Impact of capacity underutilization of milk processing plants on employment multipliers

Abstract

The investigation into the employment-generating capacity of industries has captured the interest of numerous scholars on a global scale. However, there is a paucity of literature on the impact of the capacity underutilization of dairy processing plants (DPPs) on employment multipliers. This study employed secondary data sourced from the Tanzania Ministry of Livestock and Fisheries’ budget reports for the fiscal year 2022/23. Using the Leontief Input‒Output simulation model, the study establishes the effects of low utilization of milk processing plants on employment generation. The study establishes employment gaps created by capacity underutilization of DPPs along the milk value chain. The fact that the available DPPs operate at just 23.4 % of their total capacity constrains employment opportunities across the entire value chain. Approximately 500,000 Full-Time Equivalent (FTE) minimum wage jobs (i.e., direct, indirect, and induced) are lost annually, highlighting the need for measures to address the challenge of undercapacity utilization of DPPs. Furthermore, the study found significant backwards and forward linkages in the upstream and downstream parts of the dairy value chain. This indicates strong connections and the potential for job creation within the value chain. Thus, ensuring a consistent milk supply in dairy processing plants is crucial to mitigate undercapacity issues in DPPs and to sustain job growth in the milk value chain. Additionally, the study strongly recommends policy measures to boost DPPs’ capacity utilization, foster economic growth, develop the dairy industry, and enhance the overall national economy.

Keywords

• Backward and forward linkages
• Capacity utilization
• Dairy value chain
• Employment
• Input-output
• Milk