Digitalization Potentials in the Dairy Value Chain for Inclusive Growth in Uganda

Abstract: The dairy sector in Southwest Uganda plays a crucial role in national milk production and the livelihoods of smallholder farmers. However, digitalization remains underutilized in enhancing productivity and market access. This study examines the potential of digital technologies to transform the dairy value chain for inclusive growth. A multi-stage sampling procedure was used to select four districts—Mbarara, Ntungamo, Kabale, and Rubanda—where 120 respondents were surveyed using an online questionnaire. Likert-scale measures assessed awareness, perceptions, and adoption of digital tools, alongside key barriers to adoption. Results indicate that 75% of respondents had low awareness of digital technologies, with mobile money applications being the most recognized (mean score: 2.73), followed by digital marketing (2.38) and online marketplaces (2.23). Adoption rates were highest for mobile money (38.3%) and digital payment systems (18.4%), while advanced technologies such as AI-driven insights (65.0%) and blockchain (65.0%) generated high interest despite low current usage. Key barriers included limited awareness (60%), high investment costs (55%), and language/literacy constraints (50%). Regression analysis identified education level, awareness, and willingness to adopt as significant predictors of digital adoption. The study underscores the need for targeted awareness campaigns, capacity building, and policy interventions to bridge the digital gap. Enhancing digital inclusion in the dairy value chain could drive economic growth and sustainability for smallholder farmers in Uganda.