Intermediate outcome: Stagnation of dairy farm

Figure 10-14 Intermediate outcome: stagnation of dairy farm Source: own compilation

Embedded in a traditional system, dairy farmers have subsistence orientation that is closely associated with the higher valuation of family and social concerns above economic concerns.

The higher valuation of family and social concerns signifies that individuals possess higher willingness to sacrifice economic resources for satisfying household or social needs. During interviews with the dairy farmers on the retrospective development of their dairy farm, it was identified that the decrease of cattle number was not only caused by adverse economic (e.g.

price surge of concentrate feed) or climatic conditions (e.g. extended drought), but also by family and social concerns: dairy cows are sold to finance wedding reception, circumcision celebration, or to buy a new motorbike for the children of the family. Apart from being a fam-ily concern, celebrative events and ownership of certain goods are of social importance for the family, since it represents the social status and reflects the prosperity which in turn is impor-tant for social acknowledgement and prestige. However, viewing such action from business perspective, the expenditure of one or more dairy cows from the already small herd on family or social occasions can, first, hinder the accumulation of capital which is required for expand-ing the dairy farm; and, second, even undermine the dairy farm performance to the extent that its sustainability is at stake.

Compared to urban societies, rural societies in general are more reliant on well-maintained family and social relations for sustaining the livelihood. Also, they consider economic con-cerns less important than urban societies do. For example, individuals in urban areas have a higher tendency to allocate more time resource for working and more efforts to pursuit higher economic performance, thereby making their resources less available for family and social concerns. On the contrary, for individuals in rural areas the first and foremost objective of economic activities is to generate and secure sufficient livelihood for the household. Insofar as the individuals perceive that they have successfully achieved sufficient livelihood, they prefer to retain the already attained livelihood situation and to allocate the remaining re-sources for family and social needs. Consequently, although they may identify or be aware of opportunities to improve their business, their preference of generating ‘just enough’ liveli-hood prevents them from investing more resources - i.e. more money, time, or effort – to ex-ploit the opportunities. Such preference seems to be more pronounced among older people:

There are indeed dairy farmers who never improve their farm. These are not always older farm-ers, but many of them are. When given advice, they typically response, “Well, I have been working this way all the time”. That means that they feel satisfied with what they have right now. (Exp 2)

Situated in a transaction condition where higher quality milk does not receive higher price (LC3), dairy farmers receive low external price-incentive to specialise on dairy farming. As they have other more preferential sources of income, dairy farmers are inclined to allocate resources just enough to sustain – but not sufficient to improve – the dairy farming on mini-mum level.

In traditional economy economic actors follow the strategy of livelihood optimisation, i.e.

combining different sources of income to minimise risk, instead of specialising on and maxi-mising a single source of income. Risk management seems to be one of the main concerns for smallholder dairy farmers. During discussions in training sessions with dairy farmers, it was identified that the current production intensity was not yet optimum: the marginal milk in-come from increased milk production was still higher than the marginal cost of additional concentrate feed. When asked about the reason why they left such available potential produc-tion capacity and thus income improvement unexploited; the main answer – apart from “that is what usual here” denoting the orientation toward common practices – was “it is too expen-sive”.

There is an important consideration behind such answer. The intensification of the feeding management, i.e. the working capital, would constantly drain more financial resource from their limited cash flow and thus has at least twofold consequences. First, it entails greater business risks, namely greater lost if the intended benefits do not accrue or an unexpected, negative incident happens to the dairy farm. Since traditional farmers are generally risk averse, the perceived risk tends to be higher than the objective risk. And if the perceived risk exceeds their threshold risk, then such option is considered as non-preferential undertaking for livelihood improvement. Second, the more resource used for the dairy farming, the less is available for other sources of income. Such option can undermine the performance of other sources of income. As long as there is any other source of income with higher priority or pref-erence – e.g. on account of lower risk –, dairy farmers will unlikely opt for intensifying the dairy farm, in particular if the dairy farming is regarded as sideline job⁴³.

43 Cf. Moran (2007, p. 7)

Another factor that causes the restricted resource allocation for improving dairy farm is the weak self-identification as dairy farmer which in turn is caused by the fact that dairy farming is treated as sideline job, that milk consumption is not an integral part of farmers’ household, and that the profession as dairy farmer has a negative association. How someone identifies his/her own profession exerts influences on his/her own professional performance. If someone is convinced that he/she is doing the right and good things, believes that his/her work has val-ues for himself/herself or the family or the society, enjoys doing the work, and is proud of what he/she is doing; there is a great motivation and incentive to achieve the highest perform-ance and to improve continuously. The same also applies for the dairy farmers.

Either you like milk or you don't like milk. A dairy farmer must like his milk. He has to be a milk drinker and to be part of the milk himself. Because otherwise it does not make sense, you have to like and to be proud of what you are doing. You have to believe in it. So I think this is true: an industry will only have success if they believe in themselves. What they are doing has to do something with themselves. (Exp 4)

With weak self-identification, dairy farmers have thus weak internal motivation and incentive to make themselves successful dairy farmers. As a result, it is unlikely that dairy farmers make great efforts and invest more resources to expand the existing dairy farm.

Last but not least, the low participation of younger generation, which presumably have better educational background and higher motivation to improve, in dairy farming also contributes to the stagnation of dairy farm in general. As dairy farming involves strenuous physical works and “dirty” activities – in literal meaning – like cleaning dirty animal or scrapping manure in a place with pungent smell, younger generation considers it as an inferior job. Combined with other factors of diminishing farmland availability due to urbanisation and increasing opportu-nity cost of labour on account of improved education, younger generation prefers other pro-fessions to dairy farming. As a result, labour availability, particularly family labour, for dairy farming is continuously declining⁴⁴.

All in all, the selected actions described above lead to the stagnation of dairy farming. This is indicated by, inter alia, stagnating small herd-size, no improvement in milk equipment, and animal shed.

44 Cf. Moran (2007, p. 7)