The Impact of Dairy Cooperatives on the Incomes of Smallholder Dairy Farmers in Muheza District, Tanzania

Abstract

Th study assessed the impact of dairy cooperative membership on the income of smallholder dairy farmers in Muheza District, Tanzania. A cross-sectional research design was employed; the primary data were collected through structured questionnaires. Stratified and systematic random sampling techniques were used to select sample size of 99 respondents. Propensity Score Matching (PSM) was applied to estimate the causal effect of cooperative membership on farmers’ income while controlling for observable characteristics. Matching quality was assessed using balance diagnostics to ensure comparability between members and non-members. The results indicate that members of the dairy cooperative (CHAWAMU) earned significantly higher average incomes (TZS 235,000) compared to non-members (TZS 118,000), suggesting a positive income effect of cooperative participation. The main limitation was the small sample size and single-district focus, which may not generalize to other dairy farming regions. Future research could extend coverage to more regions and increase samples to improve generalizability. While several studies focus on cooperative performance and market access, few have assessed the direct income effects on smallholder farmers in Tanzania. This study contributes to the literature on agricultural cooperatives in Tanzania by focusing on the income effect of dairy cooperative membership among smallholder farmers in Muheza District. While previous studies have discussed cooperative performance, access to inputs, and market participation, fewer have empirically estimated the direct contribution of dairy cooperative membership to smallholder income at the local level. The findings therefore provide context-specific evidence on the role of dairy cooperatives in improving rural livelihoods.