Changes in the Enterprise Mix as a Proxy for Risk Mitigation

For all entrepreneurs participating in the dairy enterprise development programme the introduction of the new dairy enterprise had to fit into a mix of existing enterprises. Table 46 shows that ten enterprises accounted for 89% of the enterprise mix in 2003 prior to the introduction of the dairy enterprise. The introduction of the dairy enterprise had a significant effect on the enterprise mix five years later with dairy representing one-half of total household income by 2008.

Table 46 : Past Present and Projected % of Income by Enterprise Type

Enterprise 2003 2008 2013 Dairy 1% 49% 51% Beans 24% 12% 9% Maize 21% 12% 11% Groundnuts 9% 7% 6% Irish Potato 8% 6% 5% Soya 6% 6% 8% Business 8% 2% 1% Cassava 7% 1% 1% Chickens 2% 1% 2% Tobacco 5% 0% 0% Other 11% 4% 6% Total 100% 100% 100%

All prior enterprises were displaced to some extent with the exception of Soya. While soya was being grown as a cash crop with the introduction of dairy it then switched to becoming an input into the dairy enterprise since soya forms an ingredient in the supplementary feed for the dairy animals. Maize and Beans grown commercially in the area were the most prominent sources of income in 2003, accounting for 45% of household income, and their combined contribution to overall household income was almost halved with the introduction of the dairy enterprise.

Roy H Thompson PhD Thesis Page 170 Figure 48 compares the average number of enterprises operated in 2003 and 2008 and plans for 2013, split by gender of the entrepreneur. The chart shows that contrary to a priori expectation male-headed households are operating more enterprises than females at the time of investigation with an expectation to maintain or expand this number in future.

Figure 48 : Average Number of HH Enterprises by Gender over Time

When female entrepreneurs are disaggregated into FHHs and FWRPs there is a divergence in the trend over time for the two groups (Figure 49). While FWRPs show a modest increase in the average number of enterprises from 2003 to 2008 the increase for FHHs brings the number of enterprises to the same level as MHHs by 2008 and while the future expectations of FWRPs involve a decline in the number of enterprises by 2013 those for FHHs remain at par with MHHs.

Figure 49 : Average Number of HH Enterprises by HH Headship over Time

3.2 4.1 _4.0 3.7 4.4 4.6 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 2003 2008 2013 Female Male 3.3 4.5 4.6 3.1 3.7 3.5 3.7 4.4 4.6 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 2003 2008 2013 FHH FWRP MHH

Roy H Thompson PhD Thesis Page 171 Figure 50 charts the anticipated changed from 2008 to 2013 for the three groups. Clearly, the greatest change comes from FWRPs with a 27% increase in the concentration of dairy in the enterprise mix compared to 20% for FHHs and 13% for MHHs.

Figure 50 : Projected Change in Dairy in the Enterprise Mix 2008 - 2013

This finding runs contrary to the a priori expectation that diversity in the enterprise mix was likely to be maintained by female and not male entrepreneurs, as a risk mitigation strategy. The finding is further supported by Figure 63 on page 192 which charts the changes in distribution of the ten most significant enterprises among surveyed entrepreneurs from 2003-2013. The diversity of enterprises reflects the ‘octopus organisation’ and associated risk mitigation strategy explored by Kiggundu (2002) in the African context, with the exception of the complementary nature of the soya and dairy enterprises. -7% 0% -7% -13% -27% -7% 13% 27% 13% 7% 0% 0% -30% -20% -10% 0% 10% 20% 30%

Change

Roy H Thompson PhD Thesis Page 172 4.19. Use of Purchased Inputs as Proxies for Performance and Risk Mitigation 4.19.1. Supplementary Feeds

Supplementary feeds are purchased through a feeds revolving fund with deductions made from the monthly receipt of payment to the entrepreneur by the dairy processor, via the MBG association. There is a direct correlation between the utilisation of supplementary feeds and milk yields obtained; milk revenues and net income for the enterprise. The propensity to purchase supplementary feeds might be related to the availability of cash at any time, but since in this case feed is purchased on credit, the decision to purchase or not must be related to other factors. Evidence from the research suggests that the frequency of purchase

of supplementary feeds among female headed households is significantly lower than for both females with resident partners and male headed households. Females with resident partners exhibit the highest proportion of households purchasing supplementary feeds on a regular basis (Figure 51).

The caveat to this analysis is that some entrepreneurs are mixing their own supplementary feeds from

locally produced soya and local purchase of madeya (maize bran, the by-product of maize milling) with possible inclusion of purchased minerals and vitamins. The question asked was ‘Have you been using purchased supplementary feeds for your animal(s)?’ and this therefore excluded homemade supplementary feeds. Despite this caveat response to the question does provide an indicator of each entrepreneur’s propensity to extend the enterprise from a more traditional ‘low-input low-output’ and therefore relatively risk-averse business strategy to a ‘high-input high-output’ enterprise. This transition to a more commercial operation may be seen to bring with it some level of exposure to higher levels of risk in the event of problems in cash flow, related to sickness or even mortality of the principal animal.

Roy H Thompson PhD Thesis Page 173 Figure 51 : Frequency of Purchasing Supplementary Feeds

The MBG financial records are summarised in Table 47 using two alternative measures; the first divides the total Malawi Kwacha (MK) value of feeds purchased by those individuals recorded as delivery milk during 2008; the second averages the MK purchase over those who actually purchased feed. Each measure provides information; the first provides an indication of the level of feed for animals in lactation and the second the intensity of use for those who purchased feed.

Table 47 : MK Value of Supplemental Feeds Purchased per Month by HHH in 2008 Chimbia MBG Financial Records

Measure FHH FWRP MHH

Ave. MK of feeds purchased from those delivering milk

2,204 2,140 2,572 Ave. MK value of

those purchasing feed 4,020 3,951 4,475

While the MBG records do suggest that MHHs are purchasing more supplemental feeds from the MBG than either FHHs or FWRPs, female entrepreneurs are also purchasing significant amounts of supplemental feeds for their dairy animals from the MBG feeds revolving fund stocks. Supplemental feeds are crucial in obtaining higher levels of milk production but they are only effective when used as an adjunct to a base of adequate basic forage for the dairy animals.

53% 87% 77% 47% 13% 23% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% FHH FWRP MHH

Roy H Thompson PhD Thesis Page 174 Supplemental feeds will not substitute for inadequate provision of forage and excessive provision of concentrate feeds relative to forage can create problems for dairy animals, necessitating a balance of basic forage and supplemental feeds. Levels of basic forage provision for animals could not be measured in either the household survey or through records but adequate nutrition from both sources is measured indirectly through the body condition score (BCS) of the animal.

4.19.2. Acaricides

The consistent use of acaricides is essential to maintain the health of a dairy animal. ‘Acaricides’ refers to the medication that is either sprayed or dropped onto the spine of the animal every 14 days to prevent it from tick infestation, and particularly against the potential threat from East Coast Fever (ECF). Without their regular and proper use the imported and exotic dairy animals will inevitably succumb to tick infestation which in its extreme form can lead to

death. ECF can kill an animal within a matter of days,

as experienced by the dairy enterprise project at one quarantine location where there was a breakdown in proper spraying of the animals brought in from a commercial farm just across the border in Chipata, Zambia.

It is interesting to see that in the case of frequency of use of acaricides, which is also a purchased (and expensive) input; the relative position of female headed households is reversed (green being frequent use). Almost all of the FHHs are using acaricides on a regular basis, which suggests that they are both more prudent in their management of their enterprise, and mitigating against the risk of mortality which would severely impact upon their cash flow in the medium-term even with a ‘dead cow’ revolving fund as insurance. 93% 71% 73% 7% 29% _27% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% FHH FWRP MHH

Roy H Thompson PhD Thesis Page 175 4.19.3. Medications

Typically medications include antibiotics to fight opportunistic infection and these can be administered by a paravet and sometimes by the entrepreneur themselves. The association operates a drugs revolving fund and there is a drug box maintained at the MBG cooling centre, which is usually within a maximum of five miles from the farm, and therefore reasonably accessible. As in the case of acaricides a relatively high percentage of female headed households report frequent use of medication, on a par with male headed

households and

markedly higher than enterprises operated by females with resident partners. The interpretation of this response needs to be treated cautiously as medication is only used when the animal is sick. Frequent use of medication may

indicate poor animal husbandry related to other aspects of care for the animal, and cannot therefore be interpreted as a positive aspect of management of the animal and the enterprise without additional supporting (and triangulated) information to make an overall assessment.

Table 48 shows the average monthly value of medications purchased from the MBG computed in two ways; the first using a denominator of all those entrepreneurs delivering milk; the second by those who actually purchased medications. The data indicates that on average those purchasing medications spent around MK800 per month, with FHHs spending closer to MK700 per month and MHHs closer to MK900.

73% 53% 73% 27% 47% 27% 0% 10% 20% 30% 40% 50% 60% 70% 80% FHH FWRP MHH

Roy H Thompson PhD Thesis Page 176 Table 48 : MK Value of Medications Purchased per Month by HHH in 2008

Chimbia MBG Financial Records

Measure FHH FWRP MHH

Ave. MK of purchases of

those delivering milk 454 515 680 Ave. MK value of those

purchasing drugs 705 775 876