An economic assessment of problems associated with small-scale farmers in the dairy sector of Pakistan (A case study of Punjab Province)

Abstract

The contribution of livestock in the economic development of a country is vital. Pakistan is blessed with abundant natural resources, especially vast agricultural resources on account of its fertile irrigated land, four seasons and glorious history of old traditions of farming. The current study is designed to analyse the response of participants an informal and formal supply chains for small-scale dairy farmers in Pakistan. The study aimed at explaining the costs of the chosen supply channels and their transaction costs, the role of the mid-agent opportunistic behaviour in the relative milk supply chain. Using case study and qualitative method approach, eight key informants including five farmers, one local middleman, and representatives of two dairy companies were interviewed during the study, focusing the social aspects and people behaviour towards the dairy sector. Results showed a lack of coordination among small-scale farmers and associated high transaction costs. This case study suggests that small-scale farmers are illiterate and not properly trained. The way they handle and produce milk shows the dominance of informal mid-chain agents, where producers face high uncertainty caused by the opportunistic behaviour of middlemen.