ORIGINAL PAPER Milk production systems in Central Uganda: a farm economic analysis Oghaiki Asaah Ndambi & Otto Garcia & David Balikowa & Doris Kiconco & Torsten Hemme & Uwe Latacz-Lohmann Accepted: 4 October 2007 / Published online: 31 October 2007 # Springer Science + Business Media B.V. 2007 Abstract The Ugandan dairy sector is developing rapidly over recent years and is dominated by small- scale farmers owning more than 90 percent of the national cattle population. Due to market forces and higher competition for production factors, milk production systems are intensifying, necessitating proper understanding of the new production tenden- cies. Three intensive and four extensive production systems were identified and analysed, using TIPI- CAL (Technology Impact Policy Impact Calculations model). The results show that the production systems are very different in many respects but share similar development trends. Whereas intensive systems use graded animals and invest heavily into feeding, buildings and machinery, extensive systems use local breeds and invest minimally. Total cost of milk production falls with increasing herd size, while dairy returns vary among farms from 18 to 35 USD/100 Kg of milk. All systems make an economic profit, except the intensive one-cow farm, which heavily employs family resources in dairying. Due to better manage- ment of resources and access to inputs and markets, dairy farming closer to urban areas and using improved breeds is highly profitable, especially with larger herd sizes. Stakeholders should favour such practices as well as others which can improve productivity, especially in African countries where traditional systems dominate dairying. Keywords Farm analysis . Milk . Production systems . Typical farms . Uganda Introduction Dairy production plays a vital role in Uganda in improving on people’ s nutritional status, generating income to farmers and improving soil fertility through manure application (Nakiganda et al. 2006). It is also an important source of employment with many traders, processors and retailers intervening in the Trop Anim Health Prod (2008) 40:269–279 DOI 10.1007/s11250-007-9091-4 DO09091; No of Pages O. A. Ndambi (*) : O. Garcia : T. Hemme IFCN Dairy Research Center at the Department of Agricultural Economics, University of Kiel, Schauenburger Str. 116, 24118 Kiel, Germany e-mail: ndambi.asaah@ifcndairy.org D. Balikowa Dairy Development Authority, Kampala, Uganda D. Kiconco Ministry of Agriculture Animal Industry and Fisheries, Entebbe, Uganda U. Latacz-Lohmann Department of Agricultural Economics, University of Kiel, Kiel, Germany