Rural household sources of income, livelihoods strategies and institutional constraints in different commodity contexts - Institutional Constraints to Small Farmer Development in Southern Africa - page 47

2.11.2 Milk
A Nguni cow produces 2-4 kg of milk per day on average, compared to established breeds
which produce 10-20 kg under improved conditions (Bester et al., 2003). The low milk
quantity is further manifested by few lactating cows that the beneficiaries normally have
at the same time. The available markets for Nguni milk in the Eastern Cape Province are
mainly neighbours, street milk vendors and small local dairy shops. However, for the
farmers to be able to meet the required supply by these dairy shops and for street vendors,
they have to do cooperative marketing and this involves putting their milk together so that
they can reduce transactional cost and meet the required volume (ECDC, 2003a). Nguni
cattle producers can add value to their milk by processing and marketing their own products
such as farm bottled pasteurised milk, powdered milk, butter, cheese, yoghurt, ice-cream,
chocolates and sweets. In the long-term, organic certification and group marketing can
result in higher premium prices and profits for the smallholder milk producers (Mapiye
et al. , 2007). Labelling such products could further enhance value and could even lead to
potential lucrative contracts with foreign investors.
2.11.3 Skins and hides
In the past, most of the hides and skins were exported by many companies in South Africa
(ECDC, 2003b). However, the communal farmers failed to penetrate this market because
of lack of information and large volumes required. For the few well informed communal
farmers that were able to penetrate this market they only managed to obtain meagre returns
due to high transaction costs (many middlemen were involved). As pointed out by Nkhori
(2004), the higher the transaction costs the lower the profits and this reduces the chances of
farmers participating in a given market. However, nowadays a number of leather industries
have been set up throughout the country and these are currently experiencing shortage of
domestic hides, especially of higher quality. These industries form a local market for hides
from Nguni cattle, which, according to SAADA (2005), are of high quality.
In the Eastern Cape, the Eastern Cape Development Co-operation (ECDC) is partnering
with Triple Trust, the Eastern Cape Tourism Board and with local farmers and businesses
to train small-scale tanners (ECDC, 2003b). The aim of the project is to process skins
and hides to produce hand-crafted 'organic' leather products to sell to the tourist market.
The project has potential to provide products and a market for the hides that are currently
either used locally or sold to brokers without any value being added (ECDC, 2003b).
The high demand for quality automotive leather and the need to import finished leather
for auto seat manufacture provides an ongoing opportunity. For example, the Daimler
Chrysler committed itself to the project and will use 40,000 Nguni hides in exported
Mercedes vehicles (Raats et al., 2004). In addition to this, the South Africa Antique Dealers
Association (SAADA) (2005) highlighted that the decor and fashion industries are taking