Improving Smallholder Livelihoods Through Local Value Chain Development: A Case Study of Goat Milk Yogurt in Tanzania

Farmers in the Mgeta village in the highlands of Uluguru Mountains, Tanzania, started keeping dairy goats over 20 years ago. Recently, the farmers, through their local association (TWAWOSE, meaning “let’s work together”), have started to transform part of their surplus milk into yogurt as a means of adding value and raising incomes. The objective of this study was to assess the potential for upgrading local dairy value chains to improve smallholder livelihoods. The main research questions included (i) whether local dairy value chains are beneficial for smallholder farmers, and (ii) whether smallholder farmers are capable of developing and maintaining a newly established dairy value chain. These questions were examined through a case study analysis of Twawose’s local dairy value chain. Kaplinsky and Morris’ (2001) value chain framework was used to analyze the Twawose value chain. The framework was modified to incorporate a review of assets that highlights the links between assets and chain governance on upgrading strategies. Data were collected during two field visits to Mgeta in May 2010 and January 2011 utilizing semi-structured interview techniques and secondary qualitative and quantitative data. Findings confirm that local dairy value chains benefit both the smallholder farmers’ directly involved in the chain and others in the Mgeta community. Year-round income from milk and yogurt is a valuable addition to their seasonal vegetable sales. Other positive impacts of local dairy value chains can include an increased asset base for participants, job creation, and improved household nutrition. This chain has the potential to benefit an even larger number of smallholders in Mgeta. However, there are challenges related to a lack of critical assets such as electricity, proper packaging, and limited access to information, markets, and finance that complicates the scaling-up and scaling out of the chain. The case highlights the need for supportive networks to mobilize and sustain local value chains.