The Preferences and Determinants of Dairy Farmer?s Participation in Alternative Marketing Channels: A Study of the Small-scale Dairy Farmers in Oman

By 2020 it is expected that the Oman economy will not be predominantly reliant on oil, but rather, will have diversified into non-oil sectors. The non-oil sector's contribution is expected to increase to 29 percent in 2020 from the 7.5 percent registered in 1996.Agriculture is one of the non-oil sectors of the Oman economy. Even though currently the sector makes only a very small contribution to Oman?s GDP, as oil deposits dwindle agriculture will be increasingly important. The vision for the agricultural sector, aims at achieving among other things, an annual growth rate of approximately 4.5 percent and a contribution to the GDP of 3.1 percent by 2020. Agricultural commodities produced in Oman include crops (date palms, perennial crops, fruits and vegetables) and livestock (dairy and beef cows, sheep, goats, and camels). Among the livestock commodities produced in Oman, dairy milk production is somewhat promising. Recent statistics for example(Table 1) shows that Omanreached 44.7 % self-sufficiency in dairy products in 210. A recent study (Mbaga, 2011) investigated among other things, the efficiency of small-scale dairy producers in Oman. The study found that Oman has the potential to reach self-sufficiency in dairy production if the problems facing small-scale dairy producers in the county are addressed. Most of the small-scale dairy farmers in Oman own indigenous breed dairy cows which produces very little amount of milk per day?as low as 2 to 10 liters. Individually therefore these dairy farmers are weak but if they were to organize themselves into some form of a cooperative, it is possible to pool together their milk output and make it viable as a business. In addition, the availability of a market would stimulate investment towards more milk production. Historically, cooperatives have proved to be the best institutions in the provision of services, such as training, microfinance and bulk procurement of inputs to members at affordable costs. In this case cooperative might help to upgrade the dairy cows leading to improved milk yield by providing members (farmers) with Artificial Insemination (hereafter AI) facilities and or alternatively by establishing heifer breeding centers. Therefore as identified in Mbaga (2011), one of the major problems facing small-scale dairy farmers in Oman is lack of market for their milk. Forming small-scale dairy cooperatives is one way to address this problem and most importantly because cooperatives have added advantage in that, they could also provide other services such as the provision of inputs and volume discount through bulk procurement of inputs. This proposed study therefore builds on the previous internal grant (IG/AGR /ECON/07/ 01) which among other things, found that small-scale dairy farmers in Oman lack reliable market for their milk.The overall objective of this study is, therefore, to propose alternative dairy marketing channels in addition to the existing (status quo) channel, and toassess dairy farmer?s preference for these channels in order to identify one that farmers prefer most. Furthermore, is to identify the determinants of dairy farmers choice or preference of a given market channel among the proposed channels. A random sample of a cross section of 600 dairy farmers will be analyzed. The outcome of this project will provide useful information that might lead to the formation of small-scale dairy cooperatives based on whether the cooperative marketing channel is the one preferred. Furthermore, depending upon the availability of graduate students in the NRE department, this project will generate at least two mastertheses.