Lending to Agribusinesses in Zambia

ACP were: (i) marketing, trade and agribusiness promotion; (ii) agricultural finance and
investment; (iii) agricultural infrastructure and land development; (iv) technology
development and dissemination; and (v) sector management and coordination.

The Dairy Sub-Sector

Dairy is one sub-sector that has great potential for development and growth in Zambian
agriculture. Zambia is a net milk importer, with the country only able to meet about 75
percent of its 253 million liters annual milk requirement. About 70 to 80 percent of all
milk consumed in Zambia is sold directly to consumers in local, open markets while the
remaining 20 to 30 percent is processed by the commercial dairy processing industry
(Mukumbuta and Sherchand 2006). An increase in the number of dairy processors is
changing this situation, leading to significant product differentiation resulting in increase
in demand for fresh milk.

Over 90 percent of cattle in Zambia are owned by traditional small-scale cattle
producers who are mainly beef producers and milk production is largely a by-product of
beef cattle production. Milk production efficiency is therefore very low, averaging 2 liters
per cow per day compared to an average of 20 liters per cow per day among specialized
dairy farmers. Animal health and nutrition issues do not receive significant attention by
the smallholders even though cattle production is a symbol of wealth among these
communities. Cattle feeding is primarily by open pasture grazing practices rather than
provision of fodder, hay and feed supplements. Due to heavy or total dependence on
natural pastures whose availability fluctuates significantly with different seasons, milk
production in the dry season among small-scale producers is very low. The smallholders
also generally tend to sell only surplus milk. As a result, volumes are usually too low to

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