Lending to Agribusinesses in Zambia



allow them access to better formal sector markets (Mukumbuta and Sherchand 2006).
The regulatory framework for management of the dairy sector and enforcement of public
health guidelines to ensure food safety in smallholder milk marketing also remain weak.
This weakness has disadvantaged smallholder milk producers because milk processors
are not provided quality guarantees and are usually unwilling to buy milk supplied by the
smallholders.

Dairy processors have also concentrated on urban areas where the demand for
milk and dairy products is high and infrastructure for efficient management of cold
chains available. The location of these processors in urban centers means high
transportation costs for the rural milk producers making such markets further inaccessible
and unprofitable with low volumes.

A 2001 effort by USAID to stimulate growth in Zambia’s smallholder dairy sector
through the ZATAC project made significant inroads towards achieving this goal. As a
result of that effort, 10 smallholders-owned and -operated milk collection centers were
established and engaged about 1,000 smallholder producers who marketed 2 million liters
of milk through formal channels within the first two years. Today, there are a total of 17
such milk collection centers established through , with additional development funds
from CARE International, the Swedish International Development Agency (SIDA) and
the Government of Zambia (Mukumbuta and Sherchand 2006).

ZATAC has, in partnership with these institutions, financed the development of
the smallholder dairy sector with some of the most significant projects being:

(i) Establishment of smallholder owned- and -operated milk collection centers to
collect and market small-scale dairy producers’ milk, ensure high standards of

20



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