 1980).

Although many pastoral families migrate together, herds from different

families never mix or get lost during migration. A Fulani man can identify his
animal by its name, colour, hair, spots, patches, twist of the horn, or shape of
breast (de St Croix, 1945). Because they breed their animals in different ways,
the Fulani cattleman easily recognizes an animal from another man's stock.

Herding is a monumental task for the Fulani who are always trying to get the
best grazing condition for their animals. At sunrise, the Fulani free the animals
from the tether and take them out to graze until sunset. Throughout the night,
the pastoral Fulani must keep vigil on the animals, protecting them from night
marauders. Daily herding tasks vary according to seasonal changes.

2.4 The Pastoral Fulani Seasonal Calendar

2.4.1 End of wet-season (October to December)

October to December marks the end of the wet-season and the beginning of
the dry-season. Relative humidity is low; so is insect population. The dry soil
allows the animals to move without becoming stuck in the mud. Some water
and grass in isolated places are present for pastoral use. The Fulani begin
their southward migration or start moving along the rivers and stream valleys.

15
2.4.2 The Harmattan Season (January to February)

January to February is the Harmattan season. Relative humidity nears zero,

and the tsetse population is reduced by extreme dryness. During the dry
period, fodder quality and quantity fall, compelling animals to intensify bush-
stubble grazing. Bushfires that destroy extensive pasturelands are common.
Water becomes scarce and animals lose weight. Uncertainty of food and water
necessitates longer grazing hours, splitting of the herd, and frequent visits to
permanent water sources. Southward migration increases.

2.4.3 The Beginning of the Hot-season (March to April)

March and April are the hottest and toughest months for the Fulani. The
condition of the bovine is at its sub-optimal level. The Fulani are in their
southernmost locations. Widespread fires in the range worsen the pasture
situation. Herds no longer select grass but make do with what is available.
Because of insufficient rains, animals' urine and feces 'burn' the soil, further
reducing the amount of forage (Riesman 1977). Excessive ambient heat
compels the Fulani to graze early in the morning, late in the evening and
sometimes at night.

2.4.4 The end of the hot-season (May to June)

May to June is the end of the hot season and the beginning of the rainy
season. Vegetation begins to appear. The cattle stop eating the old, dry grass.
The Fulani start moving northward, with the cloud. The rate of reappearance of
the grass determines the northward movement. Herders take precaution
against animals wandering in the crop field.

2.4.5 The rainy-season (June to September)

June to September is the peak of the rainy-season. The Fulani reach their
northernmost homes in July. A resting period for the Fulani, this is also the

16
cattle-breeding season. The herders engage in shorter grazing hours. The
Fulani get the highest milk yields in this period.

2.5 Milk Collection Schemes in Nigeria

These began in the late 1920's when the Veterinary Department set up units in
Northern Nigeria to which pastoral women brought fresh milk for cream
separation and processing into clarified butter fat (CBF). The women were
paid only for the cream while the skim milk was returned to them (Yahuza,
2001). The various governments of the then Northern region encouraged the
establishment of milk collection and cooling units. The butter fat collection
scheme was established to encourage the pastoralists to keep their cattle in
one place throughout the year, offering them an immediate market for all the
milk they could produce (National Archives 1934-48).

The collection scheme was primarily set up to export clarified butter fat to
England, where it was used to make toilet soap (National Archives 1934-48).
Other private enterprises, including United Africa Company (UAC), entered the
export business, offering higher prices than the government to encourage
middlemen to collect more butter from the pastoralists, this increased butter
export from 10 tonnes in 1933 to 2,400 tonnes in 1939 (Walker 1981).

The delivery of milk for cream separation demonstrated the possibilities of

whole milk collection. Therefore, the then Veterinary Department set up a milk
processing plant at Vom (near Jos) in 1939, originally to produce butter and
later to produce Cheese (Walker 1981). Some milk came from the Vom dairy
herd kept by the department, but mostly it came from Fulani women through a
network of collection centres. A similar scheme was launched in Kano in
1940.

Growth of the dairy industry in Nigeria could be attributed to wartime (World

War II) restrictions on dairy produce imports and a ban on Butter fat exports
(Yahuza 2001). For these reasons, the annual output of the Vom Dairy for

17
1949-50 was 123,800 kg of butter, 50,882 thousand kilogramme of clarified
butter fat and 36,700 kg of Cheddar type cheese to suit the taste of expatriate
customers (Buchanan and Pugh 1955).

The dairy plant at Vom eventually closed in 1954, with the lifting of restrictions
after World War II. This was due to the availability of imported butter of higher
quality in urban markets (Walker 1981). The West African Milk Company is
now renting the site of its farm and has stocked it with Friesian X White Fulani
Crosses. A small processing plant has also been established at the site, to
produce pasteurized fresh milk, Yoghurt, butter and cheese (Yahuza, 2001).

2.6 Smallholder Dairy Cooperatives: The Annand Pattern

According to Kurup (2001), the milk producers' co-operative movement of India

started in Annand, Kaira District of Gujarat in the mid forties, set up by the milk
producers and their enlightened leaders, as an alternative to the highly
exploitative and unfair milk trade foisted on them by middlemen and private
dairy companies in Annand and Bombay. The spectacular success of the
Annand Milk Union Ltd (Amul), its rapid growth and democratic management
set up, made it an ideal model for rural milk production and marketing for the
rest of Gujarat. It enabled the milk producers to gain direct access to far flung
urban milk markets; earn a lion's share of the consumer rupee for their
products, eliminating middlemen.

The management structure of the union comprises the board from among the
primary members nominated by the District Cooperative Societies (DCSs) and
a chairperson elected from among the board members. Professionals manage
the union under the guidance and control of the board. The tenure of the
chairperson is one year and a new chairperson is elected each year, even
though the incumbent chairperson is eligible for re-election and is often
reelected for continuity and to support long-term development of the union.
Elected boards from among the primary members of the society also govern
the DCSs; and they in turn elect a chairperson from among them. The paid

18
secretary of the DCS and his staff, work under the supervision and control of
the board.

Milk collection in the Annand Pattern Co-operative set up through village dairy
co-operative societies in all major villages in the district, organised along viable
milk collection routes. The DCSs collect milk from their members twice a day,
test it for fat content and pay a quality based price to the members, twice daily.
The milk collected is picked up by the route milk trucks or tankers twice a day
and is delivered to the dairy plant or chilling plant of the union for processing or
storage or marketing. Starting with 11 DCSs and an opening volume of some
5000 litres per day, the Mehsana Milk Union now covers the entire district, and
has some 1078 dairy co-operative societies and, by 1999, a daily average milk
collection volume of 1.13 million kg; and some 415,212 tonnes annually
(Kurrup, 2001).

2.7 Smallholder Dairy Cooperatives: NLPD’s Experience

The National Livestock Project Division (NLPD) was established in 1974 as

Livestock Project Unit (LPU), under the Federal Department of Livestock and
Pest
Control Services of the Federal Ministry of Agriculture. It was given the
responsibility for the implementation of the first and second World Bank
assisted livestock projects. During the mid term review of the Second
Livestock Development Project (SLDP), a pilot dairy programme was added to
the SLDP in order to collect, process and market milk on behalf of pastoral
Fulani (Isma’il, 1995, Danbaba, 2001 and Yahuza, 2001).

The programme according to Shu’aibu (1999), is fashioned after the “Annand

Pattern” of dairy development programme implemented in India. A small-scale
dairy development unit was established by the NLDP and given the
responsibility for the implementation of the programme. According to Yahuza
(2001), a spearhead team was established and sent to the National Dairy
Development Board (NDDB) of India for a short training in farmer organization

19
and development, following the Annand pattern. On the return of the team, a
mobilization drive was initiated. The mobilization team comprising of the
following specialists: Veterinarian, Sociologist, Economist, Animal nutritionist
and Cooperative officer was constituted and given the responsibility for
mobilizing pastoralists and organizing them into associations. The mandate of
the team was to identify producers, mobilize and organize them into Village
Milk Producer Cooperative Associations (VMPCA). According to Yahuza
(2001), this was done through formal and informal contacts/visits with relevant
government agencies, traditional institutions, Fulani Ardos and the cattle
owners.

The programme started at Kachia grazing reserve where pastoralists have

been settled and provided with infrastructure under the SLDP. The first Village
Milk Co-operative Association (VMCAL) was established at Kachia grazing
reserve in 1991. Today there are 36 identified associations with about 2000
members spread across Kaduna state. Special milk collection routes were
identified and the sensitized milk producers were urged to supply milk to
collection centres on the identified routes. Each society has an elected
chairman and an appointed secretary. The secretary, act both as
administrator, of the society and as record keeper for the milk supplied by
members of his society. The secretary is paid from the commission that the
federation pays to each society (on per litre basis) for the quantity of milk
supplied. With the officials in place, an association is ready to commence milk
procurement activities while the spear team’s responsibilities ceases except
for supervision and the provision of extension and veterinary services.

As the number of associations increased, an apex organization solely

responsible for the procurement, transportation, processing and marketing of
milk supplied by the association was established. Thus, the Kaduna
Federation of Milk Producers’ Co-operative Association Limited (MILCOPAL)
was born.
The federation now trades under the name MILCOPAL.

20
To enable the processing of the milk collected by the federation, the approval
of the Kaduna state government was obtained for the use of the defunct
Kaduna Dairy Plant (Shu’aibu, 1999). The NLPD through the World Bank loan
carried out some repairs so that minimal level of operation was made possible.
As the operation expands, the need to control the dairy plant and secure
unlimited access was discussed. The World Bank provided a grant through the
loan for the purchase of controlling shares at the Nigerian Dairy Company
Limited (NDC), the owners of the Kaduna Dairy plant. According to Yahuza
(2001), the federation now owns 55% of the Kaduna Dairy Plant.

The NLPD, through the World Bank project, provided the vehicles for
procurement and marketing of milk collected. It also provided the initial seed
capital for milk procurement and operation. The management of MILCOPAL
was also provided from the staff of the NLPD. With the exception of veterinary
drugs and supplementary feeds that are on full cost recovery basis, all
developmental activities of the Federation are funded by NLPD, while
commercial activities (milk procurement, transportation, processing and
marketing and operating staff salaries) are funded directly by the Federation.

2.8 Yoghurt and Yoghurt Production

Yoghurt has been known to be the traditional form in which milk is consumed
in central and Southern Europe (Kon, 1972). It is a nutritious, tasty and stable
product obtained from milk subjected to a number of controlled fermentation.
According to Fox (1967) and Kosikowski (1982), Yoghurt is preferred to fresh
milk because of its hygienic safety, better flavour and texture and therapeutic
effects.

Yoghurt according to Van Den Berg (1988), originated from the inability of the
milk producers to control the quality of fresh milk over time. The name yoghurt
is used for products manufactured by cultures consisting exclusively of

21
streptococcus thermophillus and lactobacillus bulgarius. These cultures give
rise to different forms of fermented products available in the market.

The method of yoghurt production as described in literature is similar except

for one or two additions along the production line. The milk is heated to 90 oC
for 1530minutes, cooled to 40-45oC, inoculated with 2% mixed culture of
lactobacillus and streptococcus bacteria. It is held at this temperature (40 -
45oC) for 3-4 hours this is known as incubation process. The product is then
cooled to 5oC for packaging. This production process can be presented in a
flow diagram as illustrated by 0'Connor (1995) and Yakubu (2003) in figure 1.

FRESH MILK
Cream Separation

Standardization

Heating

Cooling to Incubation
Temperature

Inoculation with starter

Incubation

Filtering

22
 Packaging and
Storing
Figure 1: Flow diagram for yoghurt production.

Good quality yoghurt according to Arthurton (1987), should have body with a
relatively high viscosity. It should be firm and cohesive with a "gelatin"
consistency. It should also have a clean sharp acid flavour.

2.9 Dairy Products Marketing

Marketing of dairy products involves a large number of individuals, including

the pastoralists, processors, milk product distributors and retailers. The
marketing systems follow the production pattern, which distinguishes between
traditional producers, who operate mainly in the rural or semi-urban markets
and the reconstituted milk product producers and milk product importers who
operate in the urban markets.

2.9.1 Traditional (Rural) Markets

Unlike the marketing of animals, traditional dairy products (milk, cheese/butter

and yoghurt) marketing is widespread among the Fulani maids. The traditional
pastoral sector is noted for the production of milk. Therefore, marketing of milk
is one of the most important economic preoccupation of the Fulani maids. Milk
is important in the diet and culture of the Fulani. Fresh, boiled, or curdled, milk
is consumed by the Fulani and by the rural population. The Fulani women
monopolize the local dairy production in Nigeria, although they own only a few
of the family’s cattle (Isma’il, 1995). Pastoral women sell milk and cooked
millet balls called Fura in northern Nigeria and in other areas settled by the
Hausas. The milk products are carried on the women’s heads, in calabashes
as they walk to sale points such as rural markets, road side settlements and
urban areas. Every Fulani man must give his wife or wives enough milk to sell
or risk his marriage. Proceed from dairy sales are kept by the women, which

23
they use to buy cooking ingredients such as cooking oil, seasonings and
flavourings.

2.9.2 Urban Markets

Processing of milk in to various dairy products by urban processing plants, has

introduced a new dimension into the marketing of milk. Fresh or powdered milk
is converted in to yoghurt considerd to have a longer shelf life and high
acceptance among the people than raw milk. The urban milk and milk product
markets are dominated by the processors, distributors, wholesalers, depots,
retailers, bicycle boys and other retailers. The dairy products marketed
include: evaporated milk, powdered milk, baby formula, butter, ice cream,
cheese and yoghurt. Yoghurt is marketed in the cities under refrigerated
conditions to preserve its quality. It is sold in shops, restaurants, along major
roads and on low gravity bicycles in all the major cities of Nigeria.

2.10 Review of Analytical Techniques

There are significant studies on economics of production, but little has been
done specifically on yoghurt production, under the small holder dairy
cooperative of the NLPD. Therefore, studies in other aspects of production will
be reviewed.

2.10.1 Production Function Analysis

In a production process, inputs are converted into output. In agriculture, the

physical inputs with which we deal are land, labour, capital and management.
These resources can be organized into a producing unit, whose objective may
be profit maximization, cost minimization or the maximization of satisfaction.

The production function stipulates the technical or physical relationships

between inputs and outputs in any production process. It helps in the
estimation of marginal productivity of inputs and their efficiency in the
production process. The units to adopt in expressing the input – output

24
relationships and the criteria for selection of functional forms have been a
problem and a subject of controversy among researchers. The problem arises
from the heterogeneity of most variables (inputs and outputs) and lack of
common physical unit of measurement. For computational convenience, some
forms of aggregation and measurement in value were suggested by Heady
and Dillon (1964). Three commonly cited approaches to this area of
aggregation are the use of money, calorie equivalent and the use of grain
equivalent. Money is used for measurement of output from mixed cropping
(Mijindadi, 1980).

Heady and Dillon (1964), outlined some useful principles for selection of
appropriate functional forms. These include:
i) The consistency of the chosen function with the study objectives.
ii) Knowledge of the relationship that exist between variables. iii)
A consideration of the existing theories of the sciences.
Olayide and Heady, (1982) suggested choice of functional form based on
economic criteria. These criteria are:
i) The goodness of fit, which is determined by the magnitude of
the coefficient of multiple determination (R 2).
ii) Statistical significance of the regression coefficients. iii)
Correctness of the signs of the regression coefficients.

2.10.2 Farm Profitability Analysis

Cost-return analysis usually forms the basis for farm productivity analysis.
According to Osifo et al (1977), monetary values should be used as basis for
measuring all inputs and outputs in costs and returns analysis. According to
Wermer (1993), profitability is measured as the difference between value of
yield and cost of production, and net returns is measured as the difference
between values of yield and cash input cost including hired labour.
The major problems of cost returns analysis are:
(i) It does not indicate the relative importance of each of the resource in
production and

25
(ii) It is location bound and specific in applicability

In spite of these limitations, it is a useful tool in enterprise comparison and

indicating a profitable pattern of aggregate input use.

2.10.3 Resource Productivity

Productivity according to Olayide and Heady (1982), is the index of the ratio of
the value of total farm output to the value of the total inputs used in the
production. It is a measure of economic progress. It helps in solving problems
such as:
i) Distribution of income. ii) Allocation of
resources. iii) The relation between stocks
and flows. iv) Measurement of efficiency or
productivity.

Thus resource productivity can be defined in term of individual resource input

or in terms of their combination. Maximum resource productivity signifies an
efficient utilization of resources in the production. Therefore, productivity and
efficiency are synonymous in this context.
2.10.4 The Concept of Efficiency

According to Olukosi and Erhabor (1988), efficiency is the quantity of output

per unit of input used in the production process. It is concerned with the
relative performance of the process used in transforming given inputs into
outputs (Mijindadi, 1980). Economic theory distinguishes between two types of
efficiency: allocative and technical efficiencies. The degree to which allocative
and technical efficiencies are achieved is commonly referred to as production
efficiency (Olomola, 1991). According to Onyenweaku (1991), technical and
allocative efficiencies are parameters used in measuring economic efficiency.
This implies that both production and economic efficiencies are the same and
can be used synonymously. Allocative efficiency refers to the concept of in
which resources are allocated in the profit maximizing sense so that the

26
marginal value product of the products are equal to their input prices, while
technical efficiency is the ability to obtain the highest amount of output with
given amounts of factor inputs (Onyenweaku, 1991 and Olomola, 1988).

2.10.5 Measures of Efficiency

Different methodological approaches used in measuring efficiency are:

i) measures of farm business performance;
ii) the average production function; iii) the frontier
production function; iv) the profit function.
Each of these methods has its peculiar problem. The choice of any one of
them depends on the nature of available data, resources and facilities
available and the functions which the result of the research would serve
(Ekele, 1982).

2.11 The Structure and Conduct of Milk Marketing

The structure of market describes how the market is organised and its effect
on the competition of the market. Consequently such parameters as number
of firms, product differentiation, entry and exit condition as well as the degree
to which market information is available to all participants will be used to
determine the nature of the market competition.

2.11.1 Marketing Margin Analysis

Tomek and Robinson (1981) defined marketing margin as the price of a

collection of marketing services. The marketing services in this study are in
form of commissions paid to cooperatives, transportation, processing, storage,
distribution and packaging costs as well as wages to employees of the dairy
plant.

Marketing margin shows the fraction of the consumer’s expenditure on a

commodity that is received by the producer and each of the marketing

27
agencies (Olukosi and Isitor, 1990). The technique was used to give a closer
approximation of the market performance.
It is expressed in percentage as thus:

sellingcost costof purchase 100

Marketingmargin  x
sellingcost 1

28
 CHAPTER THREE

METHODOLOGY

3.1 The Study Area

This study was conducted in Kaduna state, which lies within the sub-humid
agro-ecological zone of north central Nigeria. Different types of crops are
grown and the area is conducive for animal production due to its relatively high
rainfall, which supports the growth of pasture.

The smallholder dairy project, which consists of the pastoralist, their

cooperative associations and the dairy plant, which produce and market dairy
product under the name of MILCOPAL (Milk Producers Cooperative
Association Limited) formed the study area. The choice of this study area was
based on the fact that it is the only project that deals with Fulani cooperative in
the whole federation.

3.2 Sampling Procedure

A sample of 40 male pastoralists (milk producers) from a population of 403and

60 female pastoralists (milk suppliers) from a population of 592 was randomly
selected, from 3 designated milk collection routes. The routes selected were
Kagarko/ Kuse, Joga /Kaban and Bango/ Maje. The registered cooperatives
sampled were Janjala, Maganda, Iche, Kuse, Joga, Kaban, Bango and Maje.
Also one peri-urban producer that is participating in the smallholder
programme was selected for the study.

3.3 Data Collection

Three sets of questionnaires were administered by the researcher with the

assistance of the cooperative officials, using interview schedules. Primary data
were collected from the pastoralists (males and females) and from the village
cooperative association officials in the three routes to enable the researcher
analyze the economics of small-scale dairy production under the cooperative

29
system. Also primary and secondary data were collected from MILCOPAL and
NLPD officials at the dairy plant.

The first set of questionnaire comprised information from the pastoralist milk
producers and suppliers, concerning mainly their:
i. Socioeconomic characteristics such as: age, sex, marital status, number of
children, occupation, educational background, herding experience,
membership of cooperative society and name of cooperative society. ii.
Production and marketing information such as the scale of production (herd
size), production system, number of cows in the herd, number of lactating
cows, daily milk off take per cow, calving interval, labour used in grazing,
watering, milking, supplementary feeding, drugs and vaccines, source of
production inputs, price per litre of fresh milk sold, amount of milk consumed at
home, how the milk is sold, equipments used in production, processing, and
marketing of milk, mode of payment for milk purchased by MILCOPAL, who
controls proceeds from milk sales and the amount realized from milk sales.

The second set of data comprised information obtained through interview of

officials of the various village milk producers’ association. Information collected
include: name of cooperative association, location or area of operation,
membership size, date registered, litres of milk supplied weekly to MILCOPAL,
quantity of milk supplied to MILCOPAL since formation, methods of milk
procurement, mode of payment for milk supplied and commissioned received
by the association services rendered to members, .

The third set of data comprised information obtained from the dairy plant.
Data collected include: production and marketing information such as quantity
of milk procured per week, number of cooperatives registered to supply milk,
price per litre of milk procured, mode of payment, transportation cost, labour
cost, production inputs, plant installed capacity, achieved output, amount of
water, sugar culture and fresh milk used in yoghurt production, electricity

30
consumed, storage facilities, packaging materials cost of providing marketing
services and price per litre of yoghurt produced.

Other information collected from the dairy plant includes: services rendered to
the cooperatives/pastoralist, problems encountered in the process of
procurement, processing and marketing. Data collection covered the
2004/2005 seasons.

3.4 Analytical Tools

The tools of analysis used for this study were:-

3.4.1. Descriptive statistics

Statistical tools such as percentage, frequency distribution table, arithmetic

means, ratio, and standard deviation were used to achieve objectives (i) (iii)
and
(vi).

3.4.2. Production Function Analysis:

According to Olayide and Heady (1982) it indicates the technical relationship

that exists between inputs and outputs in any production process. Four forms
of production function (Linear, Semi–log, Cob Douglas and Quadratic) were
used. They were used because they may give result close to that of a typical
classical production function.. The signs of the coefficients, the significance of
the t- value and the coefficient of multiple determination were used in selecting
the lead equation.

For milk production, the dependent variable milk output in litres was specified
as a function of three independent variables: Quantity of supplementary feed
in Kg/week, Labour in man- hours/week and Number of lactating cows in a
herd. This was used for the pastoral milk production. The Cobb-Douglas

31
(double log production) production function was selected for milk production
because its coefficient of multiple determination (R 2) provide the best fit and it
has the highest number of significant variables. The explicit form of the model
used in its estimation was:
Y = a x1b1. x2b2 . x3 b3. U
In double–log form, the function is

Log y= log a + b1 log x1 +b2log x2 +b3 log X 3 + log U

Where, Y= milk output in litres per week
X1 = number of lactating cows in a
herd
X2 = labour in man–hours/ week
X3 = quantity of feed in kg/week
U = error term
a = constant
b1-b3 = regression coefficients
This was used to achieve objective (ii)

For yoghurt production, the dependent variable yoghurt output in litres/ week
was specified as a function of four independent variables: Quantity of milk
procured in litres/week, labour in man hours/week, amount of sugar in
Kg/week and culture used in litres per week. The Cobb-Douglas production
function was selected because its coefficient of multiple determination (R 2)
provided the best fit and it has the highest number of significant variables. The
explicit form of the model used in its estimation was:
Y = a x1b1. x2b2 . x3 b3.x4b4. U

In double–log form, the function is

Log y= log a + b 1 log x1 +b2log x2 +b3 log X 3 +b4 log x4+ log U
Where Y = output of yoghurt in litres/week
x1 = quantity of milk procured in litres/week
x2 = labour in man hours/week
x3 = amount of sugar used in kilograms/week
x4 = amount of culture used in
kilograms/week

32
 b1 –b4 = regression coefficients
a = constant terms
U = error term
This was used to achieve objective (iii).

3.4.3 Resource Use Efficiency

Efficiency is the quantity of output (Y) per unit of input (X) used in the
production process. It is the average physical product (APP). It is measured
as
Y
APP 
X
Where APP = Average Physical product
Y = output
X = input

Also efficiency ratio (r) will be used to determine whether resources are
efficiently utilized, under utilized or over-utilized.
The ratio is given as
MVP
r
MFC

Where r = Efficiency Ratio

If r =1, it implies that resources are most efficiently
utilized. r > 1, it implies that resources are under
utilized. r <1, it implies that resources are over utilized.
MVP = Marginal Value Product
MFC = Marginal factor Cost (Cost/unit input)
MVPx can be obtained from

MVPx MPPxPy
__
dy bi Y

33
 MPPxi   __ dxi
Xi
__

Where Y = arithmetic mean of output

__

Xi = arithmetic mean of inputs ith bi =

estimated regression coefficient of the i th input

MPPxi = marginal physical product of input x i

Py = unit price of the output
This was used to achieve objectives (ii) and (iv) of the study.

3.4.4 Marketing Margin Analysis

The marketing margin analysis shows the percentage of consumers spending

that goes to the producer. It is calculated as follows:

Sellingcost Costof purchase 100

Marketingmargin  x
sellingcost 1

The tool was used to achieve objective (v) of the study.

3.4.5 Net Farm Income Analysis

The net farm income shows the total sales less the total cost of production
(variable and fixed cost). Calculated as follows:
Net Farm Income (NFI) = Gross Income (GI) - Total cost (TC).
The model for its estimation is

NFI Y.Py PX i X i FK

NFI = Net Farm Income
Y = Total product or output
Py = Price Per unit of product
Xj = Quantity of variable inputs
used
Pxj = Price per unit of variable
inputs

34
FK = Cost of fixed inputs
 = Summation sign
This was used to achieve objectives (ii) and (v) of the study.

3.4 Hypotheses Test

The first two hypotheses- there is no relationship between milk production and
inputs used and there is no relationship between yoghurt production and
inputs used- were tested based on the significant value of ‘t-cal.’ and F-ratio
obtained from the regression analysis, while the last two hypotheses – milk
production and yoghurt production are not profitable - were determined as
follows:

Ra Ca
t
S.E

Where
Ra = average revenue,
Ca =average cost,
S.E =standard error.
The standard error was calculated using:
2 2
S r S c

S.E  n1 n2

Where:
S2r = variance of revenue S2c = variance of cost n1 and
n2 = sample sizes of revenue and cost respectively.

35
 CHAPTER FOUR

RESULTS AND DISCUSSION

Chapter four presents and discusses the results of the study. The chapter is
divided into six sections. The first section describes the socioeconomic
characteristics of the pastoralists Milk producers and suppliers in the
smallholder dairy cooperatives, while the second section estimates the
production function, resource use efficiency for smallholder milk production
and profitability of milk production. The third section describes milk
procurement and processing under the dairy cooperatives. The yoghurt
production function estimation and resource use efficiency for MILCOPAL is
presented in the fourth section. Section five evaluates the profitability and
marketing margin of yoghurt in the study area. Section six examines the
problems associated with milk production, processing and marketing under the
smallholder dairy cooperatives of MILCOPAL.

4.1 Socioeconomic Characteristics of the Pastoralists Milk

Producers and Suppliers in the Smallholder Dairy Cooperatives

The pastoralists in the cooperatives are classified in to two by MILCOPAL. The

first category which consists of the male pastoralists is called the milk
producers. This is because they own the cows or the means of production.
The second category consists of the females or wives of the pastoralists are
called the milk suppliers. This is simply because they own the milk produced
by the family and control the proceeds generated from its sale.

The socioeconomic characteristics of the pastoralists milk producers are

summarized in Table 4.1

36
Table 4.1: Socioeconomic characteristics of the milk producers

S/No Characteristics Frequency Percentage

1. Age (Years)
21 – 30 2 5.0
31 – 40 5 12.5
41 – 50 19 47.5
51 – 60 9 22.5
Above 60 5 12.5
Total 40 100%
2. Number of Wives
1 4 10.0
2 23 57.5
3 11 27.5
4 2 5.0
Total 40 100%
3. Number of children
0–5 11 27.5
6 – 10 17 42.5
11 – 15 9 22.5
16 – 20 3 7.5
Total 40 100%
4. Education
Qur’anic Education 40 100.0
Adult Education 4* 10.0
Primary education 2* 5.0

Total 46* 115* %

5. Membership of Association
Maganda/Kagarko 5 12.5
Kuse 5 12.5
Iche 5 12.5
Janjala 5 12.5
Kaban 5 12.5
Joga 12.5
5
12.5
Maje 5
12.5
Bango 5
Total 40 100%

6. Herd Size
20 – 50 14 35.0
51 – 80 19 47.5
81 – 110 6 15.0
111 – 140 1 2.5
Total 40 100%

7. Years of cattle rearing

experience. 10 25.0
47.5

37
 0 – 15 19 17.5
16 – 30 7 10.0
31 – 45 4
46 -60
total 40 100%

Source: field survey data 2004/2005.

*Multiple responses n>40.
Age structure: Age distribution of the respondents ranges between 29 and 65
years. 82.5% of the respondents were above the age of 40 years while the
remaining 17.5% were below 40 years. This shows that more than half of the
respondents are of old age (above 40 years age); they therefore require a lot
of extension work to accept innovations that will improve performance of their
animals.
Sex: The male respondents were the producers. They own the cows (means
of production) that were used in the production of milk and beef.
Marital status: The entire males interviewed were married with about 80%
having more than one wife. They also have children ranging from 2 and 19 in
number. 70% of the male respondents have less than 10 children, while only
30% of the respondents have more than 10 children. This implies that the
Fulanis have fairly large families for labour supplies on the field and it serves
as a measure of prestige among the Fulanis.
Educational level: All the respondents interviewed have Islamic or Qur’anic
education. Only the secretaries to the village milk producers cooperatives
limited (VMPCL) attended primary schools or adult literacy classes. This
represents only 15% of the respondents; there is therefore low level of literacy
among the pastoralists.
Membership of cooperative societies: All the 40 respondents belong to their
village milk producers association. The associations should serve as avenues
through which the pastoralists can be contacted.
Herd size and structure: The number of animals in a herd ranges between
22 and 135. Average herd size 61 animals per herd. The breeds of cattle
mostly kept are the white Fulani. The herd composition on the average
consists of 50% lactating cows, 24% calves, 15% heifers, 10% breeding and
working bulls and 1% castrates. This implies that the Fulanis in the study area

38
are interested in the production of more calves and milk in their herds.
Increase in the herd size is one of the motives behind keeping large number of
cows and heifers.
Years of cattle rearing experience: Cattle rearing experience ranges
between 16 and 50 years, with an average of about 35 years. 25% of the
respondents have less than 15 years of cattle rearing experience, while the
remaining 75% have more than 15 years rearing experience. This implies that
majority of them are experienced cattle producers.
The socioeconomic characteristics of the pastoralist milk suppliers are
presented in table 4.2

Table 4.2: Socioeconomic characteristics of the pastoralist milk suppliers

S/No Characteristics Frequency Percentage

1. Age (Years)
11 – 20 8 13.33
21 – 30 26 43.33
31 – 40 13 21.67
41 – 50 9 15.00
Above 50 4 6.67
Total 60 100%
2. Marital status
1. Unmarried. 15 25.00
2. Married. 45 75.00
Total 60 100%
3. Education
Qur’anic Education 60 100.00
Primary education 2* 3.33
Total 62* 103.33* %
4. Membership of Association
Maganda/Kagarko 8 13.33
Kuse/Iche 8 13.33
Janjala 12 20.00
Kaban 8 13.33
Joga 8 13.33
Maje 8 13.33
13.33
Bango 8
Total 60 100%
5. Weekly milk supply in litres
2 – 10 31 51.67
11 – 20 18 30.00

39
 above 11 18.33
20
Total 40 100%
Source: field survey data 2004/2005.
*Multiple responses, n > 60.
Age structure: Age distribution of the respondents ranges between 11 and 58
years with an average age of 30 years. 56.66% of the sample were below 30
years, while 43.34 were above 30 years. The suppliers are younger than the
producers.
Sex: The females (Fulani maids) are called the suppliers because they own
the milk supplied and control the proceeds from its sale.
Marital status: About 75% of the females interviewed are married with about
25% unmarried.
Educational level: All the respondents interviewed have Islamic or Qur’anic
education. Only 2% attended nomadic primary school.
Membership of cooperative society: All the 60 suppliers belong to their
village milk producers association.
Weekly milk supply, Marketing and control of proceeds from the sale:
This is done by the women or suppliers. A husband must give his wife the milk
or risk his marriage. Non married women obtain milk from their parents. From
table 4.1 about 51% of the respondents supplied less than 10 litres of milk
weekly, while the remaining 49% supplied more than 10 litres per week. What
the women realized from the sale of milk is used in buying cooking ingredients
such as salt, cooking oil and other house needs. The women also buy the
containers in which they carry the milk. The most commonly used containers
are calabashes of various sizes, plastic buckets and metal bowls.

Milk collected is usually sold to The Milk Cooperative Producer Association

Limited (MILCOPAL), hence no processing is required. Milk is only processed
into butter, sour milk or boiled, on the days when procurement officers are not
available. The women are paid N30.00 per litre of milk supplied to MILCOPAL,
at the collection centres.

40
4.2 Production Function Estimation and Resources-Use Efficiency for
Milk Production by the Smallholder Pastoralists

4.2.1 Production Inputs in Smallholder Milk Production

Labour Inputs: Labour is a very important input in small holder pastoralist

system. Labour is required for the following: grazing, watering, milking,
supplementary feeding, security and medication.

The number of hours spent for any of the activities listed above depends
largely on the size of the herd and the time of the year. The average number of
hours spent for grazing and watering during the rainy season is about 8 hours
per day, while during the dry season it is about 10.5 hours. The number of
people allocated to a herd depends on the size of the herd and the season.
One person can take out 40 cows for grazing during the dry season, while two
people are required during the rainy season for that number because of their
closeness to farms then. Livestock production requires a higher amount of
labour in the months of July to November because the herd requires a great
deal of supervision to prevent crop damage at this time.

During the dry months of March to May, there is an increase in cattle labour
because of the need to water the animals from wells or far away streams and
to graze them farther away from the compounds.

Children do almost all the herding (92%) as reported by 80% of the

respondents. About 15% of the respondents use a combination of hired and
family children labour while 5% use mainly hired labour.

At six to seven years age, a child becomes a full-time herder beginning with
small stock. Children start herding calves, by eleven years. Children
particularly boys, start herding cattle initially as apprentices to an older herder.
Normally cattle herding is a supervisory activity as the animals know the way

41
and set the pace. Herders follow the animals keeping them from straying and
watching for predators.
Girls also do more small stock and calf herding and less cattle herding than
boys. The survey shows that some children attend nomadic schools. They only
participate in grazing activities during the weekends or when schools are on
break. In families where there are many children, they share the grazing days.
While some are on duty others are off.

The pastoralists using hired labour are those who do not have enough male
children to do the grazing or those who send their children to qur’anic or
nomadic schools. Amount paid for hired labour varies. The usual practice by
the pastoralist is to pay wages in kind. The hired labourer is paid at the end the
year with a 2 year-old bull, free accommodation and feeding. The bull can be
averagely sold for N 15,800.00. The males do milking in the morning, which
lasts for about an hour. Supplementary feed is given in the morning before the
animals are taken out for grazing during the dry season. The adult males in the
family provide security for the animals during the night hours.
Other inputs required in the production of milk include: Ropes, fencing wire or
stick, calabash or plastic containers, sticks and pegs.

Source of capital for production: None of the respondents reported ever

obtaining loan from any bank. They however, reported obtaining production
input such as cotton seedcake during the dry season on credit basis from
MILCOPAL. Their source of capital is from the sale of livestock such as
chickens, goats, sheep, eggs, cows and grains, which they produce.

Veterinary drugs and supplies: The pastoralists in most cases source for
veterinary drugs in the open market while some patronize the farmer
organization of MILCOPAL. The total cost incurred by a pastoralist per annum
for treatment of his animal depends on the disease condition of the herd. On
the average, cost incurred for treatment of a herd is about N23, 840.00 per
annum. However, the animals are being vaccinated every year by the various

42
local government authorities and MILCOPAL. The most commonly reported
cases of disease are worm infestation, trypanasomiasis, mastitis, Kirchi and
Brucellosis. The vaccines used are Black Quarter Vaccine (BQV). Tissue
Culture Rinderpest Vaccine (TCRV) and Contagious Bovine Pluero
Pneumonia (CBPP).
Cost of deworming an animal is N80.00, antibiotic (L.A. injection), N60.00,
BQV and CBPP are N40.00 per animal.

There are more reported cases of sickness in the rainy season than during the
dry season. The NLPD usually provides emergency mobile clinic services
wherever there is a case of disease outbreak.

During the year 2004, veterinary drugs worth N142, 250.00, salt lick worth N6,
000.00 were sold to the association members and private individuals by
MILCOPAL. Table 4.3 shows the drugs purchased by each association in the
year 2004.

Table 4.3: Drug purchased by each association in the year 2004

Association Veterinary drugs Dose AmountN

/association
Gwaraji Dewormer, sulphur drugs 279 18,250.00
Minerals salt lick 6 blocks 1,200.00
Joga Trypanocide, dewormer 788 43,500.00
mineral salt lick 3 blocks 600.00
Amana Dewormer, trypanocide, 291 15,350.00
antibiotic
Kaban Mineral salt lick 4 blocks 800.00
Trypanocide, dewormer 712 41,200.00
Gadangayan Mineral salt lick 16 3,200.00
Trypanocide, dewormer blocks 2,100.00
Bango Antibiotic, ectoparasiticide 41 9,350.00
Trypanocide, dewormer, 133 4,200.00
Maje antibiotic 110
Mineral salt block 200.00
Kuse Trypanocide, dewormer 1 block 8,300.00
antibiotic 178
Total 2,532 142, 250.00

43
 Dose
30 6,000.00
blocks
Sources: quarterly reports of the dairy unit, 2004.

Also in the year 2004, ambulatory services were carried out by the dairy unit
for the treatment of 2,532 cattle of association members at Kuse, Gadan
Gayan, Bango, Joga, Kaban, Gwaraji, Maje and Amana. The dairy unit also
embarked on enlightenment campaign on grazing management, feed
supplementation, milk hygiene, tick control and deworming in the year 2004.

Table 4.4 shows the number of animals treated per association under the
animal health and extension programme of the NLPD in 2004.

Table 4.4: Number of animals treated in the year 2004.

Association Cattle treated
Gwaraji 279
Joga 788
Amana 291
Kaban 712
Gadan Gayan 41
Bango 133
Maje 110
Kuse 178
Total 2532
Source: quarterly reports of dairy unit, 2004.

Livestock supplementary feed: The result of the study shows that all the
respondents give supplementary feeds to their animals only during the dry
season. Only very old and sick cows that cannot graze receive some
supplementation during the rainy season. Supplementary feeds given include,
cotton seed cake, crop residue, potash, maize bran and in some cases salt
lick. During the year 2004, 43.48 tonnes of cotton seed cake, worth N
784,100.00 were purchased by the associations for their members. The
pastoralists also purchase some of the feeds from the local markets around.
Level of supplementation is very low among the pastoralists. On the average
they give about 2kg per day of supplementary feed per animal against the

44
standard of giving animals 3% of their body weight (a matured white Fulani
cow averagely weighs 250kg, hence it requires about 8kg supplementary feed
per day). The average cost of supplementary feed per pastoralists in the dry
season is about N48, 512. Only animals on production (lactating or in their last
stage of gestation) are given supplementary feeds in the morning before going
for grazing or in the evening when they return. Reasons advanced for this is to
ensure survival of the calf as well as revenue from the sales of extra milk
produced.
4.2.2 Production Function Estimation and Resources-Use Efficiency
for Milk Production by the Smallholder Pastoralists

Production function analysis is used to determine the productivity of the

individual factors of production. This section examines the extent to which the
independent variables explain the variability of the dependent variable
(output).The result of the regression analysis for the small-scale pastoralists
shows that, the double-log equation fit well for their system of production.

Table 4.5: Estimated double–log production function for smallholder

milk production

Variable Regression Standard t-value

coefficient error
Number of Lactating cows X1 0.522 0.130 3.999*
Feed X2 0.276 0.125 2.206*
Labour X3 0.179 0.069 2.587*
Constant 0.570 0.208 2.743*
R-2 = 0.87
F= value = 88.20*
* = significant at 1% level of probability.

The other production functions tried were rejected based on the fact that the
double-log function has a higher R-2 value and the highest number of
significant variables. From Table 4.5, the three variables - number of lactating
cows, feed and labour are all significant at 1% level of probability. The
adjusted coefficient of multiple determination - R -2 indicated the percentage of
the variations in the observed dependent value that is explained by the fitted

45
regression equation.The R-2 adjusted value obtained is 0.87. This indicates
that the independent variables – number of lactating cows, feed and labour
explained, on the average, 87 percent of the variation in the output of milk. The
unexplained variation in milk output is obviously due to other inputs not
specified in the model.

The F- ratio presented in Table 4.5 measures the joint significance of all the
explanatory variables in the model. The value obtained is 88.20, which is
significant at 1% level. This implies that, the included explanatory variables
together, significantly explain variation in milk production. This led to the
rejection of the null hypothesis, which states no relationship between milk
production and the three inputs used.

The regression coefficient with respect to each of the explanatory variables

and their t- value are also presented in Table 4.5. The regression coefficients
show the extent to which variation in independent variables explains variation
in the dependent variable. The t-values are used to test the significance of the
coefficients.

The selected equation being a Cobb-Douglas function, it implies that the

regression coefficients represent the elasticities of production with respect to
its corresponding variable. The regression coefficient and elasticity of
production with respect to the number of lactating cows, feed and labour
are.0522, 0.275 and 0.179 respectively. These values are significant at 1%
level. This implies that a 1% increase in the number of lactating cows, feed
and labour will increase the amount of milk obtained by 0.522, 0.276 and
0.179 percent respectively. These values are all less than one, which implies
that they are all inelastic and a 1% increase in any of the inputs will increase
output of milk by less than 1%.

On returns to scale, when all the inputs are changed simultaneously by 1

percent, the sum of the elasticities of production with respect, to all the inputs

46
is 0.977. This implies that there is almost an equal increase in output from
equal increase utilization of the inputs (constant returns to scale). There is
therefore the need for increase in the utilization of the inputs, since milk
production is secondary; the primary motive of production is Beef production
and the survival of the calves.

4.2.3 Resource - Use Efficiency for milk production

Efficiency ratio (r) was used to determine whether the resources are efficiently
utilized, under utilized or over utilized. Table 4.6, gives the marginal physical
product (MPP), marginal value product (MVP), marginal factor cost (MFC) and
the efficiency ratio (r) of the inputs.

Table 4.6: MPPs, MVPs, MFCs, and efficiency ratio(r) of variables in milk
production

Input MPP= bi y / xi MVP= Efficiency =

Litre/unit input MPPxPy (N) MFC MVP/MFC

Number of 6.400 192.00 0.0082

lactating cows
Feed 0.180 5.40 11.00 0.5000
Labour 0.152 4.56 4.86 0.9400

A given resource is optimally allocated if its marginal value product is just

sufficient to offset its cost. The basic condition that must be satisfied to obtain
efficient use of resources is the equality of MVP to MFC. The values of the
efficiency ratio for lactating cows, feed and labour are 0.0082, 0.50 and 0.94
respectively. All the values are less than one, which implies over utilization of
resources. The result means an increase in extra unit of the inputs will not
yield revenue sufficient enough to offset the cost. This calls for reduction in the
utilization of the inputs if milk is considered as the only output from the
production process.

47
4.2.4. Net Farm Income Analysis

This section gives a summary of the cost and returns of the small-scale
pastoralists (milk producers) and consequently the gross margin and the net
farm income. The gross margin is obtained by subtracting the variable costs
from the total revenue, while the net farm income is obtained by subtracting
fixed cost elements from the gross margin.

It is difficult to isolate the cost of milk production in a traditional system of

production (Nwoko, 1986). Reasons advanced include: milk is regarded as
secondary rather than a primary product, cattle are fed through the free range
system or on the stubble of harvested crops which may not necessarily belong
to the owner of the herd and the fixed cost component form a negligible
fraction of total costs.

The average values obtained from the descriptive

statistic was used to calculate the net farm income. The
average number of cows lactating in a herd was 30 cows, average feed used
was 607.38kg /week, average labour was 60.50 man hours/ week and milk
output was averagely 368.98 litres/ week.

Table 4.7: Net farm income statement for milk production for 30 lactating
cows/ week

Unit Produced Price Unit Total (N)

Items (N)
A. Output (fresh milk) 368.98 Litres 30.00 11,069.63
Cost Unit Used

B. Variable Cost
Feed 607.38Kg 11.00 6,681.18
Labour 60.5Manhours 4.86 294.03
Medication 142.60

Total variable cost. 7117.81

48
C. Fixed Cost
Calabash 2.50
Stick 0.50
Ropes 15.00
Feeding/watering trough 5.00
Local fencing 20.00
Depreciation on cows 923.08
Total fixed cost. 966.08

D. Total cost = (B+C) 8,083.89

E. Gross Margin GM = ( A – B ) 3,951.82

F. Net Farm Income

NFI = A – (B+C) 2,985.74
Average rate of return
ARR = NFI/Total Cost 0.37
Source: field survey, 2004/2005.

The net farm income as shown on table 4.7 is N 2,985.74 while gross margin
is N3, 951.82. The farmer’s average rate of return is N0.37. Therefore,
pastoral milk production is profitable. Variable costs account for 88% of the
total cost of production, while the fixed cost component is 12%.
4.2.5. Significance of the Difference between Revenues and Costs in
Milk Production

The significance of the difference between revenues and costs in milk

production was used in testing null hypothesis (3) of the study – milk
production is not profitable.
Table 4.8 shows the difference between revenues and costs in milk and
yoghurt production.

Table 4.8: Significance of the Difference between Revenues and Costs in

Milk Production.

Estimate Milk production

Revenue(N) Cost(N)

49
Minimum 3,528.00 1,900.00
Maximum 27,300.00 18,900.00
Average 11,069.63 8,083.89
Std. deviation 5,312.72 3,588.19
Std. error 840.02 567.34
Difference (profit) 2985.74
t – statistic 5.629*
t – critical 2.426

Source: field survey, 2004/05

* Significant at 1% level of significance.
Decision rule: the value of t-statistic (5.629) > the value of t-critical (2.426),
hence the null (Ho) hypothesis is rejected. Therefore, pastoral milk production
is profitable.

4.3 Milk Procurement and Processing under the Smallholder

Cooperative

The pastoralists used for this study were mobilized to form village milk
producer associations, by the dairy unit of the National Livestock Production
Division (NLPD). Thirty-six (36) village milk producer cooperative associations
were formed from inception of the programme in 1987 to date. However, at the
time of this study the number of associations that sell milk to MILCOPAL are 8
and 1 peri-urban producer. These associations are: Kagarko (Maganda),
Janjala, Kuse and Iche all in Kagarko local government area. The rest are
Joga, Kaban, Maje and Bango in Igabi local government area. The peri-urban
producer is from Sabon Birni also in Igabi local government. Each association
has an elected chairman, vice chairman, treasurer and secretary who serve as
the administrative head of the association. The secretary being the only paid
staff of the village cooperative association receives N1, 000.00 monthly from
the commission generated. The secretary is responsible for recording the
amount supplied by each milk supplier (woman) in his ledger. This helps in the
preparation of delivery notes which paves way for payment.

50
Leaders of the associations also represent their members and decide on their
behalf during meetings with MILCOPAL. They also procure inputs and
medications from the farmer organization of MILCOPAL for interested
members. Other activities carried out by the associations with the
commissions generated include: road and culvert repairs, construction of
classrooms for their children’s education, awareness campaign on acceptance
of cooperative milk supply, maintenance of milk hygiene and non adulteration
of milk. Some of the secretaries also teach in their nomadic schools and
participate in polio vaccination programme.

Fresh milk used by MILCOPAL for yoghurt production is sourced from the
pastoralists who were mobilized into groups of cooperative dairy producers
association at village level. The procurement department of MILCOPAL
usually sends its staff in the morning to the various milk collection routes.
Table 4.9 shows the routes usually followed, associations involved and their
approximate distances from the dairy plant.

Table 4.9: Procurement Routes, Associations involved and their

Distances from the Dairy Plant
S/no. Milk collection Producer associations Approximate
routes. involved. distance in km
1 Gadan Gayan route Bango, Maje and Amana 40
2 Kaban/ Joga route Kaban, Joga and Gwaraji. 80
3 Kagarko/ kuse route Kagarko (maganda), Kuse, 150
Iche, Janjala and chinka
4 Kachia milk route Kallah, Kajuru and Kachia 135 5 Zaria milk
route Tankarau,Hanwa and B/ yaro. 65
6 Birnin gwari route. Buruku,Kuriga and B/gwari. 140
7 Sabon Birni route. One peri-urban producer 35

Source: field survey, 2004/2005.

Gadan Gayan (maje/bango), Kaban/Joga, Kagarko/Kuse and the Sabon Birni

milk routes are the most promising routes, because they supply milk
throughout the year. Other routes have not supplied milk to MILCOPAL since

51
2003. Table 4.10 shows the total milk supplied, revenue received, and
commission collected by each association from January 2004 to April 2005.

Table 4.10: Total Milk Supplied, Revenue and Commission Received by

the Associations.

S/NO ASSOCIATION MILK SUPPLIED Revenue Commission

IN LITRES N30/litre N2.00/LITRE
1 Kagarko 48,191.50 1,445,745 96,383.00
2 Kuse 24,734.50 742,035 49,469.00
3 Janjala 33,440.00 1,003,200 66,880.00
4 Chinka 5,442.50 163,275 10,885.00
5 Kaban 10,708.00 321,240 21,416.00
6 Joga 11,006.00 330,180 22,012.00
7 Amana 2,367.50 71,025 4,7244.00
8 Bango 6,122.00 183,660 12,244.00
9 Maje 15,006.00 450,180 30,012.00
10 Sabon Birni 2,714.00 81,420 Jan-April
Total 159,732.00 4,791,960 319,464.00
Average 15,973.20 4 79,196 31,946.40
Source: - field survey, 2004/2005

From table 4.10, nine associations and one peri-urban producer supplied a
total of 159,732 litres of fresh milk; this gives an average of 15,973.20 litres
per association. The associations in all received revenue of N4, 791,960.00
and a commission of N319, 464.00 for the milk supplied. Average revenue and
commission received was N479, 196.00 and N31, 946.40 per association
respectively. The revenue goes to the various association members that
supplied the milk, while the commission goes to the association for paying
their secretaries and carrying out development programmes in their areas. The
price per litre of fresh milk procured is N30.00 and a N2.00 commission is paid
to the village association. To the MILCOPAL, price paid per litre of fresh milk is
therefore N32.00 (milk cost and commission inclusive).

Procurement staff with the company vans leave as early as 6.00am to their
procurement centers. In the dry season, due to relatively lower output of the
Fulani cows two vans were used to procure milk while three vans were used in
the rainy season. They (procurement officers) spend 6 hours when on the

52
short routes (Gadan Gayan and Sabon Birni routes), and they may have to
spend about 9-10 hours on longer routes such as the Kagarko/Kuse and
Kachia routes. Fuel consumption by the procurement vehicles is between N1,
400.00 for the short route and N2, 400.00 for the longer route daily.

The milk suppliers (Fulani maids) converge with their milk at the designated
milk collection centres every morning. The federation staff use some measures
to ensure that only high quality milk is accepted. The milk is subjected to
organoleptic test using sensory organs (eyes, nose and tongue) to test for the
presence of dirt, blood cells, odour or smell and sourness of the milk.
Lactometer test is also used to check for adulteration, especially where water
is added.

Milk supplied by each woman is measured and filtered into the milk collection
churn. Each churn takes up to 50 litres of fresh milk. The women are not paid
immediately but on weekly basis. They are given a passbook on which the
daily milk collected is recorded. The procurement officers also have a ledger
on which names of suppliers and amount supplied are recorded. The
association secretaries also have their own books for record purposes. It is
from these records that delivery notes are prepared for each association to
pave way for payment. Milk is collected five times in a week from the
pastoralists. On the remaining days, pastoralists’ women process their milk
and sell in the neighbouring villages, markets, or to the wholesalers. Prices of
dairy products are higher in the markets (N50.00 /litre) than those obtained
from the MILCOPAL (N30.00/litre).

Milk procured is then transported to the dairy plant, where alcohol test is
carried out to ascertain the suitability of the milk for further processing.
Certified milk is then steam heated for about two hours at the plant. For longer
routes such as Kagarko/ Kuse, milk is steam heated at Kuse centre to avoid
spoilage while on transit. The village cooperative secretary at Kuse carries out
the boiling process for a fee.

53
Immediately after milk procurement, Alcohol test is carried out at the dairy
plant to ascertain its ability to withstand heat treatment. After the tests, the milk
is passed for pasteurization by raising its temperature to about 75-80 0c for
about 2 hours. It is then cooled to 40-45 0c to help kill some of the harmful
bacteria in it. At this point, some of it is sold as pasteurized fresh milk or further
processed into yoghurt. To process it into yoghurt, the pasteurized milk is
inoculated with 2% mixed starter culture of lactobacillus and streptococcus
bacteria. It is held at this temperature (40-45 0c) for 3-4 hours, known as the
incubation process. The product is then cooled, filtered and sugar is added
before packaging or storage.

4.4 Yoghurt Production Function Estimation and Resource -

Use Analysis of MILCOPAL

Production and processing of yoghurt were used interchangeably in this

context. Milk is processed into various dairy products (yoghurt, pasteurized
fresh milk and butter) by the MILCOPAL, but the most important of the
products is yoghurt which accounts for 90% of total output of the plant. The
production function analysis was used to determine the productivity of the
individual factors of production.

This section, therefore, examined the extent to which the independent

variables
(milk, labour, sugar and culture) explain the variability of the dependent
variable (yoghurt output). The result of the regression analysis for the dairy
unit shows that the Cobb-Douglas equation fit well based on the number of
significant variables and its coefficient of multiple determination for the unit.
Table 4.11, presents the regression result from the Cobb-Douglas equation.

Table 4.11: Estimated Cobb-Douglas Production Function for Yoghurt

Production.

54
Variables Regression coefficients Standard error t-Value
Milk X1 0.0662 0.028 2.332**
Labor X2 0.273 0.132 2.064**
Sugar X3 0.055 0.043 1.281***
Culture X4 0.559 0.119 4.697*
Constant 1.788 0.130 13.734
R-2 = 0.84 F – Value
= 217.214* *** =Not
Significant.
** = Significant at 5% level of probability
* = Significant at 1% level of probability

The other production functional forms tried were rejected based on the fact
that the Cobb-Douglas production function has a higher adjusted coefficient of
multiple determination (R-2) and a higher number of significant variables. From
table 4.11, two variables – milk and labour are significant at 5%, culture is
significant at 1%, while sugar is not significant. The adjusted coefficient of
multiple determination R-2 value of 0.84 implies that the independent variables
included in the model explained on the average, 84% of the variation in the
output of yoghurt.
The F-ratio, also presented in table 4.11 is a measure of joint significance of all
the explanatory variables in the model. The value of this ratio is 217.214,
which is significant at one percent (1%) level. This implies that, the included
explanatory variables taken together, significantly explain variation in yoghurt
output, hence the null hypothesis which states no relationship between yoghurt
production and inputs used is rejected.

The regression coefficients also represent the elasticity of production with

respect to the corresponding variables. The regression coefficients with
respect to milk, sugar, culture and labour are 0.0661, 0.055, 0.559 and 0.273
respectively. This implies that they are inelastic and a 1% increase in milk,
sugar, culture and labour will increase the output by less than 1%.

55
4.4.1 Resource Use Efficiency of MILCOPAL in Yoghurt Production

The resource use efficiency measures how proportionate resources are used
in production. Table 4.12, shows the resource - use efficiency in yoghurt
production.

Table 4.12: Resource - Use Efficiency in Yoghurt Production Inputs

MPP= bi y / xi MVP= MPPxPy Efficiency =

Litre/unit input (N) MFC MVP/MFC

(N)
Milk 0.11 13.75 32 0.43
Labour 6.32 790 258.3 3.10
Sugar 0.70 87.5 76 1.15
Culture 6.86 857.5 142 6.04

The result in table 4.12 shows that milk with efficiency ratio of 0.43 is over
utilized meaning that the amount being used is probably too much, hence the
need to take measures that will improve its utilization. The remaining inputs –
sugar, culture and labour with efficiency ratios of more than one are under
utilized. This calls for expansion of production through the use of more
sophisticated machines, to replace manual operations that currently dominate
at the plant.

4.4.2 Resource - Use Situation in the Dairy Plant

The Kaduna pilot dairy is essentially a dairy development programme aimed at

encouraging the indigenous rural based pastoralists to produce milk above
their household consumption requirements, and pool the excess together for
collective processing and marketing. This is within a cooperative set up, which
is by design, to be owned and operated by the pastoralists themselves. Under
the current pilot stage, the staff used in the dairy processing plant are divided
into two categories. The first category of staff are seconded from the National
Livestock Production Division (NLPD), while the second category belongs to
the Milk Cooperative Producer Associations Limited (MILCOPAL). The first
category is the management staff which are under the payroll of the NLPD,

56
 while the second are the operational and junior staff under the payroll of
MILCOPAL. The plant is divided into the following sections each headed by a
manager.
i. Procurement section
ii Processing section (quality control and processing) iii
Marketing section iv Finance and administration
v. Animal health and extension.
Figure 1 presents information on the organizational structure of the dairy plant.

Project Manager
(NLPD)

Managing Director
(Diary Plant)

Procurement Processing Marketing Finance and Animal Health

Admin. and Ext.

Figure 2: organizational structure of the dairy (MILCOPAL)

57
4.4.2.1 Labour

There are in total 58 staff in the dairy plant. However, in this study, only the
actual staff involved in procurement processing and marketing are considered,
to give a better picture of the cost and returns analysis. The units concerned
are the procurement with 2 staff (procurement officers), processing unit with 5
staff and the marketing section with 10 staff. They receive an average monthly
salary of N16, 825.67. The workers directly concerned with milk processing put
in on the average, 195 man-hours per week. Therefore a man-hour costs N
21.57.
4.4.2.2 Raw Materials

The major raw material for yoghurt production is fresh milk. It is sourced from
the Fulani cooperative associations. Imported commercial powdered milk is
used to supplement the reduced amount of fresh milk obtained during the drier
months of February to June. The break down of the quantity supplied of fresh
milk and powdered milk and their costs is given in table 4.13.

Table 4.13: Fresh Milk and Powdered Milk Supplied for Yoghurt
Production at MILCOPAL in year 2004 – April 2005

Supply source Quantity (L) Mean supply/ Cost in N Percentage

Week (L) (%)
Fulani 159,067 2,524.87 5,090,144 58.36%
cooperative
Powdered milk 113,477.75 1,801.23 3,631,288 41.64%
Total 272,544.75 4,326.10 8,721,432 100.00
Source: field survey data, 2005.

A total of 272, 544.75 litres of fresh milk and its liquid equivalent worth N
8,721,432.00, was supplied to the processing plant within the study period.
Out of this, 159,067 litres, worth N5, 090,144 representing 58.36% was
supplied by the local Fulani cooperatives, while 113,477.75 liquid equivalent of
powdered milk worth N3, 631,288 (41.64%) was supplied from the market.
Other inputs like sugar, culture water, and firewood are procured depending on
the need. During the period under review, a total volume of 297,240.87 litres of

58
yoghurt was produced, with an average volume of 4718.11 litres per week.
The production process is done with some improvised machines operated
manually due to the breakdown of the major processing plant.

Equipment used in production includes: locally fabricated vat (pasteurization

vat), sealing machine, cream separator, milk and butter churns, hand plungers,
stainless steel buckets, incubator, starter culture spoon and water trough for
boiling milk. The factory has an installed capacity of handling 18,000 litres of
milk daily, but due to the obsolete nature of the machines, the only functional
part can handle only 1500- 2000 litres of milk per day. Efforts to reactivate the
plant was however, put on hold because it will gulp about $ 2.2m (about N300
million), according to the Danish consultants that initially handled its
construction at the sum of N700, 000 in 1975.

4.5 Profitability of Yoghurt Production and Marketing Margin in

the Study Area

Yoghurt after production, is passed to the quality control section to ascertain

its quality or otherwise. The product is packaged manually in bottles using
bottle filler and in sachets using sealing machines. The product line of the
MILCOPAL and their various prices is given in Table 4.14.

Table 4.14: product line of MILCOPAL and their prices in Naira

Product line Price (N)/ litre

330ml yoghurt bottle 50.00
1 litre yoghurt bottle 125.00
2 litres yoghurt bottle 250.00
4 litres yoghurt bottle 500.00
500ml sachet 60.00
Bulk yoghurt 100.00
Pasteurized Fresh milk 90.00
Butter 300.00/kg
Source: field survey data, 2004/2005.

59
Each yoghurt bottle or sachet has MILCOPAL Logo pasted on it and it comes
in different container sizes. The smallest is the 330ml and the biggest is the 4
litres Jar. MILCOPAL sales outlets are four in Kaduna town and environs.
They are in Kaduna State Government Secretariat (Independence Way),
NLPD headquarters (Yakubu Gowon Way), Unguwar Sarki (Kalanpanzee
Road) and at the plant head office (Gidan Madara/ NDC). The dairy plant also
has distributors in other areas when demand is low in Kaduna town, especially
during the rainy season and during harmattan. Refrigerated vans are used to
reach other states such as: Kano, Yobe, Niger, Katsina and the Federal
Capital Territory, Abuja where they have distributors. Occasionally, they attend
the Kaduna international trade fair as a promotional strategy. A litre of
MILCOPAL yoghurt is sold at N125.00

4.5.1 Net Farm Income Statement of MILCOPAL

The Net farm income statement shows the total cost of production and the
profit generated from the sales of a product. It is the gross income from a
business less the total cost of production. It helps the entrepreneur to
determine the average rate of return from his investment.
Table 4.15, gives the Net farm income for yoghurt production at MILCOPAL.

Table 4.15: Net farm income statement of MILCOPAL per week

Unit Prod. Price Unit Total (N)
Items (N)
A. Output 4,608.65Litres 125 576,081.24

Cost Unit Used

B. Variable Cost
Milk Used 4,326.11 Ltr. 32 138,435.52
Sugar 373.84 Kg. 76 28,411.84
Firewood 136.20 Kg. 10 1,362.00
Quality Control 6,775.00
Diesel 70.30 Ltr. 60 4,218.00
Maintenance (Plant) 4,405.92
Maintenance (Vehicle) 1,812.00
Fuel 490.5 Ltr. 55 26,977.50
Marketing cost 104,689.00

60
 Total variable cost. 318,086.78
C. Fixed Cost
Salary 40,968.20
Electricity 2,385.22
Water 1,232.25
Registration (NAFDAC) 1,458.33
Depreciation 12,188.25
Total fixed cost. 58,232.25
D. Total cost = (B+C) 376, 319.03
GM = (A – B ) 257,994.46
NFI = A – (B+C) 199,762.21
Average Rate of Return
ARR = NFI / Total Cost 0.53
Source: field survey, 2005.
From the Net Farm income statement on table 4.15, the Gross Margin per
week is N257, 994.46 and the Net Farm Income is N199, 762.21. This gives
the firm an average rate of return (ARR) of 0.53. This implies that for every
N1.00 invested, there is a return of N 0.53. The variable cost component
accounted for 84.53% of the total cost of production, while the fixed cost
accounted for only
15.47%.

4.5.2 Marketing Margin Analysis

The marketing margin for yoghurt was calculated using the following:

sellingcost costof purchase 100

Marketingmargin  x
sellingcost 1

From the gross margin analysis on table 4.15, the cost of selling a litre of
yoghurt is N81.65, while the purchasing cost of fresh milk is N32.00.
Therefore, the

Marketingmargin 

 60.81%

61
The result shows that, the marketing margin is 60.81%. This indicates that
60.81% percent of what the consumer pays goes to the MILCOPAL who
process and market the milk supplied by the pastoralists. The village milk
producers receive only 39.19% of the consumer’s expenditure. The high
marketing margin is not unconnected to the fact that, a lot of work in form of
procurement, transportation, processing and packaging is carried out on the
raw milk to make it available to the consumer at the place, form, time and price
he is willing to offer to take possession.

4.5.3 Significance of the Difference between Revenues and Costs in

Yoghurt Production

The significance of the difference between revenues and costs in yoghurt

production was used in testing hypothesis (4) of the study. Table 4.16 shows
the difference between revenues and costs in yoghurt production.

Table 4.16: Significance of the difference between revenues and costs in

yogurt production

Yoghurt production
Estimate
Revenue(N) Cost(N)
Minimum 324,282.66 242,826.60
Maximum 744,207.00 452,862.86
Average 576,081.24 376,319.03
Std. deviation 109,131.06 49,118.04
Std. error 14,715.23 6,623.08
Difference (profit) 199,762.21
t – statistic 22.755*
t - critical 2.397
Source: field survey 2004/2005.
* Significant at 1% level of significance.

62
Decision rule: the value of t-statistic (22.755) > the value of t-critical (2.397),
hence the null (Ho) hypothesis is rejected. Therefore, yoghurt production is
profitable.

4.6 Problems Associated With Milk Production, Processing and

Marketing under the Smallholder Dairy Cooperatives of Milcopal

This section gives an insight into the problems encountered by the milk
producers and processors. These problems are discussed based on the
sections they were encountered.

4.6.1 Problems Associated With Smallholder Pastoral Milk Production

Feed: Supplementary feed especially in the drier months of March to May is

very difficult to come by. The cost of purchase is exhorbitant and milk yield at
that time is very low. Pastoralists spend longer hours, covering longer routes
along fadama plains to feed their cattle. They sometimes have to migrate to
other areas to search for what their animal can browse on.

Price: There are a lot of complaints about the price offered by MILCOPAL for
fresh milk. The N30 per litre price being offered is considered too low by the
pastoralists especially during the dry season. This sometimes forces some
suppliers not to deliver their milk at the collection centres. They are requesting
for an upward review of prices.

Security: The pastoralists are complaining bitterly about insecurity in their

areas. Their lives and animals are always threatened by thieves who come in
large number to steal their animals. They spend all night guarding and in the
day they go herding.

Drugs and vaccines: The cost of drugs is exhorbitant and the presence of
quacks and fake drugs has worsened the situation. Diseases incident
especially during the rainy season is posing a serious threat to small holder

63
dairy production. Ticks and worm infestation occur more during the rainy
season.

Breed factors: Cattle breeds which originate from the tropics generally have a
limited genetic potential for milk production and remain mediocre producers
with 500-1500 kg (520 – 1560 litres) per lactation. The white Fulani kept by the
pastoralists cannot compete with breeds found in other parts of the world in
terms of milk yield. This is a serious problem especially where the government
is looking inward to encourage local production in place of over dependence
on imports.

Sociological factors: Herding people are often nomadic. Herds are moved
from one location to another. They keep herds for prestige; hence they prefer
quantity to quality production. An average, pastoralist is more interested in the
number of cows in his herd than the number that can be managed efficiently.
In this system of production, the animal has to trek long distances to search for
food, which is shared between work (trekking) and productive use. This is a
serious problem to increased productivity. The efforts of the NLPD toward
establishing fodder banks and grazing reserves should be strengthened in
conjunction with other agencies such as the Poverty Eradication Programme,
Ministries of Agriculture and Water Resources as well as states and local
governments.

4.6.2 Problems Encountered By Milcopal during Procurement

Road Network: The major challenge facing the procurement officers of

MILCOPAL is that of poor road network to the various milk collection routes.
This problem is worsened in the rainy season when milk production is at its
peak. The pastoralists are scattered in the bush with no access road. In some
days, procurement officers have to abandon the milk in some routes especially
when there is early morning down pour. The roads lack good drainages and
the rivers sometimes over flow their banks. Sometimes pastoralists have to
trek to nearby collection centres with their milk or risk its being abandoned.

64
The various local governments in the area need to live up to their responsibility
by assisting the joint efforts of the pastoralist in communal road repairs.

High cost of transportation: The cost of milk procurement is very high due to
increase in prices of petroleum products and related inputs. Every morning,
the van has to be fuelled, maintained and sent to the bush for procurement. A
minimum of N1, 400.00 fuel is needed to cover the shortest route of about
40km. (maje/bango route). This takes about 6 hours to complete. During the
dry months of March to May, an average of 40 to 50 litres is procured daily,
which is roughly equal to the amount spent on fuelling the vehicle. This makes
procurement unattractive especially during the dry season.

Product adulteration at producer level: Some pastoralists are of the habit of

adulterating their milk before supplying it to the collection centre, which creates
problem while processing. Lack of compliance to laid down procedure for milk
handling through addition of water, using unhygienic equipments, mixing fresh
milk with a spoilt one and milking of sick animals constitute a serious threat to
procurement. The procurement officers sometimes reject milk from non -
complying women to deter others. Seasonality of production: The procurement
section is also faced with the problem of low supply during the dry season.
During this period demand for dairy products is very high, which can hardly be
met. On the other hand, there is high supply of fresh milk during the rainy
season when demand is very low. This leads to the stretching of facilities for
storage with high tendency of product spoilage during the rainy season and
underutilization during the dry season.

Diversion of products by the pastoralists: This occurs during the dry season
when prices are higher in the markets, than what the MILCOPAL is paying.
The number of suppliers reduces during this time only for it to increase during
the rainy season.

65
4.6.3 Problems Encountered By the Milcopal during Processing

High cost of production: The raw materials used in yoghurt production are milk,
sugar and culture. The fixed and variable cost components are very high
thereby making production cost to be high.

Power failure: The main source of power supply to the plant is the National
Electric Power Authority (NEPA). The plant experiences a lot of power
breakdown during production and while products are in the cold room.
Spoilage is very high for yoghurt in the first and third quarters of the year due
to power failure. A stand by generator is used to minimize the problem at a
very high cost.

Lack of modern processing equipment: The plant is currently operating with

few improvised equipments, which are mainly operated manually. The plant
has since stopped operating with its installed machines due to their
breakdown. Therefore manual operations such as steam heating using fire
wood for pasteurization of milk and manual packaging predominates. This
contributes to product spoilage especially when here is power breakdown.
Efforts made by NLPD to reactivate the plant were unsuccessful due to its cost
implication. The estimated cost of reactivation as put by the Danish
consultants, who handled its construction is $2.2 (N300 million), for a factory
that was constructed at N700, 000 in 1975. This was considered too high for
the NLPD to afford. Currently the plant can only handle about 1800 – 2000
litres daily of fresh milk, against the plant installed capacity of 18,000 litres
daily. Milcopal has been unable to collect all the milk produced by the
pastoralists, especially during the flush season when excess is produced.

4.6.4 Problems Encountered By the Marketing Section of Milcopal

Supply and demand: Milk is a seasonal product, so also is its supply and
demand pattern. An average of 400 – 500 litres of dairy products is sold daily
during the rainy season, which incidentally is the peak season for the supply of
milk by the pastoralists. The resultant effect is stockpiling of product, thereby

66
tying down capital and the associated risk of product spoilage. During the dry
season when supply is lean, dairy product demand is as high as 1000 litres
per day, while supply of fresh milk is as low as 80 litres per day. This makes it
difficult for MILCOPAL to satisfy the market during periods of high demand.

Storage facilities: Storage facilities in the dairy plant are far from being
adequate. This coupled with poor power supply pose a serious problem to
product quality. MILCOPAL yoghurt contains no preservative hence the need
for it to be under continuous refrigeration to avoid spoilage.

Promotional activities: Promotional activities are very low at MILCOPAL,

especially during the flush season. They only occur occasionally during the
Kaduna international trade fair and on the few signboards placed in front of
their retail outlets.

67
 CHAPTER FIVE

5.0 SUMMARY, CONCLUSION, RECOMMENDATIONS

AND SUGGESTIONS FOR FURTHER STUDIES

5.1 Summary

In the past, different governments have tried to improve milk consumption of

the populace, by ensuring steady local supply. Most of these programmes
have not yielded the desired result of ensuring local production that will
guarantee the minimum dairy products requirements of average Nigerians.
This was partly due to the nature of the production system of the pastoralists
who are small scale and widespread in the bush. In view of these problems, a
World Bank-assisted project - the smallholder pilot dairy project- was added to
the Second Livestock Development Programme (SLDP) of the National
Livestock Project Division (NLPD), whose sole responsibility was to organize
pastoralists into viable producer associations. Kaduna state was chosen and
the pilot project was established in 1987. The study examined the economics
of milk production, processing and marketing under the smallholder dairy
cooperatives of the MILCOPAL, as an attempt to contribute to knowledge in
the area of pastoral cooperatives in Kaduna state.

To achieve the objectives of the study, a field survey was conducted in

Kaduna state from January 2004 to May 2005. Three categories of
respondents were identified. These were the small-scale pastoralist in the
various cooperatives, officials of the various cooperative associations and the
officials of MILCOPAL and NLPD at the dairy plant. A total of 40 milk
producers and 60 suppliers were randomly selected, while officials of the 8
associations were included in the study. Four analytical techniques were used
to achieve the objectives of the study. They are the descriptive statistics,
production function analysis, net farm income analysis and marketing margin
analysis.

68
The descriptive statistics was used to achieve objectives one, three and six.
The production function analysis and resource-use efficiency were used to
achieve objectives two and four of the study. The Cob-Douglas production
function was found to be suitable for both pastoral milk production and for
yoghurt production. Net farm income analysis was used to achieve objectives
two and five of the study. The marketing margin analysis was used to achieve
objective five of the study. Four hypotheses were tested from the results and in
all the null hypotheses were rejected.

With respect to the first objective, the results of the study revealed that,
pastoralists in the programme were grouped into milk producers and suppliers.
The socioeconomic characteristics of the producers revealed that their
average age was 48 years, all married with large families, only 15% attended
primary or adult literacy classes, all belong to village milk producer
association, with average herd size of 61 animals and up to 35 years cattle
rearing experience. The socioeconomic characteristics of the milk suppliers
revealed their average age as 30 years, 75% were married with children, only
2% attended formal school, they all belong to their cooperative associations,
51% supply less than 10 litres of fresh milk weekly and they all sell their milk to
MILCOPAL at N30.00 per litre.

Inputs used in traditional pastoral milk production system include: labour, feed,
drugs (veterinary drugs and traditional herbs), potash, calabash, sticks,
feeding and watering troughs, local fencing materials and buckets. Only
lactating cows are given supplementary feed before they are taken out for
grazing during the dry season. However, no supplementary feed is given
during the rainy season to all categories of animal in the herd.

With respect to the resource-use efficiency and profitability in pastoral milk

production (objective two), three variables -number of lactating cows, feed and
labour tested were found to be significant in milk production at 1% level of
probability. Also the F-ratio which shows the joint significance of the entire

69
explanatory variables in the model is significant at 1% level. This leads to the
rejection of the first null hypothesis that there is no relationship between milk
production and inputs used.

From the elasticities of production obtained, a 1% increase in the number of

lactating cows, feed and labour will increase the amount of milk produced by
0.522, 0.276 and 0.179 percent respectively, hence all the inputs are inelastic.
On returns to scale when all inputs are changed simultaneously by 1% there
will be increase in output by 0.977%.The efficiency ratio for all the variables is
less than one, which implied over utilization of resources. On profitability of
small scale milk production, the result shows a gross margin of N3, 951.82 and
a net farm income of N2, 985.74 per week from an average of 30 lactating
cows. The null hypothesis (3) of the study –milk production is not profitable
was rejected based on the test of significance of the differences between the
revenues and costs in milk production.

With respect to the third objective, the results revealed that 36 village milk
producer cooperative associations were formed from the inception of the
programme in 1987 to date. Only eight of the associations and one peri urban
producer supply milk to MILCOPAL. Officials of the associations are
responsible for organizing the pastoralists into groups of milk suppliers and
ensure the payment of money for milk supplied by their members.

The village milk producer cooperatives are paid a commission of N2.00 per
litre of milk procured by MILCOPAL which is used for the payment of the
secretary’s salary of N1,000.00 per month. Other activities carried out by the
associations with their commissions are: construction of drainages, culverts,
road repairs, construction of classroom blocks for their children’s education
and payment of transport fares for officials on assignments.

There are three major routes for milk collection-Gadan Gayan, Kaban Joga
and Kagarko/Kuse. Sabon Birni is the only Peri- Urban producer who joins the
cooperatives. These routes are found in three local government areas of

70
Kaduna state, (Igabi, Chikun and Kagarko) with a distance that ranges from
between 35 to 150 kilometres from the dairy plant.

There are two procurement officers who collect milk every day from the routes.
The milk suppliers converge with the milk at designated centres for
measurement and necessary tests. The amount supplied by each woman is
recorded and a passbook is issued to facilitate payment at a later date. N30.00
is paid per litre of milk procured by MILCOPAL. Milk procured is then
transported to the dairy plant for processing.

The method of milk processing shows that the milk is subjected to laboratory
tests by the quality control section, to ensure its quality and ability to withstand
heat treatment. The milk is then pasteurized by raising its temperature to about
900c for an hour. This is then cooled to 40-45 0c and inoculated with 2% mixed
culture of lactobacillus and streptococcus bacteria. It is then incubated at this
temperature for 3-4 hours, after which it is cooled, filtered and sugar added
before packaging or storage.

With respect to efficiency of resource-use in milk processing in to yoghurt

production (objective four) fresh cow milk is the major raw material. Other raw
materials used in yoghurt production are sugar, labour, culture and water. Four
variables were tested and the regression results show that sugar is not
significant; milk, culture and labour are significant at 5%. The F-ratio is
significant at 1%, which leads to the rejection of the second null hypothesis
that says there is no relationship between yogurt production and the inputs
used. The regression coefficients which also represent the elasticity of
production for milk, sugar, culture and labour inputs are 0.0661, 0.055, 0.559
and 0.273 respectively. This implies that they are all inelastic; hence their
increase will increase output by less than the increment. On the resource-use
efficiency, milk has a value of 0.43, meaning it is over utilized while the
remaining inputs (sugar, culture and labour) are under utilized.

71
On the marketing margin of yoghurt (objective five) the result shows that
60.81% of what the consumer pays on yoghurt goes to the processing firm
(MILCOPAL), while 39.19% goes to the milk producer. This high marketing
margin was as a result of the value added to the product through processing
which improves the shelf life of the product and its acceptance by people.

On the profitability analysis, the gross margin per week is N257, 994.46 and
the net farm income is N199, 762.21 with an average rate of return (ARR) of
0.53, meaning that for any N1.00 invested there is a return of N0.53. The null
hypothesis (4) of the study –yoghurt production is not profitable was rejected
based on the test of significance of the differences between the revenues and
costs in yoghurt production which shows that yoghurt production is profitable.

Problems associated with milk production, collection, processing and

marketing (objective six), have been discussed. These problems range from
insufficient supplementary feed during the dry season and its expensive
nature, low producer prices for milk at village level, insecurity of the animals,
high prices of drugs and vaccines, problems of low milk yield of local breeds
and their motive of production .

Problems of MILCOPAL include; poor road network to the collection centres,

High cost of transportation, fresh milk adulteration by the pastoralists,
seasonality of production, diversion of milk by the pastoralists when supply is
lean, High cost of production, power failure, lack of modern processing
equipments, differences between demand and supply, lack of enough storage
facilities and the near absence of promotional activities.

5.2 Conclusion

The main focus of this study was to determine the resource-use efficiency in
milk production, processing and marketing under the smallholder dairy
cooperative system. Based on the findings of the study, it can be concluded
that smallholder dairy cooperative production is quite feasible in the study

72
area. Such an exercise has improved the welfare of the pastoralists and
generates employment and affordable dairy products to the masses. An
effective dairy cooperative will lower cost of dairy products, improve livestock
health through proper extension services and consequently would increase
livestock productivity and hence the supply of livestock and livestock products.

5.3 Recommendations

Based on the findings and conclusion of study the following recommendations

are made. Some of the recommendations involve an appropriate institutional
framework necessary for the success of the smallholder dairy cooperative
scheme.
a. The pastoral Fulani should be settled. For the pastoralists to settle down in
the grazing reserves and form cooperatives for milk procurement, there is the
need for coordination of efforts by various organs of government that deal with
them. The National Livestock Project should work in collaboration with other
agencies such as the Poverty Eradication Programme, Ministries of Agriculture
and Water Resources as well as various states and local governments. This
collaboration should be in the following areas.
i. Gazetting of all the grazing reserves should be done by the federal
ministry of agriculture and natural resources, to enable the pastoralists,
settle there. This will go a long way in reducing conflict between the
Fulani and farmers and reduce their movement from one location to
another.
ii. The ministry of water resource has a role to play in reserves, toward the
provision of water for the animals and human consumption. This
requires the construction of Dams, sinking of bore hole and wells.
iii. The National commission for nomadic education (NCNE) has a role to
play through the construction of schools for the education of their
children especially those on the grazing reserves.
iv. The various state and local governments should provide security of
lives and property in the reserves, health clinic and veterinary services,

73
 access road to the various milk collection centers and extension
services.
b. The Kaduna state government owns 45% of the share, should fulfill its
promise of rehabilitating the plant, so that it can become fully
operational. Efforts toward selling the state shares should be stopped.
c. The pricing of milk should be improved. Currently, N30/litre of fresh milk
is being paid to the pastoralists by MILCOPAL, as against the local
market price of N50/litre. The pastoralists have been complaining for an
increase considering the general price level in the economy. The
NLPD’S efforts toward creating different price of milk for dry season and
rainy season should be encouraged in consultation with the pastoralists.
d. Rehabilitation of the processing plant to enable the federation collect
and process milk during the flush season when the farmers have plenty
of milk. Adequate storage facilities to prevent spoilage has to be put in
place and the number of procurement vehicles should be increased to
cater for areas that are hardly covered during the rainy season.
e. The road networks are poor: This requires the action of the various local
governments especially during the rainy season. Some of the
associations need bridges to cross the rivers that separate them with
the main feeder road. Lack of these bridges cut-off milk supply and
therefore reduce the income of the farmers.
f. Inputs supplied to pastoralists albeit genuine, appear to be fairly costly.
A revolving fund with a substantial amount should be established to
allow for adequate procurement of the commodities during the season
when they are relatively less expensive so that farmer can enjoy
uniform price of these inputs throughout the season of demand.
Arrangement should also be put in place to allow pastoralists pay in
kind for inputs with their milk.
g. Genetic improvement of the local cow should be encouraged especially
through the establishment of artificial insemination centers. The
pastoralists should be educated on how to select good breeds for
mating.

74
h. Pastoralists need to be educated on the aspect of milk hygiene to
reduce contamination at producer level. They should also be trained to
identify and avoid milking cows with udder disease; milk adulteration by
adding water can be minimized by paying extra for high-grade milk
supplied to MILCOPAL.
It should be noted however, that the motive of the dairy cooperative enterprise
is not purely profit maximization. It is geared towards encouraging pastoralists
to stay in one place, pool their resources together in a worthwhile venture
(Danbaba, 2001; and Yahuza, 2001). This is aimed at ensuring steady income
to the pastoral families, education for their children, creation of job
opportunities, improvement in their living condition and the health of their
animals. The programme has therefore affected the lives of the pastoral
families in the provision of ready market for their produce, enhancing their
religious practice, ensuring steady income and good health of their animals.

The above factors explain why the profit margin of the enterprise is not much.
They focus mainly on extension of cattle management practice and formation
of cooperative, so that high quality milk products are provided to the people at
affordable prices.

Finally, there are positive indications that there are prospects in the small-
scale dairy cooperative production and the sky is the limit of investors when
their resources are appropriately managed.

5.4 Suggestions for Further Studies.

Although this study came out with some good results, it should be noted that
the data for yoghurt production was obtained from an individual cooperative
firm. Therefore general policy statements cannot be made based on these
findings on yoghurt production; such statements should be restricted to
MILCOPAL yoghurt.

75
It is therefore suggested that other yoghurt producers, especially those using
purely powdered milk should be analyzed to provide basis for comparisons.
The proposed Abuja dairy pilot project which is a replication of the Kaduna
dairy project should also be studied to find out how far it has gone towards the
provision of quality dairy products and impacting on the lives of the
pastoralists.

5.5 Limitations of the Study

This study was constrained by unavailability of comprehensive data from the

pastoral Fulani regarding their expenses. Lack of good roads to the various
settlements of the Fulani coupled with their widespread in the thick forest and
migratory nature presented another limitation. Also lack of sufficient funds by
the researcher limits the amount of data used for the study.

76
 REFERENCES

Adesipe, Y. M. (1986). Making Nigerian Livestock Policies and Strategies as

Instruments for Rural Development: A paper presented at the Annual
conference of Nigerian Association of Agricultural Economists
(NAAE), held at ABU, Nigeria.

Adholla-Migot, S., and P. Little (1980). Evaluation of Policy Towards the

Development of Pastoral Areas in Kenya. In: The future of Pastoral
People: Proceedings of a Conference held in Nairobi, by the Institute
of Development Studies, Nairobi.

Arthur ton, H. V. (1987). Chemistry and Testing of Dairy Products. CBS

Publishers and Distributors, India.

Awogbade, M. O. (1981). Prospects for Settlement of the Pastoral Fulani: A

Case Study of Ruma-Kukar-Jangarai, Kaduna State, Nigeria.

Awogbade, M. O. (1983). Fulani Pastoralism: Jos Case Study. Ahmadu Bello

University Press Limited.

Bennet, J. (1990). Human Adaptations to the North American Great Plains and
Similar Environment. In: P. Olson Lincoln (Ed). The Struggle for the
Land: Indigenous Insight and Industrial Empire in the Semi-arid World.
The University of Nebraska Press, pp 41-79.

Buchanan K. M. and Pugh J. C. (1955). Land and People in Nigeria: The

Human Geography of Nigeria and its Environment. University of
London Press.

Central Bank of Nigeria (CBN). (1999). Annual Report CBN, Lagos, Nigeria.

Danbaba, M.M. (2001). Cooperative based Livestock Extension Delivery

System: A Case Study of Kaduna Pilot Dairy. A paper presented at the
National Workshop on Strengthening the Livestock Component of the
Unified Agricultural Extension System (UAES). Arewa House Kaduna.

De St Croix, F. (1945). The Fulani of Northern Nigeria: Some General Notes.

Lagos: Government Printer.

Ekele, H.H. (1982). Farm Size and Economic Efficiency: A Case Study of Crop
Farm of Different Size Groups in the Funtua Agricultural Development
Project area of Kaduna state. Unpublished M. Sc. Thesis. Ahmadu
Bello University, Zaria, Nigeria.

77
Ellis, J., and D. Swift. (1988). Stability of African Pastoral Ecosystems:
Alternative Paradigms and Implications of Development. Journal of
Range Management, 14:450-459.
Food and Agricultural Organization of the United Nations (FAO) (1988). Food
and Agricultural Development in Nigeria (1965-80). FAO, Rome, Italy.

Fox, P. F. (1967). Fermented milks. Technical Bulletin, Dairy Series 6.

Agricultural Institute, Dublin, Ireland.

Frantz, C. (1981). Fulbe Continuity and Change Under Five Flags Atop West
Africa: Territoriality, Ethnicity, Stratification, and National Integration. In:
John Galaty, and Philip Salzman (Eds). Change and Development in
Nomadic and Pastoral Societies, pp.89-115. Netherlands: E. J. Brill.

Fricke, Werner. (1979). Cattle Husbandry in Nigeria: A Study of its Ecological

Conditions and Socio-Geographical Differentiations. Translated by J.
Hellen and Gordon Cockburn. Heidelberg.

Gulliver, P. (1952). The Karamajong Cluster. Africa Journal of the International

African Institute. XXII, 1: 1-2.

Heady, E.O and Dillon, J.L (1964). Agricultural Production Functions. Iowa
state university press, Ames, Iowa.

International Livestock Centre for Africa (ILCA), (1976). Livestock Production

in the Sub-humid Zone of West Africa. System study 2. ILCA, Addis
Ababa, Ethiopia.

Isma’il Iro (1995). The Fulani Milk Maid and Problems of Dairying in Nigeria.
www.gamji.com/fulani.

Kaduna Federation of Milk Producers’ Cooperative Association Limited

(MILCOPAL): (2004). Annual Marketing Reports.

Kon, S. K. (1972). Milk and Milk Products in Human Nutrition Food and
Agricultural Organisation (FAO) Rome, Italy.

Konczacki, Zbigniew. (1978). The Economics of Pastoralism: A Case Study of

Sub-Saharan Africa. London: Frank Cass.

Kosikowski, F. V. (1982). Cheese and Fermented Milk Food. Kosikowski and

Associates, New York USA

Koutsoyiannis, A. (1979). Modern Microeconomics. Macmillan Press Limited,

2nd Edition, Houndmills, Basingstoke, Hampshire and London pp. 68-
70.

78
Kurup M.P.G. (2001). Package of Improved Livestock Services through
Cooperatives: A Case Study of the Mehsana District Milk Producers'
Union Ltd., Gujarat, India. Proceedings of a South – South Workshop
held at the National
Dairy Development Board (NDDB), Annand, India. E-mail:
mpgkurup@wilnwtonline.net/ mpgkurup@yahoo.com
Kurwijila, L.R. (2001). Evolution of Dairy Policies for Smallholder Production
and Marketing in Tanzania. Department of Animal Science and
Production, Sokoine University of Agriculture. Morogoro, Tanzania.

Livestock Subsector Review (1992). Report 102/92 CPNIR 49 SR/5/8/92.

Meir, A. (1987). Comparative Vital Statistics along the Pastoral

NomadismSedentarism Continuum. Human Ecology series 15: 2.

Michael, W. J. Grindale J., Neil, A. and Bachman, M. (1991). Dairy

Development in Sub-saharan Africa: A Study of Issues and Options.
Washington, D. C. World Bank Technical Paper. Africa Technical
Department Series 1:35

Mijindadi, N.B. (1980). Production Efficiency of Farms in Northern Nigeria.

Unpublished Ph.D. Dissertation, Cornel University, Ithaca, USA pp. 19-
22.

National Archives (1934-48). Archives, A. Ghee (Butter) Industry (Clarified

Butter Fat or CBF), Zaria Province. In: Yahuza M. L. (2001). Smallholder Dairy
Production and Marketing Constraints in Nigeria. National Livestock
Project Division (NLPD) Yakubu Gowon Way, Kaduna, Nigeria. ACC
1967. National Archives, Kaduna Nigeria.

National Livestock Project Division (NLPD) (1992). National Dairy Survey,

NLPD, Kaduna, Nigeria

Niamir, M. (1990). Community Forestry: Hunter's Decision-Making in Natural

Resources Management in Arid and Semi-arid Africa. Rome: Food and
Agriculture Organization of the United Nations.

Njire, R.M; Kwinji, L.N; Gabche, A.L. and Tambi,E.N. (2001). Contributions of
the Heifer Project International (HPI), to Small scale Dairy Development
in Cameroon. Proceedings of a South – South Workshop held at the
National Dairy Development Board (NDDB), Annand, India.

Nuru, S. (1990). Prospects and Challenges of a Viable Dairy Industry. Paper

Presented at the Monthly public Lecture series of the Federal Ministry
of Science and Technology, Lagos, Nigeria.

79
Nwoko, S. G. (1986). The Development of Dairy Imports in Nigeria. LPU
Working Paper No. 10. International Livestock Centre for Africa (ILCA)
Addis Abba, Ethiopia.

O'Connor C. B. (1995). Rural Dairy Technology. ILCA, Addis Ababa, Ethiopia.

Olaloku, E. (1976). Milk Production in West Africa. Objectives and Research

Approaches. Journal of the Association for the Advancement of Agriculture in
Africa 3: 5-13

Olayide, S.O. and Heady E.O. (1982). Introduction to Production Economics.

Ibadan University Press, Ibadan, Nigeria.

Olomola, A.S. (1988). Agricultural Credit and Production Efficiency: a Case

Study Monograph series No. 4. Nigerian Institute of Social and
Economic Research (NISER), Ibadan, Nigeria.

Olomola, A.S (1991). Captive Fisheries and Agriculture in Nigeria: A

Comparative Economic Analysis. In: Doss, C.R and Olson, C. (Eds.)
Issues in African Development. Winrock International Institute for
Agricultural Development, USA.

Olukosi, J. O. and Isitor, S. U. (1990). Introduction to Agricultural Marketing

and Prices: Principles and Applications. Living books series Abuja,
Nigeria.

Olukosi, J.O. and Erhabor, P.O. (1988). Introduction to Farm Management

Economics: Principles and Applications. Agitab Publishers, Zaria,
Nigeria.

Onor, I. A. (1999). Economics of Yoghurt Production: A Case Study of NAPRI.

Unpublished MSc Thesis, Ahmadu Bello University, Zaria, Nigeria.

Onyenweaku, C.E. (1994). Economics of Irrigation in crop production in

Nigeria. In: Breth, S.A. (Ed) Issues in African Development 2, Winrock
International Institute for Agricultural Development, USA.

Osifo, D. E. and Anthonio, Q.B.O. (1977). Costs and Returns: A Case Study of
Upland Rice Production under Traditional Farming Conditions in the
Wasimi and
Ilaro areas of the Western State of Nigeria. Nigeria Journal of Economics and
Social Studies, Vol.1 2, No. 3

Resource Inventory and Management (RIM) (1990). Livestock Resource

Survey, Nigeria.

80
Riesman, P. (1977). Freedom in Fulani Social Life: An Introspective
Ethnology. Translated by Martha Fuller. Chicago: The University of
Chicago Press.

Saha, G.C. and Haque, S.A.M. (2001). Small scale Processing and Marketing
of Milk in Bangladesh: A Case Study. Proceedings of a South – South
Workshop held at the National Dairy Development Board (NDDB),
Annand, India.

Salzman, P. (1980). Processes of Sedentarization as Adaptation and

Response. In: Philip Salzman (Ed) When Nomads Settle. New York:
Praeger.

Sandford, S. (1982). Management of Pastoral Development in the Third

World. John Wiley & Sons, New York USA.

Shu'aibu, M. U. (1999). The strategy of Managing Dairy Cooperative Firm in

Nigeria. A Case Study of MILCOPAL.

Stenning, D. (1959). Savannah Nomads: A Study of the Wodaabe Pastoral

Fulani of Western Borno Province Northern Region, Nigeria. London:
Oxford University Press.
Timmer, C.P. (1970). Measuring Technical Efficiency. Food Research Institute
Studies in Agricultural Economics, Trade and Development. U.K. vol. 9
No. 2.

Tomek, W. G. and Robinson, K. L. (1981). Agricultural Product Prices. (2nd

edition) Cornell University Press, New York, USA.

Van den Berg, J.C.T. (1988). Dairy Technology in the Tropics and Subtropics.
Centre for Agricultural Publishing and Documentation (PUDOC) the
Netherlands.

Vengroff, R. (1980). Upper Volta: Environmental Uncertainty and Livestock

Production. Texas.

Walker D. A. W. (1981). Livestock development in Nigeria 1914-1979. A brief

historical review. Working Document 1. National Livestock Project
Division, Kaduna, Nigeria.

Waters-Bayer, A., and E. Taylor-Powell. (1986). Population and Land Use in

the Sub humid Zone of Nigeria. In: R. Von Kaufmann, S. Chater, and R.
Blench (Ed). Livestock Systems Research in Nigeria's Sub humid
Zone: Proceedings of a second I.L.C.A. /N.A.P.R.I. Symposium held in
Kaduna, Nigeria, October 29November 4, 1984, pp.37-58. Addis
Ababa: I.L.C.A.

81
Wermer, J. (1993). Participatory Development of Agricultural Innovations:
Procedures and Methods of On-farm Research GTZ publishers,
Eschborn, Germany.

Wilson, W. (1984). Resource Management in a Stratified Fulani Community.

Ph.D. Dissertation, Howard University, Washington, D.C.

World Bank. (1992). Feasibility Study of the Rehabilitation and Operation of

the Kaduna Dairy Plant. The World Bank Annual Reports 120,
Washington DC, USA.

World Bank. (1993). Feasibility Study on the Viability of the Kaduna Federation
of Milk Producers’ Cooperative Association Limited. The World Bank
Annual Repsorts, Washington DC, USA.

Yahuza M. L. (2001). Smallholder Dairy Production and Marketing Constraints

in
Nigeria. National Livestock Project Division (NLPD) Yakubu Gowon Way,
Kaduna, Nigeria. Proceedings of a South – South Workshop held at the
National Dairy Development Board (NDDB), Annand, India.

Yahuza M. L. (2002). Improving Livelihoods of Smallholder Livestock

Producers through Peri-urban Dairy Production in West Africa: The
National Livestock Project Division (NLPD) Experience. National
Livestock Project Division, Federal Department of Livestock and Pest
Control Services, 9 Yakubu Gowon Way, Kaduna, Nigeria.

Yakubu, A.O. (2003). Problems Associated with Pilot Yoghurt Production.

Seminar paper, Department of Food Technology Kaduna Polytechnic.

82