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Dairy Value Chain Rwanda Report
 

Dairy Value Chain Rwanda Report

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    Dairy Value Chain Rwanda Report Dairy Value Chain Rwanda Report Document Transcript

    • The Dairy Value Chain in Rwanda A report by TechnoServe Rwanda for the East Africa Dairy Development Program October 2008
    • EXECUTIVE SUMMARY Rwanda produces around 185 million liters of milk annually (2007 data, estimates), which translates into an average daily yield per cow of just 3.2 liters, an unsurprisingly low yield given that improved breeds constitute less than 10% of the 157 thousand milking cattle in the country, and given that their nutrition is inadequate. While the government is undertaking a number of initiatives to improve the dairy sector (e.g. “One cow, one household” which aims to alleviate rural poverty by providing a heifer to each family), given execution challenges, it will take time to effect widespread change. Dairy consumption is difficult to assess because of the large volume of milk that is sold in the informal market (defined as sales of unprocessed milk). TechnoServe estimated that approximately 96% of milk marketed is in the informal market, and that approximately half of all the milk produced never makes it to the market (due to losses along the chain as well as on-farm consumption). The value of milk produced annually is estimated to be ~64 billion USD using data collected in September/October 2008. Processed milk sells for between 2 to 2.5 times fresh raw milk. That dramatic price difference between the informal and formal markets helps to explain the popularity of the informal market, even amongst those who can afford processed milk. Annual milk consumption per capita is reported at 12 liters (compared to approx. 100 liters per capita in Kenya and 22 liters per capita in Uganda). Comparing to local production, imports are insignificant – less than 1% (after conversion of imports into Liquid Milk Equivalent numbers). There are three types of dairy farmers, as defined by the way in which cows are fed – open grazing, semi-grazing, and zero-grazing. Most semi-grazing farmers are transitioning between open and zero grazing and do not intend to remain in this stage for long. The reliance on naturally growing or cultivated grass as the sole source of nutrition (i.e., open grazing and some semi-grazing farmers) creates a production system dependent on weather. As a result, prices fluctuate as milk supply changes between rainy and dry season. The open grazing farmer achieves a profit margin of ~60% due to his minimization of costs (no money is spent on feed or napier growing). For the semi-grazing farmer, labor accounts for almost 50% of monthly costs, while feed constitutes an additional ~40%. This farmer segment suffers from the greatest economic challenges because of relatively lower milk production while exotic cattle are growing and increased expenses for feed. Indeed, the semi-grazing A report by TechnoServe Rwanda for the East Africa Dairy Development Program 2
    • farmer only achieves a profit margin of ~30% For the zero-grazing farmer, feed accounts for over 70% of monthly costs, and profit margins are around 45%. However, zero-grazing offers the best level of earnings for the farmer - annually, a zero-grazing farmer can earn over 5 million RWF in profit from milk, while a semi-grazing farmer can make only around 320,000 RWF, and an open-grazing farmer around 600,000 RWF. In terms of agricultural inputs, the products dairy farmers typically purchase are bran for feed (e.g., maize), salt blocks and treatment for ticks and worms. These inputs are largely sourced from Kigali, with few feed products reaching other regions as transport is difficult and branches of these stores are few. However, smallholder farmers’ use of these inputs is low due to limited knowledge of feeds and their benefits, inability to pay, and the challenge of physically procuring materials. As farmers turn their attention to the increased revenue that improved breeds can bring, demand for artificial insemination (AI) is increasing. The government is the main supplier of bull semen in Rwanda, though ABS Global is also active here. The industry is not market competitive, as the government is sustaining it in multiple ways. RARDA provides free and mandatory training for AI providers, supplies the provider with all equipment at no cost, and sells semen at cost on credit. A chiller/bulker (a milk collection center - MCC).in Rwanda is typically supported by the government (PADEBL project) to encourage farmer cooperatives. Fifteen such chilling plants are currently operational, with another sixteen scheduled for completion by November 2008. Out of the six sites EADD is currently operating in, five were funded by PADEBL. Such chilling plants typically have only one tank, require a one-time fee from farmers for membership, and will be sustained by milk revenues. Many MCCs own milk shops in Kigali, ensuring that there is a market for milk. If a MCC does not own a milk shop, it will likely sell its milk to a transporter, who is then responsible for finding buyers. This reliance can be devastating in some cases, particularly during the rainy season when demand for transport is high and transporters can determine the price at which they purchase milk. MCCs interviewed earned on average 20 RWF per liter on the milk they sold. Given that many MCCs received large capital expenses like the building and chilling tank free from the government, they need only focus on operating expenses. Staff salaries constitute the largest proportion of monthly expenses (30% to 70%). The other major cost category is that A report by TechnoServe Rwanda for the East Africa Dairy Development Program 3
    • of electricity or a generator. This cost can be very high (in some months exceeding the cost of staff salary), and is only somewhat proportional to volume. Thus, most of the MCCs costs are fixed and maximizing the volume of milk received and sold is key to the center’s financial success. On average, MCCs earn only a 6% profit margin and even this slim profit is at risk during the dry season when volumes are too low to cover the fixed operational costs. Part of the challenge is that the chairmen and/or staff are not aware of general business principles; as a result, there is not a culture of cost-consciousness or decisive decision-making. When it comes to the next stage in the value chain, processing, the main processors in Rwanda are (in rough descending order of volume of dairy processed): Nyanza (formerly known as Nyabisindu), Inyange, Rubirizi and Masaka. All processors except Nyanza are located in or around Kigali. According to interviews, a processor can make a healthy profit margin of approximately 15%. Though the processors are only operating at ~20% of installed capacity, each has expansion plans that hope to be implemented in the near future. It is unclear whether the volume of dairy products will indeed increase (these processors also produce mineral water and juices). There is a need to cultivate a customer orientation in the industry. Currently, the processors produce whatever products are easiest and at the maximum price Retailers in Rwanda can be split into three categories based on the products they sell and their scale. The first is sellers of raw fresh milk and some processed goods, the second is sellers of boiled fresh milk (not examined in this study) and finally is sellers of processed dairy products only (supermarkets). Sellers of raw fresh milk can be very profitable, due to the minimal costs of the operation. Most shop owners maximize profit by forcing the farmer or hawker to take on milk transport costs. Sellers of processed dairy products are making healthy margins, with some reporting success in selling products with ~10-20% markup. A report by TechnoServe Rwanda for the East Africa Dairy Development Program 4
    • TABLE OF CONTENTS EXECUTIVE SUMMARY .....................................................................................................................................2  INTRODUCTION ...................................................................................................................................................7  METHODOLOGY ..................................................................................................................................................7  OVERALL ECONOMIC PERFORMANCE ..........................................................................................................8  DAIRY SECTOR: PRODUCTION.......................................................................................................................11  Eastern Province...........................................................................................................................................14  Southern province ........................................................................................................................................15  City of Kigali................................................................................................................................................16  Northern province ........................................................................................................................................16  Western province..........................................................................................................................................16  DAIRY SECTOR: CONSUMPTION ...................................................................................................................18  DAIRY VALUE CHAIN.......................................................................................................................................21  Pricing ...............................................................................................................................................................22  Artificial Insemination ......................................................................................................................................26  Chillers/bulkers .................................................................................................................................................32  Processors..........................................................................................................................................................37  Retailers ............................................................................................................................................................40  RELATED PROGRAMS ......................................................................................................................................42  Dairy Cattle Development Support Project (PADEBL) ...................................................................................42  Other programs .................................................................................................................................................44  RECOMMENDATIONS FOR VALUE CHAIN..................................................................................................45  INTERVIEW DETAIL..........................................................................................................................................47  REFERENCES ......................................................................................................................................................49  A report by TechnoServe Rwanda for the East Africa Dairy Development Program 5
    • LIST OF ABBREVIATIONS ABS African Breeder Services—Total Cattle Management AI Artificial Insemination BDS Business Development Services CAGR Compound Annual Growth Rate EADD East African Dairy Development Program GDP Gross Domestic Product MCC Milk Collection Center MINAGRI Ministry for Agriculture and Animal Resources NGO Non-governmental Organization PADEBL Dairy Cattle Development Support Project RARDA Rwanda Animal Resources Development Authority RWF Rwanda Francs UHT Ultra-high Temperature Processing UK United Kingdom USD United States dollar A report by TechnoServe Rwanda for the East Africa Dairy Development Program 6
    • INTRODUCTION The East Africa Dairy Development (EADD) project commissioned this study to provide information on the chain of players involved in the dairy industry in Rwanda, from the producers, or farmers, to the end consumers of dairy products, referred to as the dairy value chain. This study seeks to inform the public about the economics and challenges facing each segment of the value chain and ultimately identify opportunities to increase farmers’ income and/or expand the dairy industry. The vision of EADD is to “move smallholder farmers out of poverty by delivering farmer-focused, value-chain activities that are implemented simultaneously. These activities will stimulate dairy farm production, dairy-sector services, business development and dairy market pull. Developing technically trained, business-savvy farmers and services providers will generate success and sustainability. Research and documentation of effects, outcomes and lessons will inform decision-making as this project develops and will identify future opportunities for effective interventions in the dairy value chain. The project will deliver direct economic benefit to rural dairy households—the common vision of the implementing partners.”1 METHODOLOGY The findings in this study are based on primary and secondary data gathered. The team first created a comprehensive list of secondary data sources, ranging from ministry officials to processors to research institutions. We interviewed over 50 individuals regarding data on milk production, demand and trade. Secondary data proved extremely difficult to find. Unfortunately, most figures were outdated (e.g., written in 2004), not available in English or not documented. As a result, this analysis relies largely on primary data. Given the paucity of data available, our team gathered primary data from around the country. First, we divided the country into five main regions: Kigali city, the North, East, West and South. Leveraging expert knowledge, we identified two districts within each region that would provide representative data on dairy farming in the region. In each district, the team interviewed as many players in the value chain as possible. This usually involved a few input providers, two to three farmers, one to two chiller/bulkers, any present processors and 1 EADD Grant Proposal – Summary Information for Submission of August 30, 2007 A report by TechnoServe Rwanda for the East Africa Dairy Development Program 7
    • one or two retailers. Transporters proved difficult to contact, as they are either transient and/or not based in the region in which they operate. Data collection relied on sector veterinarians or agronomists to identify interviewees and facilitate introductions. Interviews were conducted in Kinyarwanda, with answers immediately verbally translated into English. Though interviewers made every attempt to ensure accuracy of information provided, all data is subject to the truthfulness of respondents as well as their knowledge of the data provided. Most interviewees responded from memory and did not have written records with which to verify information provided. Indeed, no farmers interviewed kept records of milk production, sales or expenses; the dairy farms seemed to have ledgers though no records were shown to the interviewers. In some cases, the data provided was contradictory but the respondent was not able to reconcile the differences. As a result, the data gathered may not be entirely accurate, though it provides a picture of the general condition. Moreover, some subjects were difficult to discuss given the sensitive or confidential nature of the topics. Particularly difficult topics include milk spoilage or adulteration and other milk lost. This is especially important to note given the impact of spoilt/lost milk on overall profitability – we were not able to assess with confidence the percentage of spoilt/lost milk at each stage of the value chain, and as a result, profit margins do not take into account milk losses, although these can be significant in Rwanda. OVERALL ECONOMIC PERFORMANCE Rwanda is a landlocked country with an area of 26,338 square kilometers.2 According to the World Bank’s World Development Indicators, Rwanda’s population in 2007 was 9.74 million.3 As a result, Rwanda has one of the highest population densities in Africa, with about 370 inhabitants per square kilometer. The problem of land scarcity will continue to worsen, as Rwanda’s demographic growth rate is estimated to be 2.9% per year, leading experts to project that the population will increase to 15 million in 20204. 2 World Bank, World Development Indicators, 2007 <http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/AFRICAEXT/RWANDAEXTN/0,,menuPK:368741~ pagePK:141132~piPK:141109~theSitePK:368651,00.html>. 3 World Bank. 4 And 20 million in 2030 – source: World Bank A report by TechnoServe Rwanda for the East Africa Dairy Development Program 8
    • The overwhelming majority of the country’s working population is employed in agriculture, mostly as subsistence farmers. In fact, some 90% of the country’s population lives in households in which at least one person works in agriculture.5 This means that approximately 3.1 million adults work on family subsistence farms as their main source of livelihoods; this is the most common source of livelihood and accounts for 60% of all Rwanda household income, with farm wages accounting for an additional 8%.6 The reliance on agriculture and scarcity of land mean that approximately 46% of the land in Rwanda is cultivated. Poverty is a serious issue in Rwanda, with approximately 57% of the population, over 5 million people, living below the poverty line.7 Poverty in rural areas is even more pronounced, as 90% of the poor live in rural areas.8 The poverty line is defined as the expenditure needed to provide the minimum food requirements of 2100 kcal per adult per day. The average adult poor person consumes 150 Rwandan francs (RWF), or 0.33 USD, per day, a sum that has only increased by 2% in the past five years.9 GDP in 2007 was 3.32 billion USD and has been growing at a CAGR of 6.4% in the period 2001-2006.10 Given that agriculture constitutes 36% of GDP, the second largest category after services, the large population and limited land present a challenge for economic development.11 Consequently, policymakers are turning to agricultural innovation as one of the few tools available to increase productivity and income.12 Recently, attention has turned to the dairy farming sector as a means to improve the economic situation of smallholder farmers. Proponents argue that the cow is a stable source of milk, providing a crucial input for children and the family. Moreover, when there is surplus milk, the family has a reliable source for additional cash. In an analysis of Rwandan households, “Agriculture and Poverty in Rwanda” found that selling milk was significantly associated with being in the highest consumption quintile. Indeed, when comparing yearly adult equivalent consumption, the analysis discovered “sales 5 Rukazambuga Ntirushwa T. Daniel, “Agricultural Innovation and Technology in Africa,” (2008). 6 Scott Loveridge, Alastair Orr and Abdoul Murekezi, “Agriculture and Poverty in Rwanda,” (2007) 28. 7 37% of the population is identified as living in extreme poverty. Note that the World Bank lists 79% of the land as used for agriculture. Ministry of Finance and Economic Planning, “Economic Development and Poverty Reduction Strategy 2008-2012,” (MinFEP, 2007) 13. 8 Ibid. 13. 9 Ibid. 13. 10 Ibid. 5. 11 Ibid. 6. 12 Daniel 3. A report by TechnoServe Rwanda for the East Africa Dairy Development Program 9
    • of milk had a positive association with falling in the highest consumption quintile.”13 By contrast, sale of traditional cash crops, fruit or vegetables had a negative or little positive impact on poverty. This association between selling milk and high consumption was significant, leading the report to suggest that it may be “quite important to increase the proportion of farms engaged in milk production.”14 A similar positive effect was found with selling eggs, perhaps because both activities are the few examples of year-round recurrent revenue in agriculture. However, the positive impacts of selling livestock products were weak enough that the report could only conclude that “commercialization of smallholder agriculture has not yet reached the level where it can be expected to make a significant impact on poverty.”15 This is partly due to the low number of households engaged in selling livestock products. Livestock constituted just 2.2% of GDP on average between 2001 and 2006 and grew at an average annual growth rate (CAGR) of 3.5% in the same period. In addition, the report found that “only 0.4% of rural households reported income from sale of milk and 12% from sale of eggs.”16 There are multiple benefits of investment in the dairy industry. First is the above- mentioned benefit for subsistence. Second, owning livestock has a significant impact on wealth. The report stated that a “higher value of livestock assets per head was highly significant with positive consumption outcomes.” 17 Livestock assets serve as a form of savings, can be sold quickly when households need cash and may also provide supplemental income in the form of fertilizer. Interviews verified this claim, with respondents sharing that they sell cattle in order to pay for necessary expenses like school fees.18 Though nine in ten rural households own some livestock, average ownership is one or two cows, leading to a low ratio of livestock assets per head and, thus, low influence on consumption ability.19 Finally, culturally, owning cattle is associated with higher social status.20 Even the poor themselves identify livestock ownership with better economic means. In a survey of rural community 13 Loveridge, Orr and Murekezi 12. 14 Loveridge, Orr and Murekezi 12. 15 Loveridge, Orr and Murekezi 13. 16 Loveridge, Orr and Murekezi 12. 17 Loveridge, Orr and Murekezi 14. 18 Technoserve, personal interview, Sep 2008. 19 Loveridge, Orr and Murekezi 30. 20 Anastase Murekezi, “Medium term plans for Agriculture and Growth,” (MINAGRI, 2007) 15. A report by TechnoServe Rwanda for the East Africa Dairy Development Program 10
    • members, 6.5% of respondents cited lack of livestock as a major cause of poverty.21 This was the fourth most frequently cited response. The report’s findings are encouraging in identifying the effect livestock ownership can have on a rural family’s economic situation and the activity’s many benefits help to explain the recent attention on the opportunity in dairy cattle. DAIRY SECTOR: PRODUCTION Chart 1: Cattle and dairy production 22 Livestock data is difficult to collect, with different data sources often contradicting each other. The 2006 Agriculture Survey indicates that there are 1.2 million cattle in Rwanda, of which 13.6% are milking cattle.23 According to this data source, there are a total of 157,479 milking cattle; improved breeds constitute 8.2% of that group. It should be noted that in 2008, the “One cow, one family” program24 distributed more than 10,000 heads of 21 Ministry of Finance and Economic Planning 14. 22 Note that number of cattle includes lactating and non-lactating cattle. FAO estimates are inconsistent, remaining constant for half a decade and then jumping dramatically. Ministry for Agriculture and Animal Resources, “2007 Annual Report,” (MINAGRI, 2007) 11. 23 National Institute of Statistics of Rwanda (NISAR), “Rwanda Agricultural Survey 2006,” (NISAR MINFEP, 2007) 36.. It is important to note that this statistic is questionable for a sustainable production system – as per ILRI, a more realistic estimate would be 35% in a pastoral system. 24 See section on Dairy Programs in Rwanda A report by TechnoServe Rwanda for the East Africa Dairy Development Program 11
    • cattle; thus, it is expected that livestock numbers are at least greater than 2007 numbers by that amount. Estimates of milk production in Rwanda range from 0.7 liters per cow per day to 3.2 liters. The 2006 Agriculture Survey reported that milk production for the first half of 2006 was 20,283,160 liters.25 Annualizing that production leads to a yield of 0.7 liters per cow per day or an annual yield of 258 liters per cow. However, the 2007 MINAGRI Annual Report indicated that 185,410,395 liters of milk were produced in 2006. Using that figure, daily yield per cow is 3.2 liters (annual yield is 1,177 liters per cow). Despite the significant variance between these estimates, it is clear that productivity in Rwanda is low. By comparison, Kenya’s average annual yield per cow is between 290 and 990 liters26. Developed nations can achieve up to 8-9,000 liters per cow annually.27 The main reasons for Rwanda’s low yield are the prevalence of local breeds, which by nature do not supply high yields, and inadequate nutrition through either grazing or feed. This study will now turn to each of the regions and some general characteristics of dairy farming in each region. As a result of Rwanda’s high population density, average land size per household across the country is very low, approximately 0.7 hectares.28 The largest farm sizes are found in Umutara (Eastern Province), where each household has an average of 1.14 hectares (ha), followed by Gitarama (Southern Province) with an average of 1.09 ha per household and Byumba with 1.04 ha of land per household. The area with the smallest farms is Cyangugu, with an average of 0.34 ha per household and is followed by Butare, with 0.36 ha.29 As a result of these land patterns, Umutara is the least densely populated province and has the largest number of livestock. Ruhengeri, on the other hand, is the most densely populated province; here, the soil is particularly rich and the region produces a high amount of agricultural goods. 25 NISAR 36. It is unclear if this figure is for rural milk production only or if it is for the entire country. 26 On average, without analyzing the possible causes such as any differences in production systems, feed or genetics 27 Technoserve, “Kenya Dairy Value Chain,” (2008). 28 NISAR 17. 29 “Rwanda Agriculture Survey 2006” 16. A report by TechnoServe Rwanda for the East Africa Dairy Development Program 12
    • Following the genocide, certain plots of land were opened to settlement, with few regulations governing this settlement. As a result, the individuals who were able to act most quickly were able to lay claim to large areas of land. The Rwandan government is currently attempting to redistribute this land in a more equitable and standardized manner. Regions most affected by the reform include Umutara, where individual plots currently average 50 hectares, and Gishwati. Umutara covers land that was formerly part of Akagera National Park, where the terrain is flat and expansive. Most cattle-keeping farmers expect to have their plots reduced as a result of land reform, in some instances by up to 50-60%.30 These farmers currently have herds of 100+ cattle, which are largely ankole; some remarked that once their plots are reduced, they will sell off the ankole cattle and use that profit to purchase exotic milking breeds. The situation is slightly different in Gishwati. This mountainous region nurtures the natural growth of kikuyu grass, on which cattle feed, and is a lush area to raise cows. The government has divided the land into six zones, each intended to support ~100 families. Each zone has been segmented into five hectare plots and farmers have been permitted to raise ten cows on each plot.31 Some farmers have not actually decreased the size of their herds. One interviewer shared that though he only kept the allotted ten cows on his plot, he had distributed the rest of his herd to friends with no cattle on other plots. Those friends receive the profit from milk sales every other day as payment for keeping the cattle. Land redistribution is another tool the government is using to encourage zero-grazing. It will likely have a temporary negative effect on milk supply as farmers are forced to downsize their herds and begin to raise milking cattle, moving from open grazing to zero grazing. However, the long-term impact of improved breeds should be increased supply of milk. 30 In one case, a farmer had 80 hectares of land and expected to own 50 after redistribution. Technoserve, personal interview, Sep 2008. 31 Technoserve, personal interview, Sep 2008. A report by TechnoServe Rwanda for the East Africa Dairy Development Program 13
    • Eastern Province32 The Eastern Province is commonly referred to as Umutara. Farmers here have unusually large plots of land, though land reform will soon reduce the size of the farms. As a result of the large farm sizes, most farmers are serious cattle-keepers, raising herds of 100 or more ankole cows. Milking cattle constitute a small proportion of the total cattle; the majority of milking cattle are ankole, with approximately 9% cross-breeds.33 Farmers in this region generally pursue an open grazing system; the combination of the breed and feeding method leads to low milk yields in dry season, with ~1.5 liters per ankole cow.34 The yield can double and reach between 3 and 5 liters per ankole during the rainy season. Milk revenue is insufficient to support the family much less additional investments in cattle like feed purchase. Furthermore, many farmers are not knowledgeable about forage that can be grown on their farms. Most farmers in this region report selling cattle in order to provide for basic needs. Realizing that the potential income from milk is much higher with exotic cattle, some farmers have expressed interest in improving cattle breeds; they wait for land reform to reduce the size of their farms, at which time they will sell the ankole cattle and purchase fewer exotic cattle. One obstacle to this transition is the limited supply of exotic breeds. Farmers generally import exotic cattle from Uganda and/or South Africa, but disease outbreak has reduced the number of cattle available. Some farmers in this region do utilize artificial insemination, though they only pay for ordinary semen, given the costs. As cattle-keeping is very traditional and the number of cattle is high, several efforts to modernize the practice are focused in this region. Consequently, there is a focus on farmer organization and training. In addition, the government and private groups have invested in infrastructure to support the dairy industry, by building several functioning milk collection centers and also a dairy processing plant that hopes to be operational by December 2008. It should be noted that dairy farming in the Eastern region is not just defined by practices in Umutara. In fact, in districts closer to Kigali, farm sizes are closer to the national 32 All EADD sites in Rwanda are located in the Eastern province 33 “Rwanda Agriculture Survey 2006” 36. 34 Technoserve, personal interview, Sep 2008. A report by TechnoServe Rwanda for the East Africa Dairy Development Program 14
    • average. As a result, in Rwamagana region, farmers were observed practicing zero grazing, keeping 3 exotic breed dairy cows on 1 hectare of land or less, for example. In this case, milk revenue was sufficient to support the family. The challenge in this district is that there is no milk collection center and limited farmer organization, making markets for milk more difficult to access. In the absence of milk collection centers, farmers are forced to find individuals to buy their milk. Though this diversifies the risk of any one buyer refusing to buy milk, it increases transport time and the cost of marketing milk, as there are no long-term contracts with buyers. Southern province The Southern province has a few milk production centers, including Gitarama and Muhanga. Farm sizes range widely; Gitarama has the second largest farm size in the country with an average of 1.09 hectares household while Butare has the second smallest farm size at 0.36 hectares.35 Dairy farmers are moving towards semi-grazing, as small land plots force farmers to raise cows next to the housing structure and limited economic means leads to inability to purchase commercial feed and, thus, insufficient nutrition. Anecdotally, the district veterinarian reported that 70% of farmers are open-grazing, 29% are semi-grazing and 1% is zero-grazing. One interviewee operated a widely acclaimed zero-grazing business. Utilizing a loan from African Development Bank, the farmer purchased a pure breed Jersey from Kigali for one million RWF. Milk revenue from that cow and revenue from selling calves has allowed the farmer to pay back the loan in full in three years as well as expand into other businesses like cassava grounding. Success stories like this one, though inspiring, are few and far between, as most farmers are still struggling to transition from open grazing. More typical is the farmer who previously had a herd of 100 ankole cows; he recently sold most of them to pay for his children’s school fees and aspires to earn money from a milking business of five exotic cows.36 In this region, awareness of cooperatives is limited and farmers are likely to sell milk to hawkers or nearby retailers. Some farmers belong to cooperatives, though the cooperatives are rarely active, as they have only been initiated recently. One cooperative was quite 35 “Rwanda Agriculture Survey 2006” 16. 36 Technoserve, personal interview, Sep 2008. A report by TechnoServe Rwanda for the East Africa Dairy Development Program 15
    • exemplar and not only had a chilling tank but also kept livestock to demonstrate best farming practices to local farmers. This was an exception, though cooperative growth should be high in the coming year. City of Kigali Farms surrounding Kigali are generally owned by well-to-do individuals whose aim is to run a profitable milk business. As a result, there are few, if any, ankole cattle as part of the milking herd and most farmers practice semi- or zero grazing. Staff are employed to run the farm and operations are more modern. Indeed, the one milking machine observed in the interviews was found on a farm in Kigali. Though this study’s sample size is limited, every farm we visited in this region is vertically integrated into the dairy market. Owners of dairy farms also own a processor and/or a retailer. For example, Masaka dairy farms sells its milk directly to Masaka processing plant, which in turn sells its goods to Papyrus restaurant as well as other retailers. As a result, the market for milk is more stable, middlemen are eliminated and profits are maximized. Northern province Dairy farming is largely semi-grazing in this region and most herd sizes are smaller than ten. Even in the more active dairy farming regions, farmers had on average one or two cows, likely a mixed breed. Most farmers feed cattle self-cultivated napier and supplement the cow’s diet with local grass. Milk volume produced is quite low, though it can be an important part of the farmer’s income. An additional challenge is that the immediate market for milk is limited. Just one chilling plant, funded by PADEBL37, collects milk from three districts and sells the milk in Kigali. Though this region borders Uganda, opportunity to sell milk in Uganda is limited. Western province 37 See section on Related Dairy Programs A report by TechnoServe Rwanda for the East Africa Dairy Development Program 16
    • Dairy farmers in this region include the full spectrum from open range to zero grazing. Awareness of exotic breeds is high, though artificial insemination is not yet available through the district and sector offices. Several farms near Gisenyi were large-scale commercial dairy farms, with cattle that were almost pure exotic breeds. These farms sold over a hundred liters of milk each day and sold directly to buyers, as there is no chilling tank in the area. Farms in Gisenyi were also able to sell milk across the border to retailers in Goma. On the other hand, in districts situated farther from the border, farms were once again small and semi-grazing. As land is generally used for agriculture, cows were limited to small patches of land on which to graze or to be feed napier. We observed that one of our interviewees kept 3 cows in the open, with their feet tied to posts on a patch not more than twenty-five meters squared. This analyst was not able to visit the Gishwati district in person, but some of our interviewees kept cows there and their responses have been recorded and leveraged in this report. Types of grazing systems Cattle raising is dispersed throughout the country and the characteristics of dairy farmers vary widely depending on the region (as described above). There are three types of dairy farmers, as defined by the way in which cows are fed. Farmers in the first category, open grazing (or extensive), allow cattle to feed on whatever grass is growing on public land. Cattle are left to sleep out in the open. Labor under this form of grazing consists of herding cattle to and from open pasture and sources of water. Zero-grazing (or intensive) farmers are on the other end of the spectrum and raise cattle in stalls with feed and water troughs nearby; thus, the cow does not need to move much. Labor under this model is used to grow and cut feed (e.g., napier), and keep water and feed troughs full. The third type of dairy farmer falls in the middle and practices semi-grazing (or semi-intensive).38 As the name suggests, these farmers practice a mixture of grazing and fodder use. In the typical case, the farmer does not have much land and so keeps his few cows in stalls. At the same time, he 38 The three systems are also referred to as extensive, semi-intensive and intensive. A report by TechnoServe Rwanda for the East Africa Dairy Development Program 17
    • does not have sufficient money and/or knowledge to feed his cows properly and may allow his herd to graze on nearby land. As a result, his milk income is low. Most semi-grazing farmers are transitioning between open and zero grazing and do not intend to remain in this stage for long. The reliance on naturally growing or cultivated grass as the sole source of nutrition (i.e., open grazing and some semi-grazing farmers) creates a production system dependent on weather. As a result, prices fluctuate as milk supply changes between rainy and dry season; at times, zero-grazing farmers can be penalized by these fluctuating prices because they incur the same costs year-round. In all cases, farmers did not keep records of revenue from milk sold or expenses associated with raising cattle. When asked if selling milk was a profitable enterprise, farmers could only discern this by considering whether they were able to pay for items (e.g., school fees, clothing) with milk revenue. Many farmers, especially those in the open and semi- grazing categories reported that milk was not a profitable enterprise; rather, selling cattle provided the money necessary for the family. Indeed, cattle selling can be quite profitable, with an ankole calf earning between 30-400,000 RWF and a pure exotic calf up to 1 million RWF. 39 Those selling ankole cattle generally have large herds and can sell even 100 cattle in one year, leading farmers to conclude that the only way to earn a profit is to sell cattle. There are two milking times per day, morning and evening, and the volume of milk produced in the evening is slightly lower. Most farmers who do not live near their buyers only market morning milk, as evening milk kept overnight without being chilled will spoil. However, some farmers have found ways to market evening milk, by either boiling it and selling it the next morning or fermenting it. Farmers who do not sell their evening milk may not have considered ways to market it or may be unable to afford charcoal to boil it. It is unclear if selling boiled evening milk is hygienic, but the farmers who follow this practice sell morning milk mixed with the previous evening’s milk, so it may be difficult to isolate quality concerns. DAIRY SECTOR: CONSUMPTION 39 Technoserve, personal interview, Sep 2008. A report by TechnoServe Rwanda for the East Africa Dairy Development Program 18
    • Dairy consumption is difficult to assess because of the large volume of milk that is sold in the informal market. In this study, informal markets are defined as sales of unprocessed milk while formal market sales refer only to dairy goods that have passed through a processor. Sales in the informal market are not tracked nor is milk production. TechnoServe estimated that approximately 96% of milk marketed is in the informal market. And, in fact, approximately half of all the milk produced never makes it to the market40. (See chart 2.) The value of milk produced annually is estimated to be ~64 billion USD using data collected in September/October 2008. Currently, the Rwandan government does not sponsor programs to increase milk consumption, such as providing milk for children in schools. Chart 2: Destination of milk – across entire value chain MINAGRI reported that annual milk consumption per capita in Rwanda is 12 liters.41 This is low, compared not only to the Food and Agriculture Organization’s official recommendation of 220 liters of milk annually(though this may be unrealistically high even 40 Numbers are estimates at best. Percent consumed at home was calculated as an average of interview responses; formally marketed milk was an average of the liters processors reported receiving; wasted milk was taken as an assumption (assuming that milk is wasted/spoilt throughout the chain, and given that a recent FAO study estimates that for instance in Uganda, approx. 27% of all milk produced is lost) and informally marketed milk was the balance. Technoserve, personal interview, Sep 2008. 41 Ministry for Agriculture and Animal Resources, 2006, <http://www.minagri.gov.rw/article.php3?id_article=23>. A report by TechnoServe Rwanda for the East Africa Dairy Development Program 19
    • in developed countries42) but also to consumption in the region – approx. 100 liters per capita in Kenya, and 22 liters per capita in Uganda43. Exports and imports The National Bank of Rwanda reported that 500,000 liters of milk were imported last year, primarily in powdered milk form. (See also chart below.) Comparing to local production, imports are insignificant – less than 1% (after conversion of imports into Liquid Milk Equivalent numbers)44. According to the records, total dairy products imported has been a bit erratic, but has largely decreased since 1999. One explanation for this is that humanitarian efforts in the early 2000s led to massive importations of powdered milk. The cessation of these efforts combined with government limits on total tonnage of powdered milk imported have contributed to the dramatic decline of powdered milk imports. Between 1997 and 1999, foot-and-mouth disease in Uganda led to a ban on imports of liquid milk. As a result, current milk imports are dominated by UHT milk45. There does not appear to be a relationship between milk produced and dairy imported. A possible explanation could be that the two serve different markets (i.e., locally produced milk is largely purchased by local Rwandese while value added products are targeted at businesses and foreigners). 42 Some FAO articles refer to ~45 liters for children aged 5-15 years. Ministry for Agriculture and Animal Resources, 2006, <http://www.minagri.gov.rw/article.php3?id_article=23>. R. Passmore, “Recommended Intakes of Protein for Growth,” <http://www.fao.org/docrep/meeting/009/ae906e/ae906e31.htm>. 43 Steve Staal, ILRI 44 Calculated as follows: 2007 imports total 1,250t of Liquid Milk Equivalent, using the following conversion factors: 1;6,6 for butter, and 1:4.4 for cheese (source: ILRI); compared to 2007 local production of 185,410 tons as per MINAGRI 2007 Annual Report 45 Mainly imported from Kenya A report by TechnoServe Rwanda for the East Africa Dairy Development Program 20
    • Chart 3: Dairy imports 46 The vast majority of milk produced in Rwanda is consumed in the country. Exports are currently so insignificant, or not reported, that official records do not disaggregate them from the “Other” category. However, in 2006, the head of RARDA, Rutagwenda, proclaimed that “by 2009, Rwanda [the country] will start exporting milk.”47 The major challenge to exporting milk is that processors produce few, if any, goods that are not immediately perishable48. Currently, anecdotes suggest that cheese is being exported, but the lack of UHT or powdered milk machines severely inhibit the ability to export. DAIRY VALUE CHAIN Overview Value chains traditionally refer to the chain of activities that products pass through as they gain value before reaching the consumer.49 It is no different when we consider the dairy value chain in Rwanda, following the supply chain and determining the value added and at what expense at each step. 46 Daniel 9. 47 Richard Muliisa, “Milk, Rwanda’s ‘unexploited’ resource,” (The New Times, 2 Oct 2006) <http://www.rwandagateway.org/article.php3?id_article=3141>. 48 Another constraint (source: ILRI) on exporting milk to Uganda is the difference in farm gate prices, which makes it difficult for Rwandese milk to be competitive 49 M.E. Porter, “What is strategy?” (Harvard Business Review, Nov-Dec 1996) 61-78. A report by TechnoServe Rwanda for the East Africa Dairy Development Program 21
    • Farmers produce fresh milk with the help of agricultural inputs and artificial insemination. Surplus milk is then sold to a retailer, a transporter, a chiller/bulker or a processor. A chiller/bulker aggregates fresh milk and chills it, thus delaying spoilage, before re-selling the milk to a retailer or processor. The processor adds value to the milk by extending its shelf life and producing a variety of goods. Often, payments are made to transporters in order to move milk to the next link in the value chain. Below follows more detail about each link in the chain50. Chart 4: Dairy supply chain and profit margins Pricing Charts 5 and 6 show the proportion of retail value that each player in the value chain receives and how much each player spends in costs as opposed to retains in profit. It should be noted that processed milk sells for between 2 to 2.5 times fresh raw milk. That dramatic price difference between the informal and formal markets helps to explain the popularity of the informal market, even amongst those who can afford the formal market. 50 Please note that the estimated profit margins do not take into account milk losses/spoilage along the chain A report by TechnoServe Rwanda for the East Africa Dairy Development Program 22
    • One important conclusion to be drawn from this analysis regards the recommended approach of the chilling plant towards producers (farmers). While farmers in general will adopt revenue-maximizing behavior (and for instance be ready to sell milk to traditional traders who often offer higher prices than the chilling plant), they will also be interested in additional services that can be provided by the chilling plant (such as BDS). In some cases51, farmers also have the option of selling directly to the processor, by-passing the chilling plant (typically in the case of small-scale processors). It is therefore important for each chilling plant to first understand the range of selling and price options available to the farmer, and secondly to develop a suite of services that provide a wider range of benefits to the farmer and thus help build supplier loyalty. The chilling plant’s reaction time to changing market dynamics will be critical, as when milk is scarce, farmers will sell their product to buyers who not only provide a higher price, but also collect milk directly from the farmer. Another observation is that transporters who charge fixed daily rates for transport are able to secure a greater proportion of value in the rainy season because all other players adjust their prices down. Transporters, by not decreasing prices accordingly, gain a greater share of value though the actual service provided does not change. 51 One such example is Inyange Dairies A report by TechnoServe Rwanda for the East Africa Dairy Development Program 23
    • Chart 5: Share of value in the informal market (shown as proportion of retail price) Chart 6: Share of value in the formal market A report by TechnoServe Rwanda for the East Africa Dairy Development Program 24
    • Agricultural inputs Though agricultural inputs play a small role in the value chain, they are addressed here because they are a key input for producers. Agricultural inputs refer to materials farmers need for cattle, from medicine to feed. The products dairy farmers most frequently purchase are various types of bran for feed (e.g., maize), salt blocks and treatment for ticks and worms. These inputs are largely sourced from Kigali, with few feed products reaching other regions as transport is difficult and branches of these stores are few. Livestock World is the main agro-input store in Kigali. There are also small shops that sell custom supplements for cattle. Smallholder farmers’ use of these inputs is low for the following reasons: limited knowledge of feeds and their benefits, inability to pay, and the challenge of physically procuring materials. These challenges are compounded when one considers that most farmers only have one or two cows, which is not a large enough volume to justify the investment needed to receive these inputs. Feed prices are most likely higher in Rwanda than in neighbouring countries such as Kenya due to low levels of grain production52. In addition, Rwanda lacks a thriving milling industry which would provide, through its by-products, some of the key feed ingredients. Finally, Rwanda suffers from low productivity of such crops as sunflower or cotton, whose by-products are converted to animal feed (cake). Indeed, some traditional cattle farmers were not aware of supplements and how to use them. When asked why they did not grow forage, the response was that they were not familiar with the practice and would not know where to begin. One of RARDA’s current initiatives is educating farmers about forage (e.g., napier) and distributing seeds at no cost. The effectiveness of this initiative has been limited and it has not distributed the targeted amount thus far in 2008 due to budget constraints in procuring the seeds.53 Some farmers who are aware of the benefits of feed are even willing to play a middleman role and earn some profit. One farmer in a particularly remote region explained how he organized a large order of feed inputs, paid for a truck to transport materials from 52 Steve Staal, ILRI 53 Technoserve, personal interview, Sep 2008. A report by TechnoServe Rwanda for the East Africa Dairy Development Program 25
    • Kigali and then re-sold the items to neighboring farmers. This farmer also made his own mix of feed for his cattle, combining everything from maize to dried fish. According to one vendor, the investment in feed is sensible, considering that 1 RWF spent on feed can result in 5 RWF in milk revenue.54 Stores were reluctant to provide information, but one shopkeeper indicated that he earned a 15% margin on custom-mixed feed that he sold.55 Stores’ reluctance to increase access to feed in other regions may be due to uncertainty about the potential size of the business. In order to spur interest, there is opportunity to coordinate relationships between farmer cooperatives and feed stores and negotiate bulk shipments of items. In addition, farmer education is crucial to increasing understanding of and interest in forage, with the interest of increasing yields. Artificial Insemination As farmers turn their attention to the increased revenue that improved breeds can bring, demand for artificial insemination (AI) is increasing. Most farmers are aware of AI, though not all are interested in its use. Prices for AI services depend on the quality of the semen and the AI provider. There are three general categories of semen. The cheapest, referred to as “ordinary,” is semen from local breeds and is unproven. Higher quality semen is referred to as “super” or “extra-super” and is genetically tested and proven. The government is the main supplier of bull semen in Rwanda, though ABS Global, a worldwide provider of bovine reproduction services, is also active here. 54 Based on information from feed store; claims that 6 kg of feed at 143 RWF per kg will result in 30 liters of milk from a pure Freesian. Calculation assumes a price per liter of 150 RWF. 55 Technoserve, personal interview, Sep 2008. A report by TechnoServe Rwanda for the East Africa Dairy Development Program 26
    • Chart 7: Typical AI provider equipment AI providers are earning a generous margin for their services. The industry is not market competitive, as the government is sustaining it in multiple ways. RARDA provides free and mandatory training for AI providers. Once these providers complete training, RARDA integrates them into district or sector offices, making them government employees. In addition, the agency supplies the provider with all equipment at no cost and sells semen at cost on credit. This amounts to a subsidy of about 450 USD for start-up equipment and an additional 3 USD per insemination.56 For ordinary semen, AI providers pay 1500 RWF per straw of semen and only pay the government when they pick up their next batch. Each AI provider is allowed to set his/her price for insemination, though s/he should only add a reasonable amount to cover transportation cost. Our interviews indicated that AI providers charge between 2000 and 3000 RWF for insemination using ordinary semen, allowing for a profit of ~500-1000 RWF on each ordinary insemination. AI providers build the same margin into super and extra super inseminations, though these account for less than 10% of inseminations.57 56 Technoserve, personal interview, Sep 2008. Estimations are based on prices at cost, without additional retail margins, meaning that the subsidy could be even greater. 57 Technoserve, personal interview, Sep 2008. A report by TechnoServe Rwanda for the East Africa Dairy Development Program 27
    • Based on these numbers, an AI provider is earning a margin of ~15% on inseminations. In Uganda, private providers of AI are earning margins of 33%; however, this includes the variable cost for each insemination and not the fixed cost of the initial investments. After taking those costs into account, the margins should be quite similar.58 In Rwanda, these margins mean that on average, an AI provider might make a profit of 20,000 RWF (~33 USD) per month from inseminations, which is a 15% profit margin.59 This profit is in addition to the government salary of 69,000 RWF net per month that s/he receives. Interviews revealed that AI is not yet available in some areas, such as Gisenyi. In these areas, farmers must rely on the traditional method of using a bull, preferably an exotic one. Farmers reported purchasing exotic bulls for a price of ~500,000 RWF and 17% of farmers interviewed owned their own bulls.60 From a purely reproductive perspective, it is not sensible to purchase a bull rather than use AI, as the farmer will never recover the cost of the bull.61 A farmer may not have many other options in areas where AI is not available. One district pursued a different solution; it purchased an exotic bull that farmers could use for a charge. Each attempt costs 1500 RWF, which is only slightly cheaper than AI.62 Though this method provides access to exotic semen in areas where AI is not available, it raises concerns about the spread of disease, as multiple cows interact with the same bull. In its eagerness to accelerate the movement towards zero-grazing63, the government has heavily subsidized the artificial insemination industry, enabling AI providers and farmers to engage in this practice. However, if the government ends the subsidy and AI providers are forced to take on equipment costs, preserving the margin they currently earn could double the price per insemination for farmers, which would have consequences for affordability and the speed of transition to zero-grazing. 58 A straw of ordinary semen costs $3 USD and variable cost for equipment per insemination is $3 USD. An AI provider would charge $9 USD. Technoserve, personal interview, Sep 2008. 59 Assumes 40 inseminations per month, which usually indicates an experienced provider. Technoserve, personal interview, Sep 2008. 60 Technoserve, personal interview, Sep 2008. 61 This does not account for the bull’s re-sale price. 62 Technoserve, personal interview, Sep 2008. 63 Although open grazing is in fact more profitable for the farmer A report by TechnoServe Rwanda for the East Africa Dairy Development Program 28
    • Veterinary Services Farmers rarely seek veterinary services during the year, reserving this service for rare cases when when the life of the cow is endangered. In fact, most farmers reported vaccinating only in cases of disease outbreak. Vaccination during these periods is essentially mandatory as RARDA takes responsibility for vaccinating the cattle, sending the district veterinarian to farms and charging farmers between 200-300 RWF per cow. Other basic veterinary services are provided by the farmers or laborers using inputs purchased from shops. Examples of these activities include administering solutions to prevent ticks and deworming tablets. As with AI providers, private providers of veterinarian services must compete with district and sector employees. Most farmers choose district or sector veterinarians because of the lower price of service. However, these public sector providers tend to be less reliable and there can be a long wait for service. As a result, those farmers who can afford private service providers will seek them instead. Production In order to estimate the economics of farmers under each system, this analysis uses a simple calculation based on a sample size of over 20 farmers from around Rwanda. These numbers are estimates at best for the following reasons: (1) it is difficult to isolate the revenue and costs of milking cattle from those of other cattle; (2) the sample size is too small to ensure statistical significance and (3) the data provided ranges widely from farmer to farmer. Moreover, profit margins might be higher than farmers experience in reality because the calculation does not include initial capital investment in cows and infrastructure, nor revenue and costs not directly related to milk production (i.e., revenue from selling cattle or manure and costs of feeding non-milking cattle). Overall, in the informal sector in Rwanda, the producer’s share of value ranges64 from 37% to 57% (depending on whether this is in the dry or the rainy season). That share is only 28% 64 A simple value share calculation is: retail price of processed dairy = producer price of dairy + gross margin; source: Christopher Gilbert, “Value chain analysis and market power in commodity processing with application to the cocoa and coffee sectors” (Commodity market review 2007-2008) 12. A report by TechnoServe Rwanda for the East Africa Dairy Development Program 29
    • for the formal sector65. This number is comparable to producer value shares in other products, considering that milk is the only product input for these final products. Arabica and Robusta producer value shares were on average between 12 and 25% and cocoa producer price as a share of UK chocolate price was on average 9%.66 Chart 8: Revenue and cost per liter by grazing system Open grazing Average milking cattle ownership is ~4 ankole and 3 exotic cows. In the dry season, these cattle can produce an average of 30 liters, of which 18 is sold. In the rainy season, production and sales are 45 and 22 liters, respectively. Labor constitutes 80% of the monthly costs and no money is spent on feed or napier growing. The open grazing farmer achieves a profit margin of ~60% due to his minimization of costs. Annually, the farmer could earn slightly over 600,000 RWF (~1,100 USD) or 1660 RWF daily, which is about 330 RWF a person when split amongst a family of five. 65 20% is the maximum because fresh milk is the cheapest processed dairy good. Using the value of any other processed dairy good would result in a lower producer portion of retail value. 66 Arabica and Robusta figures are an average of producer prices in ten countries measured against US retail prices. Cocoa value is a 10-year average. Gilbert 19 and 23. A report by TechnoServe Rwanda for the East Africa Dairy Development Program 30
    • Semi-grazing Average milking cattle ownership is ~7 ankole and 1 exotic cow.67 In the dry season, these cattle can produce an average of 35 liters, of which 17 is sold. In the rainy season, production and sales are 50 and 26 liters, respectively.68 The semi-grazing farmer can earn ~1.2 million RWF annually from milk revenue. Labor still accounts for the largest proportion of monthly costs at almost 50%; but feed accounts for an additional ~40% of monthly costs. Feed costs are either in the form of supplements or cultivating a hectare of napier. This farmer segment suffers from the greatest economic challenges because of relatively lower milk production while exotic cattle are growing and increased expenses for feed. Indeed, the semi-grazing farmer only achieves a profit margin of ~30% and an annual milk profit of ~320,000 RWF (~600 USD), which places a family of five in almost extreme poverty. The situation is somewhat improved when one considers that a farmer may be able earn additional revenue by selling cattle or manure. Interviews suggest that in regions where manure is needed, a farmer can earn 6,000 RWF (~1,000 USD) per cow per month from manure sales. Zero-grazing Average milking cattle ownership in this category is virtually no ankole and 8 exotic cows. In the dry season, these cattle can produce approximately 150 liters, of which 125 is sold. In the rainy season, production and sales are 190 and 150 liters, respectively. The zero- grazing farmers in this data sample were able to procure higher prices per liter, partly because some of these farms are vertically integrated and can control the selling price. As a result, a zero-grazing farmer can earn ~9.6 million RWF annually from milk revenue. Feed accounts for an even high proportion of costs in this category because supplements are usually combined with napier. In this category, feed constitutes over 70% of monthly costs and labor is over 20%. Annually, the farmer can earn over 5 million RWF in profit from milk. This figure does not include revenues or value from selling cattle or manure.69 67 The low number of milking exotic cattle is usually accompanied by a higher number of non-milking exotic cattle. These non-milking exotic cattle may not yet be of age to produce milk. 68 None of the semi-grazing farmers interviewed sold evening milk, resulting in a lower percentage of milk for sale and, thus, lower revenues. 69 One farmer in the Southern province even mentioned producing gober gas, or biogas generated by cow dung, from her cattle, which has value as an energy source. A report by TechnoServe Rwanda for the East Africa Dairy Development Program 31
    • Chillers/bulkers A chiller/bulker can also be referred to as a milk collection center (MCC). This can be as simple as a one-room building which holds a chilling tank. Milk needs to be chilled within two to four hours of milking and kept at a temperature of 4°C in order to prevent spoilage. Given that many farmers are many kilometers away from milk markets and do not have access to electricity or other means to chill, MCCs are necessary to provide farmers access to the market. Since a MCC is a business, the government encourages the creation of farmer cooperatives to manage the milk gathered at a MCC. The vision for these cooperatives is to not only serve as a marketing point for milk, but also provide additional services like wholesale agricultural inputs, farmer education and financial credit. The government has heightened its emphasis on the creation of cooperatives, prompting an increase in registrations. As these milk cooperatives are a new development, many of the interviewees’ cooperatives were not yet fully functional and merely served as a market for milk, if that. Operating structure A milk-producing sector will likely only have one chilling tank and, in some cases, up to three sectors are served by the same chilling tank. Each chilling tank is operated by a farmer cooperative, which requires a one-time fee from farmers for membership and is also sustained by milk revenue. The fee varies and is lowest if one joins when the cooperative is first incorporated. In exchange for the fee, the farmer receives a vote. Among interviewees, it was common for farmers to split the cost of membership, and thus, their voice in the cooperative’s business. For example, if membership fee is 10,000, a farmer joins with four other farmers. Each pays 2,000 and they select one member to represent the group. Lack of membership does not preclude a farmer from selling milk to the center, though a few centers offer lower prices per liter to non-members. A MCC also serves as quality control, testing milk using a lactodensimeter as it is brought to the center. Staff reported rejecting less than 1% of milk; the most common A report by TechnoServe Rwanda for the East Africa Dairy Development Program 32
    • offenses are adding water to milk or attempting to sell evening milk after it has spoiled.70 Beyond rejection for failure of the quality test, there is no distinction in milk quality. Thus, there is no incentive for farmers to increase attention to hygiene. Hygiene is a general concern both for farmers and MCCs. The Rwanda Bureau of Standards (RBS) is attempting to increase adherence to quality standards. However, its efforts are hampered by limited staff to inspect sites, virtually no awareness of these standards (one must pay a fee of 10,000 RWF to procure a copy of standards) and the lack of a central dairy authority to help disseminate information. Each MCC employs a full staff, with an accountant and other employees who work with the milk. Most centers operate seven days a week and only accept morning milk. However, the MCCs that aggregate a large volume of milk also accept evening milk. In such cases, the MCC chills evening milk collected and then transports it the next morning with the morning milk collected. Following this method has two benefits. The first is expanding the percentage of milk produced that is marketable and the second is eliminating one physical constraint. Chilling tanks have an average capacity 2,000 liters and the morning milk collected in various MCCs exceeds that volume.71 MCCs that choose to chill morning milk must reject any milk beyond tank capacity. By selling morning milk immediately rather than chilling it, tank capacity is no longer a constraint to the volume of milk that can be accepted. However, the risk of spoilage may be slightly higher depending on transport time to markets.72 Many MCCs own milk shops in Kigali, ensuring that there is a market for milk. If a MCC does not own a milk shop, it will likely sell its milk to a transporter, who then takes responsibility for finding buyers. This reliance can be devastating in some cases, particularly during the rainy season when demand for transport is high and transporters can determine the price at which they purchase milk. One milk collection center stopped operations for over two weeks because it could not agree on a price for milk with the transporter. 70 Technoserve, personal interview, Sep 2008. 71 Tank capacities varied, with some as small as 1,000 liters and others over 3,000 liters. 72 Some MCCs pass on the risk of spoilage to transporters by selling milk directly to the transporters. A report by TechnoServe Rwanda for the East Africa Dairy Development Program 33
    • Revenue MCCs interviewed earned on average 20 RWF per liter on the milk they sold. Some only earned a spread of 10 RWF and the MCC with the highest volume earned 90 RWF per liter.73 Pricing is rather arbitrary, mostly depending on what the buyer is willing to pay. In Gishwati, for example, the cheese processing plant paid an extremely low price per liter of 100 RWF. However, since the nearest market was nine kilometers away and required traveling a mountainous route, farmers in the area think they have no choice but to sell to the processor. Capital expenses Given that many MCCs received large capital expenses like the building and chilling tank free from the government, they need only focus on operating expenses. PADEBL, which constructed many chilling tanks across the country, spent approximately 35 million constructing the MCCs and outfitting them.74 These chilling tanks have a capacity of 2,150 liters and cost ~5 million RWF (~9,000 USD75). Ongoing capital expenses include construction of new buildings or investment in generator replacements. Operating expenses According to interviews, staff salary constituted the largest proportion of monthly expenses, accounting for between 30 to 70%.76 The other major cost category is that of electricity or a generator. Since most MCCs are in locations where there is no electricity, they must rely on a generator to chill milk, which costs an average of 160,000 RWF (~300 USD) per month, including fuel and maintenance for the generator. This cost can be very high and, in some months, exceed the monthly cost of staff salary. The cost to run the generator is somewhat proportional to volume, though it is not a direct relationship. Thus, most of the 73 Technoserve, personal interview, Sep 2008. 74 PADEBL officials approximated that a building costs 14MM, generator 6.2MM, 30 steel cans 1MM, cooling tank & accessories 14MM. Technoserve, personal interview, Sep 2008. 75 Tank cost only, these are small (2000l) tanks - for comparison, 10,000l tanks cost around $48,000. 76 Technoserve, personal interview, Sep 2008. A report by TechnoServe Rwanda for the East Africa Dairy Development Program 34
    • MCCs costs are fixed and maximizing the volume of milk received and sold is key to the center’s financial success. Profit On average, MCCs earn only a 6% profit margin and even this slim profit is at risk during the dry season when volumes are too low to cover the fixed operational costs. Part of the challenge is that the chairmen and/or staff are not aware of general business principles; as a result, there is not a culture of cost-consciousness or decisive decision-making. Chart 9: Example MCC financials77 Mbare example Monthly revenue Dry Rainy Wghtd Avg Milk sold (L) 69,996 122,768 105,177 Price/liter 222 150 174 Total monthly revenue 15,539,112 18,415,200 18,300,856 Monthly costs Milk bought (L) 69,996 122,768 105,177 Price/liter 200 128 152 Staff salary 225,000 215,000 218,333 Electricity/generator 202,500 264,200 243,633 Transport 0 0 0 Generator maintenance 290,000 290,000 290,000 Miscellaneous 199,850 79,400 119,550 Union fee 349,980 613,840 525,887 Capex 0 606,500 Total monthly costs 15,266,530 17,176,744 17,384,358 Monthly profit 272,582 1,238,456 916,498 Margin 0.0175 0.0673 0.0501 Annual profit 10,997,976 0.0525 Daily breakeven liters 1894 3092 2088 77 Technoserve, personal interview, Oct. 2008.; example for Mbare adjusted to include generator maintenance costs in the rainy season A report by TechnoServe Rwanda for the East Africa Dairy Development Program 35
    • Challenges and opportunities MCCs perform a very important service for farmers by providing access to the Kigali market. Otherwise, farmers would have to work to find independent buyers for their milk and transport milk to each buyer. The challenge for the MCC is to generate enough farmer awareness to enable the collection of a large enough milk volume to securely pay the fixed operational costs each month. One inevitable challenge is that of physical access. Though the construction of MCCs is increasing, it is still difficult for farmers to access MCCs. Considering that many of these villages have extremely poor roads and bicycles are in poor condition, it’s common to hear a farmer report that approximately once a month, his worker would spill all of the milk on the nine kilometer trip to the MCC, resulting in a large loss. There are few solutions to this challenge, one of which is investing in a vehicle that can collect milk from more informal collection centers that are positioned around the MCC closer to farmers.78 Integrating the transport function is an attractive option for the MCCs not only for the potential for increased profit but also for the elimination of dependence on transporters. Most MCCs rely on vendors for transport of milk and, thus, have no control over their actions. One MCC explained that they provide farmers a lower price per liter for evening milk because the transporter could not show up without any advance warning as often as twice a week, causing the MCC to lose all milk revenue while still incurring milk purchase costs.79 This happened as often as twice a week and can eliminate any profits in a month. Other MCCs expressed fears that transporters would abandon them for higher milk volume producing regions during the rainy season. Assuming the MCC can obtain a low-interest loan to purchase a truck, it is possible to increase profit margins fourfold.80 This is because the operational costs of the truck are similar to, or even less than, the price the MCC is paying for transport currently and the interest payment on the loan is minimal. These costs are far outweighed by the higher price 78 In fact, Nyanza pursues this exact method in order to increase the volume of milk they collect. 79 Technoserve, personal interview, Sep 2008. 80 Assumes MCCs can negotiate loans with the African Development Bank similar to ones offered to farmers at 2% interest A report by TechnoServe Rwanda for the East Africa Dairy Development Program 36
    • that MCCs could obtain by selling directly to a retailer or processor. The challenge is that if a MCC integrates transport, it becomes responsible for finding a market for the milk as well. Since MCCs are producer owned, theoretically there should not be an issue with paying farmers less, as they will still reap benefits from the cooperative. In reality, though, the benefits to the farmers can be minimal beyond a market for milk and farmers may benefit more from higher income. MCCs should continue to expand and would benefit from (1) an active membership to ensure that farmers are receiving a reasonable return for their investment either in the form of income or other benefits and (2) understanding of economics to identify unnecessarily high cost areas and potential solutions (e.g., forward integrating into transportation). Processors The main processors in Rwanda are as follows, in rough descending order of volume of dairy processed: Nyanza (formerly known as Nyabisindu), Inyange, Rubirizi and Masaka. All processors except Nyanza are located in or around Kigali. Processors are a key part of the value chain that will need to be addressed to improve the supply of dairy products. There is large opportunity for processors to expand, in light of current offerings and gaps with market demand. Financial information was difficult to obtain, but according to interviews, a processor can make a healthy profit margin of approximately 15%. This is in line with industry averages of 10-20%.81 Inyange is currently the largest processor of liquids overall; however, dairy products constitute only 20% of the goods it produces, which also includes mineral water and juices. Thus, the capacity to increase dairy production exists, but management chooses to maintain this proportion of production for the moment. Inyange is in the midst of general expansion and plans to open a new plant by 2009; the director general has expressed interest in expanding dairy processing including producing UHT. At the moment, all milk is sourced from 22 farmers around Kigali who are contracted to provide milk all year round. This 81 Technoserve, “Kenya Dairy Value Chain,” (2008) 20. A report by TechnoServe Rwanda for the East Africa Dairy Development Program 37
    • piecemeal method of sourcing results in insufficient milk supply in the dry season. The company is considering integrating backwards by building Inyange designated chilling tanks in the countryside and significantly increasing the volume of milk they process.82 Though the processors are only operating at ~20% of installed capacity, each has expansion plans that hope to be implemented in the near future. It is unclear whether the volume of dairy products will indeed increase. For example, Rubirizi is utilizing a grant from the US Development Fund to upgrade their machinery. However, the upgrade is intended more to increase efficiency and reduce production costs than to increase plant capacity. Furthermore, Nyanza’s expansion plans include expanding into water and juice processing, meaning that dairy may not remain the core of its operations as it is currently with Inyange. There is certainly opportunity to expand this segment in the supply chain, both in terms of location and production. For example, in early 2008, Masaka, a niche player that focuses on luxury cheese, began operations. It does not produce any milk, focusing instead on yogurt, crème fraiche and a variety of soft cheeses, all products that were not produced in Rwanda previously. At the time of this report, it had only been operating for approximately 3 months. Initial sales suggested strong demand for these products and the plant is in the midst of expanding its capacity, with hopes to export items to Burundi once domestic sales are stabilized. Both the Western region, around Gisenyi or Gishwati, and the Northern region, near Gicumbi, could benefit from a processor in the area. Milk production volumes can exceed 5,000 liters daily and farmers currently struggle to market all of that milk. There is also a need to cultivate a customer orientation in the industry. Currently, the processors produce whatever products are easiest and at the maximum price. One example of the lack of customer orientation is the rigidity in product offering. Milk is only sold to individuals in 500ml packets and yogurts are offered in two sizes. Furthermore, product prices are such that only 20% of the population can afford them. Even the small portion of the local population that can afford processed milk may choose the informal market because they do not feel the significant difference in price (2-2.5 times that of raw milk in the informal market) is justified. It seems that if prices remain at this level in the processed 82 Technoserve, personal interview, Sep 2008. A report by TechnoServe Rwanda for the East Africa Dairy Development Program 38
    • market, processors will miss a large opportunity to expand the market. Processors should consider customer needs and change their products accordingly, even if it means operational changes. Other players in the processor category include cheese-makers in the Gishwati region. There are currently four plants operating, each pursuing traditional cheese-making practices and receiving milk from nearby farmers. Farmers in this region say that the government has promised to build a large dairy processing plant in the Western province that will eventually replace the cheese plants and increase the range of dairy goods produced. Indeed, in PADEBL’s September 2007 update, 5 million RWF was set aside to construct 5 cheese processing plants.83 Economics Processors reported making a profit margin of ~10-20%. Some processors change product prices and milk purchase prices in dry and rainy season; however, others keep prices essentially constant all year. Chart 10: Sample monthly processor financials 84 83 PADEBL “Trimester Report July-September 2007,” (MINAGRI, 2007) 7. 84 These are example financial statement using estimates from a secondary source. Technoserve, personal interview, Sep 2008. Innocent Rutamu, “Investment Opportunities in the Dairy sub-sector of Rwanda” (Aug 2008) 31. A report by TechnoServe Rwanda for the East Africa Dairy Development Program 39
    • Retailers Retailers in Rwanda can be split into three categories based on the products they sell and their scale. The first is sellers of raw fresh milk and some processed goods, the second is sellers of boiled fresh milk and finally is sellers of processed dairy products only. Under the first category of sellers of raw fresh milk and some processed goods are two types of shops. The pure milk shop consists of a chilling tank in a room; individuals bring their own jerrycans and purchase chilled fresh milk from the tank by the liter. Another shop in this category is the small supermarket, which has a small chilling tank from which to sell fresh milk by the liter, and also sells yogurt and perhaps fermented milk. The second category of sellers of boiled fresh milk generally includes restaurants. These establishments sell milk by the cup in the form of African tea or as milk. African tea is a combination of hot water and milk, with a tea bag. The final category of sellers of processed dairy products only includes a range of supermarkets, from smaller neighborhood establishments (e.g., Ndoli’s Joint) to large supermarket chains (e.g., Nakumatt). Sellers of raw fresh milk can be very profitable, due to the minimal costs of the operation. Most shop owners maximize profit by forcing the farmer or hawker to take on milk transport costs. Based on interviews with milk shops in Kigali, the breakeven point for a small shop (e.g., 7-800 liter tank capacity) was only 20 to 30 liters of milk per day. Considering that raw milk sold to these shops can be kept for a period of up to a week and that there are no contracts with milk suppliers, a shopowner has little inventory risk. Indeed, during the rainy season, shops can refuse to buy more milk until they have sold their inventory, leaving farmers, MCCs and hawkers with limited options for the milk they have available to sell. Other than milk costs, the majority of the remaining costs are fixed; these costs are predominantly of building and/or equipment rent and labor. A report by TechnoServe Rwanda for the East Africa Dairy Development Program 40
    • Chart 11: Sample monthly milk shop financials 85 This study did not examine the second category closely: sellers of boiled fresh milk. The range of shops is wide, as some restaurants such as those situated near large transit points reported a high dependence of profits on the sale of African tea whereas milk is likely a small contribution to other restaurants’ income. Lastly, sellers of processed dairy products are making healthy margins, with some reporting success in selling products with ~10-20% markup.86 In the latter half of 2008, two large retailers—Nakumatt and Simba—opened, providing Rwanda residents with a simplified shopping experience by offering an expansive range of goods in one location. However, both stores have struggled to stock a sufficient supply and range of dairy products. Approximately two months after their opening, neither store stocks UHT milk, and Nakumatt has only recently begun carrying butter. The largest challenge is supply of milk, both in terms of overall milk available in the country, as this study was undertaken during dry season, and in terms of supplier willingness to provide product. First, these large retailers have been unable to convince suppliers to supply greater quantities at the expense of not supplying smaller retailers. Inyange continues to supply small retailers who do not move the product daily though Nakumatt is demanding a higher daily volume. In addition, Nakumatt requires new 85 Other includes electricity, water, miscellaneous. In some cases, utilities can be fixed because it is tied to the building rent. Technoserve, personal interview, Sep 2008. 86 This range in profit margin includes a wide range of dairy products, from ice cream and butter to flavored yogurt and cheese. A report by TechnoServe Rwanda for the East Africa Dairy Development Program 41
    • vendors to forego payment for three months while products are tested in the store. As a result, Nakumatt runs out of fresh milk daily and only receives milk from Inyange. Retailers in the first category, those who sell raw fresh milk, will continue to dominate the market because of the lower cost and flexibility in volume purchased. Large retailers will continue to find it difficult to capture a larger percentage of the local market (excluding expatriates or foreigners) given the high price of dairy products at the retailer compared with the price of raw fresh milk. As for the foreign market, large retailers should work more cooperatively with local suppliers in order to acquire the quantity of milk needed and should sign agreements with importers to stock UHT milk and a larger variety of dairy items. DAIRY PROGRAMS IN RWANDA The Rwanda government has deemed livestock and dairy a priority initiative, supporting multiple programs relating to the dairy sector and spurring NGO action as well. The following section provides information on related programs. Dairy Cattle Development Support Project (PADEBL) This government project, also known as PADEBL, launched by President Kagame in 2001, has a few aspects. “One cow, one poor household” (Girinka) aims to alleviate rural poverty by providing a heifer to each family. The program works on the logic that the heifer can provide milk and manure to supplement the family’s income. In addition, the program is somewhat self-perpetuating, as a family does not gain full ownership of the heifer until it passes on the first calf to another family. The program hopes to reach 668,763 households.87 In the first half of 2008, 8,471 households benefited from the program, bringing the cumulative total of beneficiaries to close to 30,000 households.88 In order to reach the 2012 goal, the rate of distribution will need to increase. However, the department has indicated it has experienced challenges in importing cattle, resulting in insufficient supply of cattle for distribution. In fact, in 2008, the Ministry for Agriculture and Animal Resources (MINAGRI) allocated over 1 billion RWF to the program, of which only 25% had been spent in the first 87 Some sources cite a figure of 501,572. Murekezi 15. 88 Ministry for Agriculture and Animal Resources, “Agricultural Sector Performance First Semester 2008,” (MINAGRI, 2008) 16. A report by TechnoServe Rwanda for the East Africa Dairy Development Program 42
    • half of the fiscal year. 89 This suggests there are execution challenges and that the program’s reach could be greater. An additional challenge has been program management. Cows supplied under this program have been of both indigenous ankole and exotic breeds. In fall 2008, some officials were accused of misappropriating funds by providing farmers with ankole cows while charging the government for exotic cows. At the time of this report, the individuals were awaiting trial. Some interviewees who were recipients of the ankole cows derided the government’s gift, complaining that they may as well have received dogs given the low volume of milk that the ankole cow provided.90 It is true that the milk produced by the cow likely ranges between one to two liters daily; however, as most of these recipients practice open-grazing, not much investment is needed in return for that milk. An unintentional effect of the “One cow, one family” program has been a temporary increase in demand for ankole milking cattle domestically. Farmers in Umutara observed that they have a market for their excess ankole cattle because the government is currently buying. Another aspect of this program is focused on chiller/bulkers for milk. The project’s goals were to increase milk production and increase farmer organization. Key accomplishments have been the construction of chilling plants, or tanks where farmers can bring milk for sale; 15 chilling plants were constructed throughout the country in phase 1 and are currently operational.91 These chilling plants consisted of a building to house a chilling tank with capacity of 2,100 liters in addition to a generator and other operational supplies. Sixteen additional chilling centers are scheduled to be completed by November 2008 at a budgeted cost of approximately 390 million RWF, which equates to 24.4 million RWF for each milk collection center.92 Currently, PADEBL retains ownership of the chilling plants though it may enter into a Memorandum of Understanding with each site to turn over ownership to farmers. This project has been highly successful and opens opportunities for other organizations now that its funding has expired. The chilling plants are heavily utilized in 89 Ministry for Agriculture and Animal Resources 23. 90 Technoserve, personal interview, Sep 2008. 91 Technoserve, personal interview, Sep 2008. 92 PADEBL “Trimester Report July-September 2007,” (MINAGRI, 2007) 7. A report by TechnoServe Rwanda for the East Africa Dairy Development Program 43
    • regions where they are already operational and those who live in regions where tanks are under construction eagerly anticipate the arrival of these tanks. In fact, out of the six sites EADD is currently operating in, five were funded by PADEBL. A key benefit of the chillers is providing farmers with access to a market that is otherwise difficult or impossible to access. Farmers in regions without chilling tanks are forced to seek business on an ad-hoc basis, supplying milk to neighbors or small businesses like restaurants or hotels. The tanks, by aggregating a significant volume of milk, open the possibility of marketing in Kigali. In addition, some chilling tanks have recognized that they can chill evening milk for sale the next day. This increases the amount of milk a farmer can sell and can almost double his income.93 Other programs In addition to government programs, various NGOs are active in promoting dairy farming as well. The most active of these NGOs include Heifer International, one of EADD’s partners, and Send a Cow. There may be additional organizations that have not been mentioned here. These organizations have primarily focused on placing cows with poor farmers; indeed, some of our interviewees had been recipients of an exotic cow from Heifer International. Allegations of misappropriation again marred the gift, with individuals remarking that they are not confident calves were actually passed on to other farmers. One farmer stated he had given the calf to the cooperative, as he was instructed to do, but none of his neighbors have received the calf. The overall impact of these public sector efforts has been to steadily increase the number of farmers who own cattle in Rwanda. Indeed, the proportion of all households owning animals increased from 60 to 71% between 2001 and 2006.94 This increase has been along all income quintiles and in all provinces. Though this will indeed help improve the situation of households who were previously unable to afford milk, it also serves to increase the importance of expanding the market for dairy products. RECOMMENDATIONS FOR VALUE CHAIN 93 Calculation assumes that 80% of both morning and evening milk are sold compared to 10% of evening milk previously. 94 Ministry of Finance and Economic Planning 11. A report by TechnoServe Rwanda for the East Africa Dairy Development Program 44
    • Education and awareness are the most common needs across all segments of the value chain. Little attention was paid in any segment to operating costs and no mention was made of strategies to increase revenue or eliminate costs. Farmers  Create an optimal model(s) of feeding for cattle by breed that is based on a cost- benefit analysis. Teach this model to farmers  Facilitate the purchase of feed, as prescribed by the feed model, through negotiations with vendors  Some farmers employ too many laborers under the rationale that one laborer is inexpensive; however, staffing only to what is needed can amount to significant savings given that labor is one of the largest cost categories. Milk Collection Centers MCCs have a large opportunity to enable reform in this segment because of the role they play between farmers and markets. Currently, there is limited insight amongst MCC staff and board members about the center’s financial performance, which can impede its effectiveness and ability to improve the farmers’ situation.  Build awareness of costs and risks to business by helping MCCs create a simple financial template to track the business each month  Negotiate with transporters to reduce risks in service currently or investigate the potential of purchasing a vehicle  Alleviate farmer challenges during the transition to zero-grazing, perhaps by providing feed on credit and increasing awareness of milk economics  Communicate with agroinput providers and negotiate wholesale prices for large quantities of goods farmers use frequently (e.g., maize bran, salt)  Aid MCCs in finding and securing markets for milk o Connect with processors to secure fair contracts for unlimited milk volume o Investigate viability of constructing and operating a milk shop in a less- saturated region area of Kigali or another urban area Processors A report by TechnoServe Rwanda for the East Africa Dairy Development Program 45
    •  Encourage and/or support processors to conduct studies on market demand for various types of dairy products, in order to create an understanding of consumer willingness to pay and resulting implications for product range and cost  Facilitate cooperation with cooperatives, consolidating purchasing relationships rather than Show the value of purchasing milk from cooperatives Retailers  Work with government to institute milk testing in milk shops, ensuring that milk is not adulterated in the informal market  Experiment with “salesman” model for milk where retailers or milk marketers are paid on commission to encourage exploration of new markets, particularly in rainy season A report by TechnoServe Rwanda for the East Africa Dairy Development Program 46
    • INTERVIEW DETAIL Nyagatare 4 farmers 3 cooperatives 3 transporters Rwamagana 2 farmers Kigali 2 farmers 2 agroinput shops 3 processors 6 retailers Gatsibo 2 farmers 1 cooperative Kamonyi 2 farmers 1 cooperative 1 AI provider 1 retailer Nyanza 1 processor Muhanga 2 farmers 2 AI providers 1 retailer Musanze 2 farmers 1 cooperative 1 AI provider 1 retailer Rubavu 2 farmers A report by TechnoServe Rwanda for the East Africa Dairy Development Program 47
    • 1 cooperative 1 retailer Nyabihu 2 farmers 1 AI provider Gicumbi 2 farmers 1 cooperative Ministry of Agriculture and Animal Resources (MINAGRI) ICRAF Rwanda Agriculture and Animal Resource Development Authority (RARDA) ISAR (Institute for Agricultural Research) Rwanda Private Sector Federation Rwanda Bureau of Standards Natl Institute of Statistics of Rwanda Ministry of Commerce Rwanda Investment & Export Promotion Agency National Bank of Rwanda CAPMER (national board for SMEs) Rwanda Agricultural Development Agency (RADA) Dairy Cattle Development Support Project (PADEBL) A report by TechnoServe Rwanda for the East Africa Dairy Development Program 48
    • REFERENCES Daniel, Rukazambuga Ntirushwa. “Agricultural Innovation and Technology in Africa.” 2008. EADD. “EADD Grant Proposal – Summary Information for Submission of August 30, 2007.” Gilbert, Christopher. “Value Chain Analysis and Market Power in Commodity Processing with Application to the Cocoa and Coffee sectors.” Commodity market review 2007-2008: 5-31. Loveridge, Scott, Alastair Orr and Abdoul Murekezi. “Agriculture and Poverty in Rwanda.” Natural Resources Institute, et al. 2007. Ministry of Finance and Economic Planning. “Economic Development and Poverty Reduction Strategy 2008-2012.” MinFEP 2007. Ministry for Agriculture and Animal Resources. 2006 <http://www.minagri.gov.rw/article.php3?id_article=23>. Ministry for Agriculture and Animal Resources. “2007 Annual Report.” MINAGRI 2007. Ministry for Agriculture and Animal Resources. “Agricultural Sector Performance First Semester 2008.” MINAGRI 2008. Muliisa, Richard. “Milk, Rwanda’s ‘Unexploited’ Resource.” The New Times 2 Oct. 2006 <http://www.rwandagateway.org/article.php3?id_article=3141>. Murekezi, Anastase. “Medium Term Plans for Agriculture and Growth.” MINAGRI 2007. National Institute of Statistics of Rwanda (NISAR). “Rwanda Agricultural Survey 2006.” NISAR MINFEP 2007. PADEBL. “Trimester Report July-September 2007.” MINAGRI, 2007. A report by TechnoServe Rwanda for the East Africa Dairy Development Program 49
    • Porter, M.E. “What is Strategy?” Harvard Business Review Nov-Dec 1996: 61-78. Rutamu, Innocent. “Investment Opportunities in the Dairy sub-sector of Rwanda” Aug. 2008. World Bank, World Development Indicators 2008 <http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/AFRICAEX T/RWANDAEXTN/0,,menuPK:368741~pagePK:141132~piPK:141109~theS itePK:368651,00.html>. A report by TechnoServe Rwanda for the East Africa Dairy Development Program 50