Eadd mid term report 2008 2010

Milking forProfitMidterm Report

© East Africa Dairy Development 2011www.eadairy.orgRegional OfficeLikoni Lane off Dennis Pritt RoadPO Box 74388-00200 Nairobi, KenyaTel: 254 20 3862366/77Kenya OfficeElgon ViewPO Box 5201-30100, EldoretTel: 254 53 2031273/8Uganda Office14 Lourdel Road, NakaseroPO Box 28491, KampalaTel: 256 41 4233481Rwanda OfficeOff Umutara Polytechnic University RoadPO Box 115, NyagatareTel: 250 252 565 432Writer and EditorMary Anne Fitzgeraldmafitzgerald@iconnect.co.keDesign and LayoutGeorge Okellog_okello@yahoo.comPhotographyEast Africa Dairy Development photo libraryCommunicationsAnn Mbiruruann.mbiruru@eadairy.orgPrintingOffice and Beyond Ltdinfo@officeandbeyond.comThis report is funded by the Bill & Melinda Gates Foundation. Thefindings and conclusions contained within are those of the authors anddo not necessarily reflect positions or policies of the Bill & Melinda GatesFoundation.

Table of ContentsEADD Partners 1Introduction 2Adopting Business Principles 4Kenya 5Uganda 7Rwanda 9More Is Better 12The Village Bull 13Field Studies 15Home at Last 15Kenya Banks Pioneer Small Loans to Farmers 17Good Feeding Makes Healthy Cows 18Bubusi Feed Mill 21Reversing the Urban Drift 22Corporates Help Expand Dairy Markets 23Much in Common 24A Town Called Lusozi 25Women and Youth to the Fore 26Communicating 28Keeping Track 28

AcronymsABS TCM African Breeders Service Total Cattle Management Ltd.AHW Animal health workerAI Artificial inseminationCAHP Community animal health practitionerEADD East Africa Dairy DevelopmentFSA Financial services associationICRAF World Agroforestry CenterILRI International Livestock Research InstituteM&E Monitoring and evaluationSACCO Savings and credit cooperative organizationUDAMACO Umatara Dairy Marketing Cooperative UnionUN United NationsUHT Ultra-high temperature processing

ForewordAfrica is a continent of economic promise. This 68 farmer-owned cooperatives and companies havecertainly holds true for the agriculture sector where either been formed or resuscitated. Nearly 20 SACCOsinvestment in small-scale and medium-sized and Village Banks have been established as well.enterprise is driving rapid economic growth. The Today, halfway through EADD’s Phase 1 (2008-beauty of agriculture is that it is resistant to external 2012), rural families in Central Uganda, Easternshocks while its benefits reach down to those who are Rwanda and selected districts in Kenya can affordliving on less than $1 a day. And, of course, it feeds to educate their children, enjoy basic bankingthe rest of us. services, and buy farm inputs and services with As Secretary General of the United Nations, Kofi credit or cash. The continued success of about 70Annan called for a green revolution in Africa to meet producer enterprises subscribed to by thousands ofthe Millennium Development Goal of halving hunger farming families will depend on sound governance andby 2015. The livestock sector, which involves half management, modern technology, market expansionthe rural population and contributes over 30% of the and the continued availability of support services andcontinent’s agricultural Gross Domestic Product, is a inputs. These vital ingredients need time to take root inmajor player in this revolution. The dairy sub-sector rural Africa.is particularly vibrant. In Eastern Africa 15 million The EADD consortium is in the process of puttingpastoralist and smallholder farmers produce more together a proposal for Phase 2 of EADD running fromthan 15 billion liters of milk a year. With the appropriate 2012 – 2017. This will see EADD expand its reach topolicies and healthy investment, its highlands and over 650,000 farming families in five countries - Kenya,savannas have the potential to rival India’s 100 billion Rwanda, Uganda, Tanzania and Ethiopia - through anliter annual production. This would make the continent ambitious public-private partnership. We hope you willself-sufficient in milk, save foreign exchange and shift join us in helping our vision come to fruition.wealth to the rural areas. It is possible. Inspired and funded by the Bill & Melinda GatesFoundation, a consortium of five partners with a long Moses Nyabilahistory of supporting dairy production and marketing EADD Regional Directorin Africa joined together in 2008 to form the EastAfrica Dairy Development Project (EADD). The ideawas to add value to farmers’ milk production throughproducer-driven collective marketing and productionbased on efficient, farmer-friendly technology. Threeyears on, EADD has become one of the leadingmarket-oriented agro-livestock development initiativesin Africa. Its 140,000 farming-family beneficiaries haveinvested $3 million and receive some US$ 24 milliona year in incremental payments. Thanks to EADD,

to inform the implementation of EADD project activities.EADD Partners ILRI involvement in EADD focuses on the documentation of innovation and research related to dairy production; knowledge sharing among partners; and informing project design.Heifer International As the lead agency in the EADD consortium, HeiferInternational holds primary responsibility for improving dairyproductivity and efficiency. It draws on experience in EastAfrica dating back to the early 1980s when the organization African Breeders Service Total Cattle Management Ltd.first provided support to rural farmers in Kenya and Uganda. (ABS TCM)Heifer International manages the project as part of its Africa ABS TCM is a private, for-profit supplier of technicalArea Program and provides financial and programmatic assistance related to livestock breeding. It supports Heiferguidance as needed for overall coordination of the International through the promotion of enhanced animalimplementing partners. breeding for increased dairy productivity within EADD project areas. ABS TCM brings to the consortium a range of facilities and expertise including livestock genetic delivery service, liquid nitrogen production, capacity building related to milk quality and livestock reproductive health and nutrition. As a private partner, ABS TCM is committed to the promotionTechnoServe of productivity-enhancing technologies and the creation ofTechnoServe leads the EADD consortium on market access viable business linkages in dairy value chains.activities which include the procurement and financing ofchilling plants as well as technical support to traditionalmarket hubs and business development service providers.It is considered a pioneer in private-enterprise approachesto poverty alleviation in the developing world. In Africa,TechnoServe maintains country offices in Kenya, Uganda,Rwanda, Tanzania, Swaziland, Mozambique, South Africaand Ghana. World Agroforestry Center (ICRAF) ICRAF supports Heifer International by promoting the production and distribution of improved animal feed and fodder through farmer training on the production and processing of improved feeds and the establishment of feed demonstration plots. ICRAF ialso carries out research related to feeds and promotes improved feed conservation such as crop residue and storage.International Livestock Research Institute (ILRI)ILRI is charged with leading the consortium on knowledge-based learning activities and provides action research EADD MIDTERM REPORT 2008 – 20101

the fields, gender disparity persists thus preventingIntroduction their advancement. Hopelessness propels young people to join the ranks of the unemployed in the cities.On a verdant hillside in Rwanda an illiterate genocide It is against this background that the East Africasurvivor has leveraged the gift of a cow into three Dairy Development Project (EADD) has introduced amicro-enterprises that bring in $635 a month. At a dairy model on a rare scale. It is an innovative mix ofbustling milk collection center a 27-year-old school training, technology, access to markets and supply-leaver loads metal canisters of milk onto the back side economics that puts the farmer in control of theof a motorbike. Through an initial bank loan, he dairy-value chain from production to processor.has acquired three shop sites, his motorbike and a EADD takes farmers and their ambition to improvecrossbreed Friesian cow. His long-term vision is to their quality of life very seriously indeed. It intends tobuild his own milk-chilling plant. A headmistress in double the income of more than 600,000 dairy-farmingUganda, who is also chair of the board for the local families (nearly 4 million people) over the course of 10chilling plant, reports that student intake has swelled years. Phase 1 (2008 – 2012) is a pilot project coveringand parents no longer default on fees. 179,000 subsistence farmers in selected districts of Subsidized loans and micro-credit linked to Kenya, Rwanda and Uganda. The methodologies thatdonor funding have been cited as cornerstones for are being tested will inform the second part of thetransforming Africa’s impoverished smallholders project.into prosperous commercial farmers. In fact, some Phase 2 (2012 – 2017) will extend the best practicesagriculture experts say that every dollar lent leverages learned to another 500,000 farmers in Ethiopia andtwenty more in private capital. Obvious as it may seem Tanzania as well as the existing countries of operation.as an exit from poverty, access to credit has eluded After that, the assumption is that EADD’s technicallyAfrica’s farmers for generations. Similarly, smallholder competent and business savvy farmers will be onfarmers are seldom taken seriously as budding a financially sound footing and able to look afterentrepreneurs. themselves. As a result, the majority of rural households in East The EADD project has been designed and is beingAfrica continue to scratch a living from subsistence run by a consortium of five internationally knownagriculture. Many keep local cows which typically partners with a unique selling point. They haveproduce less than two liters of milk a day. Parents find pooled their technical, business and research skillsit hard to put enough food on the table, send their to lay the foundations for a sustainable and profitablechildren to school or pay for medicine when they get regional dairy sector driven by millions of farmerssick. Although women do about 70% of the work in who once lived below the poverty line. In addition, EADD will double the dairy income of 179,000 farming families by 2012 Kenya Rwanda Uganda 110,000 24,000 45,000EADD MIDTERM REPORT 2008 – 2010 2

EADD Operational Areas Phase 1 (2008 – 2012) EADD specifically targets women and youth. More than 90% of adults in the households of EADD project participants earn less than $2 a day. It is funded by a $42.85 million grant from the Bill & Melinda Gates Foundation. Part of the Foundation grant is a $2.5 million investment fund for Dairy Farmers’ Business Associations, which was increased to $5 million in 2008 thanks to a Heifer International fundraising campaign. To date EADD has mobilized $3 million of investment to build 22 new chilling plants, revitalize 13 existing ones and create 12 milk-collection centers for the traditional market. Combined with the processor- owned chilling plants used by some of EADD’s farmers, EADD has 54 dairy hubs across the region. Milk intake at dairy hubs has grown significantly in Kenya (65%), Uganda (30%) and Rwanda (10%). Microfinance associations, village banks, commercial banks and the chilling plants’ check-off system of credit against milk deliveries has given farmers, youthful entrepreneurs and business men and womenFarmers will be a major voice in what affects the the opportunity to engage in a range of enterprisesindustry. The EADD experience has stabilized that extend well beyond the dairy sector. This hasprices in the marketplace to shift the balance of in turn stimulated the local economies of hamlets,power dramatically from the processor to the trading centers and towns all over East Africa.farmer. Within the next five years farmers will be The project is coordinated by a regional team,processing their own milk or at least going into three country project teams, a Regional Advisorypartnership. Free enterprise in agriculture works. Committee and a Project Steering Committee, each of which maintains multi-partner representation. EADDMoses NyabilaRegional Director, EADD has also created direct roles for private dairy interests and relevant government agencies in oversight of the project. It works closely with government officials from local to national level and ensures that all its activities are aligned with government policy. 141,000 3,578 $3,000,000Farmers registered and organized Dairy Management Groups and Invested in chilling plants and into associations and groups Dairy Investment Groups milk-collection centers EADD MIDTERM REPORT 2008 – 20103

at dairy hubs is popular with farmers. The fact thatAdopting Business Principles they can buy on credit against a check-off system stimulates consumer demand. And it gives farmers the latitude to buy products and services when they need them rather than when they can afford them. ChillingAn expanding dairy industry requires access to plants also offer organoleptic and milk-density tests somarkets, extension services, farmer training and credit that milk quality meets the processors’ benchmark.for business start-ups. But the operating environments EADD uses a stage-gating system to chart thein East Africa are exceptionally diverse. It is not a case progress of each chilling plant from inception atof one size fits all. One of EADD’s great strengths Stage 1 to disengagement from EADD at Stage 5. Byis its flexibility in adapting the paradigm to suit the Stage 4 chilling plants and Dairy Farmers’ Businesssituation. Kenya, where the dairy industry is well Associations are profitable, offer a range of extensionestablished, operates on volume. Twenty-one chilling services and pay regularly to ensure their members willplants have been constructed so far with a minimum continue to supply large quantities of milk. And chillingof 2,000 members registered at each plant. Return on plants offer value to buyers as they can guaranteeinvestment is one year. quality and quantity. In Uganda, where sites are predominantly in Governance is a key aspect that is weighted atpastoralist areas, the return can take up to two years about 40% in the stage-gating. With training facilitatedand the volumes per chilling plant are lower. With by EADD advisers, corporate governance respects theper capita income lower too and a slow response separation of board and management, holds regularto turnkey financing from commercial banks, EADD elections and returns clean audits.has pre-financed the procurement of equipment in ‘The philosophy is that you can only supportsome of the chilling plants so that construction can to a certain point. Then we shift our resources tobegin. Rwanda has a significantly smaller market and other farmers. It’s about exit and sustainability andno culture of milk consumption. EADD works closely empowerment. This year a number of Dairy Farmers’with the government’s dairy industry and is looking at Business Associations will have moved to Stage 4,’cultivating the traditional market which means a new explains Moses Nyabila.focus on milk-collection and bulking centers. EADD also fosters relationships with training The axis of the EADD project design is the dairy institutions to create a body of graduates thathub which is used to deliver a comprehensive will form the critical mass of skills required for thepackage of services including artificial insemination implementation of Phase 2. Canada’s Coady Institute,(AI), veterinary care and animal husbandry. The hub a center of excellence for community developmentis managed by Dairy Farmers’ Business Associations established by St. Francis Xavier University, offersand promotes Business Development Services scholarships to management, board members andsuch as transporting milk, agrovet stores and the EADD staff. EADD is currently developing curriculacommercial growing of fodder. Training, exchange with African universities.visits, demonstration plots and manuals reinforce thefarmers’ understanding of how to improve milk qualityand quantity. The centralization of AI service providers,Community Animal Health Practitioners and agrovetsEADD MIDTERM REPORT 2008 – 2010 4

companies that could operate on cooperativeKenya principles. In its first three years of operation, EADD established or revitalized 19 chilling plants. In 2010 they sold 49 million liters of milk, earning farmers $13.7 million with net profits for the chilling plants of more than $0.5 million. A further three plants are When EADD started its project in Kenya in 2008, scheduled to come on stream in 2011.it was clear to the country team that farmers were The EADD goal for its Kenya program is to doublenot accruing any substantial benefits from the dairy the income of 110,000 impoverished dairy farmingvalue chain. The collapse in 1999 of the state-owned families in the Rift Valley and Central Provinces whereprocessor, Kenya Cooperative Creameries, had dairy production is concentrated. Kenyan smallholdersopened up the sector to competition but industry sold an average of 3 to 5 liters of milk a day. Lowcapacity utilization was a low 40%. Despite this, the production meant low income which preventedfarm-gate price was weak and varied little between the investment in feeds and breeds to boost yields. Itformal and informal markets. Farmers were not being would need a minimum of 15 liters a day for families topaid on time in the informal market and sometimes not break out of the poverty that encircled them.at all. The formal market, dominated by three major The same thinking applied to the chilling plants.processors, was more regular in its business dealings. They had to run at capacity to cover debt obligationsHowever, 80% of farmers favored the traders’ and and operating costs so volume was essential. Thehawkers’ cash-based system that catered to their daily challenge was to keep the chilling plants functioningfinancial needs. The delivery of extension services no with an eye to the bottom line without sacrificinglonger functioned properly. Neither were farmers able benefits to farmers. Services to farmers instilled loyaltyto access information on husbandry, markets and which, in turn, created volume at the chilling plant.prices. The team concluded that in order to lift smallholders To ensure sustainability and profitability, the out of subsistence farming, they had to design aKenya team mobilized farmers to form public liability program based on business principles with profitability driven by volume. The target was to sign up 2,000 farmers at every Dairy Farmers’ Business Association to feed milk into each chilling plant’s 10,000-liter tank. A feasibility study showed that both farmers and processors suffered from the consequences of a poor cold chain. Milk needs to be cooled within two to four hours of being poured into the can or the quality drops. It also revealed that Kenyan smallholders did not adhere to best practices. They did not use AI or fodder while preventive health care was minimal. And farmers did not know the cost of their production or if additional feed or a change in diet would boost a cow’s milk yield. By 2010 this had been dramatically turned aroundModel farmer from Ol Kalou, Kenya. with 68,000 farmers trained in better husbandry. At the EADD MIDTERM REPORT 2008 – 20105

By the close of 2010, the average monthly profitfor chilling plants was $1,300 while just under $2million was paid out to farmers. All the loss-makingchilling plants that had been taken up by EADD atthe time of its entry were now profitable.same time, the Kenya project had registered more than90,000 farmers, reaching 80% of the Phase 1 target.Households were producing an average of 15 liters ofmilk a day. And farmers were earning $4,500 a yearfrom the sale of milk and heifers. EADD uses a financing model for raising plantcapital that is suited to Kenya’s well established dairyindustry. Farmers raise 10% of the $125,000 start-upcapital to create ownership and accountability. EADDextends a 30% interest-free bridging loan redeemed Nyala Dairy in Kenyaover five years by the chilling plant shareholdersthrough a minimal levy on every liter of milk sold. Thebalance is covered by commercial debt. Fina Bank, K-Rep Development Agency and Kenya Farmers exceeded their minimum equity targets. Commercial Bank – are in various stages of financingHowever the operating environment in Kenya’s or refinancing chilling plants and equipment such asbanking sector did not lend itself to backing unproven motorbikes. The plants at Kabiyet, Lelan and Metkeiagriculture ventures. Calling on the flexibility and have secured commercial loans exceeding $335,000innovative thinking that untried paradigms require, at an average interest rate of 12%.EADD assumed responsibility for the outstanding This year EADD is partnering with the Kenya60% of the financing. It extended loans through its Institute of Management to develop an operationalinvestment fund on the premise that once chilling performance award for hub management sustainabilityplants demonstrated their profitability, commercial and to rank chilling plant companies in terms ofbanks would take over. profitability and corporate governance. This will This assumption proved to be correct. Chilling provide banks with a yardstick against which they canplants have been seeing an exceptionally rapid assess a plant’s credit rating. The concept is beingreturn on investment. In April 2010, Kabiyet Dairies replicated in Rwanda and Uganda.Co. Ltd. was granted a commercial bank loan on In 2010 the Kenya team strengthened its datathe basis of an $8,750 monthly turnover one year system for tracking progress measured against projectafter being commissioned. Now banks are vying for milestones. Seventeen databases were installed atchilling plant business at competitive interest rates in chilling plants and connected to a master database atacknowledgment of the potential demonstrated by the country office in Eldoret. Stored data include thetheir start-up track record. Currently six commercial training records of farmers and statistics on registeredbanks – CFC-Stanbic, Cooperative Bank, Family Bank, cows and all crossbred calves.EADD MIDTERM REPORT 2008 – 2010 6

Uganda In Uganda, EADD is doubling the income of 45,000families by applying integrated interventions in dairyproduction, market access and knowledge application.The project area is in central Uganda, a region thataccounts for nearly 25% of national milk production.Many of the selected sites are comparatively arid andare inhabited by pastoralists. Uganda’s nascent dairy sector presented challengesthat had not been encountered by Kenya’s longerestablished dairy industry. Smallholders owned morethan 90% of the national herd. This consisted almostentirely of native Zebu and Ankole which had beenbred with an emphasis on beef. Their milk yieldsaveraged a liter a day. Further complicating matters,the areas initially chosen for the construction of chillingplants tended to have a low population density andwere not well served with feeder roads. Farmers were carrying their milk by foot and on Girl carrying fodderbicycle for distances of up to 30 kilometers. Becausevolumes were low, especially in the dry season, themilk could sit for three or four days at a collection doubled the number of sites from 15 to 31 to widencenter before being trucked to a chilling plant. the net of farmer involvement. Today EADD worksWhile the market potential existed, it had not been with 10 chilling plants that are owned and manageddeveloped. About 90% of Uganda’s milk production by farmers. The milk is bulked and chilled beforewas sold informally to hotels, shops and independent collection by commercial processors. Another seventraders because the formal market, dominated by a chilling plants are owned by processors and rented outvirtual monopoly, fetched lower prices. to farmers. EADD’s success was premised on high volumes in a In Uganda traders handle 80% of all marketedcompetitive marketplace. However, the Uganda team unprocessed milk. EADD has penetrated this vibrantsoon realized that they would have to recalibrate the market by working with 14 traditional hubs that collectEADD program design that had been so successfully milk for sale in the informal market. The majority ofapplied in Kenya if they were to achieve results. farmers assisted by EADD are connected to these The team halved the size of the chilling tanks to traditional hubs. EADD helps to leverage their position5,000 liters to reflect the lower site volumes and with raw-milk traders through collective bargaining and EADD MIDTERM REPORT 2008 – 20107

by stimulating the demand for quality milk. Although that investing in dairy improvements was worthwhile.they do not utilize EADD-procured chilling plants, This was the tipping point needed to persuadetraditional market hubs are similar to chilling plant farmers to replace their locally bred Ankole and Zebuhubs in that they are managed by Dairy Farmers’ cows with crossbred or purebred cows. The midtermBusiness Associations and provide dairy-related evaluation showed that the most striking differenceBusiness Development Services. between EADD farmers and the farmers outside the By midterm, despite a slower than anticipated start- catchment area was the adoption of AI practice. Oneup, the project’s key milestones had been achieved out of two EADD farmers have herds where at leastahead of schedule. More than 30,000 farmers (68% half the cows are exotics compared to one out of fiveof the end-project total) had signed up as members farmers living outside the catchment area.of dairy hub cooperatives while 41,000 farmers were Farmers cite training in farming and businessalready accessing EADD’s Business Development skills, exchange visits with other farmers, andServices. They reported improved milk yields and timely and convenient payments for milk deliveredattributed it to better bred and fed cows that were as the primary attraction for being a member of ahealthy as a result of good husbandry. chilling plant cooperative. Already 4,250 farmers Several achievements were highlighted as have been on learning trips and have introducedexceptional in an independent evaluation conducted best practices on their farms. The other incentivesmid-2010. EADD was instrumental in creating a for cooperative membership are the Dairy Farmers’substantial growth in milk production and milk intake Business Associations that link farmers to stableat the chilling plants. The technical advice of EADD’s markets, SACCOs (savings and credit cooperativebusiness managers also helped to raise farm-gate organizations), and dairy-related goods and services.prices by creating competition in the formal and Farmers say they like the products on offer such asinformal markets. high quality feeds, veterinary products and genetically By stimulating the industry and expanding farmer improved semen.profit margins, EADD had demonstrated to farmers Farmers were reluctant to form companies so EADD chose to work through cooperatives instead. It was a way of organizing that was familiar to Ugandans. EADD then formed about a dozen 30-member Dairy Interest Groups at each site to enable farmers to collectively access dairy-related services and to market milk. Uganda pioneered a decentralized structure that has been replicated across the region. It is based on a devolved cluster concept that has improved the efficiency of project implementation. The extension-service system has been revitalized by centralizing the extension workers at the hub sites from where they can adapt feeding and breeding strategies to each cluster’s unique needs. An EADD business adviser is attached to each hub to help formulate and implement a business plan.Farmers in Wakiso being trained in milk testing and grading Advisers, who serve as ex-officio board members,EADD MIDTERM REPORT 2008 – 2010 8

also facilitate the training of board members andmanagement staff in sound corporate and financial Rwandapractice. Operational plans and budgets, facilitatedby Deloitte, are participatory and informed from thebottom up by the cluster teams. Generic businessplans for the Dairy Farmers’ Business Associationshave been revised into site-specific, concisedocuments pitched to farmers and funders using Rwanda’s hilly topography and good rainfall haveannual implementation plans and EADD action plans. earned it the sobriquet, the Switzerland of Africa. It In March 2011, EADD entered into an agreement is also one of the most densely populated countrieswith the Microfinance Support Center to extend on the continent with more than half the populationloans for the construction of chilling plants at the living below the poverty line. The EADD target isconcessionary rate of 9%, which compares favorably to transform the lives of 24,000 families by helpingto the commercial rate of 25%. them to exit poverty. EADD works closely with the EADD also works closely with the government Government of Rwanda to achieve its goals for thethrough the Dairy Development Authority to align its growth of the dairy industry.dairy hub model with national policy and strategies. The EADD Rwanda country office was opened inEADD is helping to upgrade the Entebbe Dairy Training Nyagatare District in May 2008, prior to a feasibilitySchool to ensure the long-term continuation of study conducted in September and October of thatvocational and outreach training. year. As a result, site selection and the formulation of EADD’s future strategy for Uganda is to continue a business plan were carried out simultaneously withto think small. Government policy prohibits the bulk farmer sensitization and mobilization. In 2009, EADDtransportation of warm milk for distances greater than expanded its presence to two more districts, Gatsibo50 kilometers. As the market expands, EADD will and Rwamagana.assist with the construction of chilling plants, many The program design for Phase 1 was to establishof them satellites to established chilling plants, with a 10 new chilling plants. Initially, however, EADD tooktank capacity of 1,000 to 2,000 liters. on six existing chilling plants. During the first half of the project, until it was disbanded, access to the cooperatives that owned the chilling plants was through UDAMACO, an umbrella organization for 23 local cooperatives. Early on in its engagement EADD seconded a consultant to UDAMACO to assist it in writing a 10-year strategic plan.When you talk to a farmer, he doesn’t want to know At the time of EADD’s entry, the dairy industryyour institutional affiliation. He wants to know how was still in its early stages but had been given ayou can help him. Before EADD came along, milk boost through a government program initiated inwas being wasted. Now chilling plants receive over 2006 to give a cow to every smallholder homestead.1,000,000 liters a month. It’s changing the face of About half the milk produced was either consumedthe villages. domestically or lost along the production chain.William Matovu Almost all the rest was sold in the informal market asUganda Country Program Manager few Rwandans could afford packaged milk. EADD MIDTERM REPORT 2008 – 20109

In addition, they were difficult to find in stores outside Kigali, and farmers had little knowledge of their application. Weak consumer demand was a key challenge. The dairy hub model is based on the premise that incomes double when farmers use their credit to access services that improve their lives. But if farmers have limited milk sales, this does not happen. Penetration into the formal market was very limited as Rwanda’s two processors were operating on low capacity. So EADD’s Rwanda team changed tack. It took a serious look at the traditional market, which is led by milk bars where local fast food is served alongside one-liter mugs of milk. Other outlets included hotels and a government school feeding scheme that is facilitated by the UN’s World Food Program. In the absence of reliable data on retail outlets and consumer habits, Tetra Pak agreed to co-sponsor consumer research to ascertain consumer segments, household milk-buying patterns and milk’s penetration and distribution in the cold chain. The recalibrated marketing approach placed a new emphasis on the importance of collection centers where milk is bulked but not necessarily chilled. The lessons learned were twofold. First, during the start-The daily trip to chilling plants can be up to 2o kms up phase in countries where the dairy industry is not yet entrenched, consumer demand may have to be Where milk collection centers existed, they operated ramped up in order to stimulate farm supply. Second,on a slim margin that was vulnerable to rainy season chilling plants are not essential to the dairy hub model.milk gluts. The centers either owned milk shops or Dairy hubs are a channel for accessing credit andrelied on transporters who sold to their own buyers. associated services regardless of how and where theAnnual per capita milk consumption was 12 liters bulked milk is sold.compared to 100 liters for Kenya and 22 liters for EADD also had to conform its financing packageUganda. to the government model for turnkey chilling Milk yields were very low as more than half the plants. At a uniform cost of about $55,000, farmersmilking cattle were local breeds and nutrition was contribute 18% of the equity. The Government ofinadequate. Cows fed almost exclusively on grass, Rwanda contributes 40% in the form of land anda fodder source that was entirely dependent on the funding. EADD extends an interest-free loan of 21%weather. As a result, prices fluctuated considerably which is matched by a low-interest loan from thebetween the rainy and dry seasons making it Rwanda Development Bank, the state investmentimpossible for a farmer to budget on an annual basis. arm for development financing. In another divergenceEADD MIDTERM REPORT 2008 – 2010 10

was evidenced by a significant improvement in milk production and milk quality. The best performing business indicator for 2010 was the value of milk sales from farmers at $1.38 million, a jump of 70% over the previous year. Other indicators also reflected an enthusiastic response on the part of farmers to EADD interventions such as AI. EADD’s farmer-to-farmer approach to training and information dissemination proved to be extremely popular. More than 90% of registered farmers undertook some form of training, a considerably higher uptake than in Uganda (75%) and Kenya (55%). Veterinary inputs and AI ranked second and third respectively in farmer demand for services and inputs. By the start of calendar year 2011, 10 existingPouring milk into a cooling tank chilling plants had been rehabilitated and were making a modest profit. More than 20,000 farmers had registered at 16 sites which was more than 85% of thefrom EADD’s investment blueprint, the Rwanda four-year project target. EADD had also establishedDevelopment Bank is responsible for the tendering, 13 satellite centers to accommodate the farmers whoprocurement and installation of equipment. Despite lived long distances from chilling plants. These centersthe concessionary terms, farmers struggle to raise the are equipped with pulverizers to convert crop residueequity. After three years, only two sites have achieved into improved feed. Seven sites have become properlyfully paid-up farmers’ equity. functioning hubs that offer three or more services to Initially, farmers were slow to buy in to the EADD nearly 17,000 members. They range from AI, agrovets,concept of commercializing the dairy sector. They tractor hire and plowing services to pulverizers for rentwere accustomed to organizing in cooperatives and mobile phone charging.and receiving equipment and services from the Since the intervention of EADD, all chilling plantsgovernment. Even so, by the end of 2010, the third have seen a modest increase in their profits. Andyear of operation, farmers had responded to the business indicators have all exceeded their annualnew technology with the result that productivity had targets. In 2010 7,400 farmers were trained inincreased significantly. governance and group dynamics to enable them to be The Government of Rwanda continued to give knowledgeably involved members of Dairy Farmers’EADD its full support and contributed AI equipment, Business Associations. About 70% were women andseed, biogas digesters and financing to the project. It young people. Nineteen farming families pioneered aalso acknowledged that the project’s training, technical pilot domestic biogas project initiated in conjunctionsupport and services had already transformed milk with the Ministry of Infrastructure. Three chilling plantsproduction from a household sideline to a profitable won tenders to supply schools with milk as part of thebusiness that had raised the living standards of school feeding scheme.smallholders over a very short period of time. This EADD MIDTERM REPORT 2008 – 201011

More Is Better They arrive amid shouts and the groan and wheezeof revving engines. It is 8 a.m. and Kabiyet town, setat 2,000 meters atop a grassland plateau in Kenya’sRift Valley Province, is alive with noise and movement.Donkey carts, bicycles, motorbikes, minivans andpickups vie for space on the dirt forecourt of KabiyetDairies as gum-booted transporters unload aseemingly endless stream of metal churns brimmingwith milk. North Keiyo District has long been in the heartlandof Kenyan dairy production. But when Kenya Farmers attend a meetingCooperative Creameries, a state-owned processingmonopoly, was declared bankrupt in 1999, the localdairy industry virtually collapsed. Farmers turned liters and by the end of the month more than 7,000elsewhere to sell their milk but lacked bargaining liters. The momentum was unstoppable.power and were hostage to discriminatory prices. By January 2010, a year after company registration,Many switched to maize growing and saw their the plant was receiving 37,000 liters a day and farmerslifestyle deteriorate. School fees went unpaid. People were subscribing to AI services to switch from theirwalked barefoot or in sandals made from discarded traditional longhorns to high-yielding Holsteins. Itcar tires. Cattle dips closed and East Coast Fever was had taken just a year and a half for the dairy hub torampant. The building where milk was collected and become a successful, farmer-owned chilling plantbulked was boarded up and fell into disrepair. poised to exit the EADD project and operate as a Then EADD agreed to assist with the renovation of profitable stand-alone business.the abandoned collection center. Five months after The Kabiyet experience is not only a successKabiyet Dairies Co. Ltd. was registered in January story, it underscores the impact the EADD volume-2009, the plant was commissioned. The first day it driven program design has on communities. Thecooled 1,623 liters of milk. The next day it was 2,223 number of shops has more than doubled. There are Kabiyet Dairies Co Ltd performance in 2010 8% $2,800,000 $368,000 Net profit margin Sales revenue generated by Monthly turnover 3,500 farmersEADD MIDTERM REPORT 2008 – 2010 12

three petrol stations (compared to the previous one)to cater for all the newly acquired vehicles. Monthly The Village Bullturnover at Kabiyet Dairies’ agrovet store is $7,500.General trading stores are selling 200 kilos of sugara day instead 25 kilos. School intake has grown by The first step in attaining high-yielding milk productionmore than 35%. Fee arrears have dropped 80% is to own the right breed of cow. East Africa’sthanks to the Kabiyet Financial Services Association indigenous cattle are hardy and resistant to localwhich uses the check-off system to advance parents diseases, adapted to survival even without goodschool fees against milk deliveries. Cases of theft and husbandry. But they have never been prodigiousdisturbances dropped from 116 to 49 over the course milk producers. EADD’s country feasibility studiesof a year. showed that the milk output was almost universally In Kenya volume has been attainable even in poorer low. Typically a cow produced less than two liters acommunities with a per capita income of less than day. Based on existing herds, farmers would need$1 a day. At Metkei, one of EADD’s first site choices, to own more than 100 cows to increase their incomefour cooperatives joined together to form a limited through the sale of surplus milk. Yet large herds requirecompany which attracted 2,000 shareholders. Paying extensive pasture and lots of water. Neither resourcethe $8.75 share price was challenging, but it was was easily available. There had to be another solution.achieved in installments. At the time of EADD’s entry, The starting point for EADD’s program in the firstthe local cows were typically yielding three cups of year of implementation was to talk to farmers aboutmilk a day. Now daily yields average seven liters. The why they should consider changing the profile ofplant has 3,500 regular suppliers who generated a their herds. Small was better. Genetically improvedrevenue of $1.85 million in 2010. was better still. Crossbreeding with exotics such as Friesians, Holsteins, Ayrshires and Jerseys allows farmers to reduce the size of their herds dramatically while improving the output of milk. The way to do this efficiently and on a large scale is through AI. Traditionally farmers used natural breeding through the services of a few local bulls. It did little to improve the quality of the animals. AI, on the other hand, is a technology that allows farmers to meet their breeding goals by introducing quality genetics fromThe root of our success is that we demystify performance-tested bulls.innovations. We involve the farmers in whatever In the first two years of project implementation,we do, and they give us feedback. We are a single, AI service providers had performed nearly 120,000holistic entity. inseminations, about half of them through EADD- funded chilling plants. While past records show thatKen Biwott breeds are improved by crossing local cows withManager, Metkei Multipurpose Co Ltd exotic quality bulls, It takes five to 10 years for AI to make its full impact on household incomes. By midterm of the project’s Phase 1, crossbred cows constituted at least half of the herds belonging to EADD MIDTERM REPORT 2008 – 201013

If you sample from the same bull, you can’t In Uganda, where 95% of cattle were local breeds,improve more than 2% in a generation. If you EADD persuaded the government to change its policychoose from the global pool of elite genetics, on breeding and promote AI. Because farmers foundthe improvement is 200% in a generation. You’re the cost of insemination high, the EADD team reducedleveraging with scientific knowledge to rapidly the price for a straw of semen by 15-20% and addedchange an indigenous animal into a viable dairy a further 10% discount on every 30 straws purchased.unit. EADD also created 22 AI satellite centers in remote areas to cater for pastoralist farmers who found itNathaniel Makoni difficult to access services. The centers offer breedingTeam leader, EADD breeding section and veterinary services as well as semen and breeding supplies. They are staffed by AI technicians and Community Animal Health Practitioners. Largely as a result of these initiatives, AI uptake increased by 25% in 2010. The success of AI uptake lies in efficiency and affordability. By midterm of Phase 1, more than 400more than 95% of beneficiary farmers, according to Community Animal Health Practitioners had beenan external evaluation. And farmers had been trained trained as accredited AI service technicians. Aboutin keeping breeding records for animal passports and 95% of AI technicians are under 35 in line with EADDtraceability. policy to target younger people. For cultural reasons, At first EADD staff seconded from ABS TCM few women have signed up to be inseminators, but theencountered resistance among some farmers, who barriers are crumbling. Between 2008 and 2011, thewere reluctant to sell their prized bulls. Farmer proportion of AI providers who are women grew fromeducation forums, the distribution of educational 3% to 11%.material and the experience of model farmers who Farmers need proper training too. Keeping awere already using AI gradually persuaded the record of each cow’s breeding cycle is important forskeptics to switch methods. With AI now an intrinsic achieving high conception rates. So is understandingaspect of local dairy culture, the straws of semen how to use the heat-detection system to establishprovided by EADD’s AI technicians are known as ‘the when a cow is in estrus. EADD has trained more thanvillage bull’. 100,000 farmers to make informed decisions on when In Rwanda, EADD partners with the government’s and how to breed.Rwanda Animal and Research Development Authority Even though efficient systems and subsidies haveand the Eastern Region Animal Genetics Improvement greatly reduced the cost of AI ($10 -15) to the farmer,Cooperative to ensure sustainability of the AI program. affordability remains a major challenge. Hubs offer theRwanda’s government-subsidized program imported service on credit, but many farmers are not able to pay10,000 units of gender-sorted bull semen in 2010, the for AI solely from milk proceeds. EADD is overcominglargest consignment of its kind ever exported to Africa. this through subsidies. AI service providers are alsoIn Kenya, AI is moving away from a public-sector facing difficulties in funding their business start-upextension service to become a highly successful costs to buy equipment and a motorbike. EADD iscommercial enterprise. The rate of successful considering financing mechanisms for new providers.impregnations is above 80%.EADD MIDTERM REPORT 2008 – 2010 14

Home at Last Set amidst softly rolling hills and lush pastures, Urugero Farm in Rwanda’s Nyagatare District is home to 26 crossbreed Friesian cows. Each one was bred on site with AI in 2009 and 2010. With the cows yielding 50 liters a day, the profits from this dairy business are healthy as the herd’s owner, 50-year-old Celestin Bwimana, is quick to point out. In 2010 his net earnings from milk sales were $4,000, an eightfold increase on his annual income before he went into the dairy business. That is not bad for a man who was born a refugee in Field Studies neighboring Uganda. Celestin came to the land of his birthright in 1995, the year after Rwanda’s genocide, A field with a resident herd of Ankole cows is as a beneficiary of a government resettlement scheme not the average seat of learning, but it is ideally on land excised from the Akagera National Park. suited for the purposes of Paul Chatikobo, Celestin was allocated 19 hectares of bush which the AI training coordinator for EADD in his herd of 23 native Ankole cows shared with lion, Rwanda. Here, in the rain-splashed grass leopard, buffalo, zebra and impala. and mud, attentive Community Animal Health ‘We didn’t own the land so we didn’t bother to Practitioners undergo two weeks of practical clear it. The cows didn’t give any milk. We kept them application in AI having completed a week because that’s what people do,’ he explains, referring of theory in a conventional classroom. Most to the Rwandan belief that livestock ownership students are men in their 30s. While AI is not confers social status. Meanwhile Celestin and his wife yet widely accepted as a woman’s job, several struggled to raise their children on their $500 annual young women have broken the gender barrier income from a canteen they had built to cater for the and enrolled in the class. village secondary school. The school is a public-private partnership Then three years ago two events coincided to between EADD, the state-run Institute of change Celestin’s life dramatically. The Rwandan Agricultural Science and Research and the government gave him a title deed. It was the incentive Eastern Region Animal Genetic Resources he had been waiting for to improve his land. As a Investment Corporation, a for-profit company refugee, Celestin had not been exposed to agriculture. owned and run by Rwandan AI experts. It Now he intended to earn a living from it. But how was was established to lay the foundation for a he going to go about it? sustainable AI sector in Rwanda. It trained 164 The answer came in the form of EADD’s Joseph students in the first 22 months of operation. Karake. The two met at a recruitment drive for the Isangano chilling plant. Celestin’s cows did not produce surplus milk for sale. He had signed up as EADD MIDTERM REPORT 2008 – 201015

Celestin Bwimana’s annual income has increased eightfold.a member anyway, lured by the prospect of being he now trains others in dairy essentials such astrained in dairy management, getting access to a breeding, husbandry, feeding, fodder growing andmarket and receiving reliable payments. ‘Joseph told record keeping. And in a role switch that brings a smileus to change our cows so that we could get milk. to his face, he receives farmers on exchange visitsThat’s what convinced me – the milk yield,’ he says. from Uganda and Kenya. Celestin’s enthusiasm caught Joseph’s attention. He ‘EADD showed us how to change the way we live,’signed him up as one of the 13,000 farmers who have says a beaming Celestin from his recently built officegone on exchange visits to farms and business hubs in one of the fields. Milk sales paid for its constructionin East Africa to observe best practices in operation. as well as for the purchase of motorbikes to transportOn his return Celestin sold his old herd and began to the milk to the chilling plant and for his daily commutebreed a new one by crossing high-yielding Friesians to and from his house in the village. Milk also funds thewith the hardy local Ankole cattle. A novice in animal schooling for his six children.husbandry, he was advised every step of the way ‘I have a five-year vision. I’m putting all my profitsby EADD’s breeding specialist, Margaret Mukawera. into improving the farm and building a larger houseEADD’s senior dairy specialist, Betty Rwahumzi, for the family. After that, I’ll start saving my money,’ hevisited regularly to talk about milk quality, hygiene and says.mastitis. Celestin proved to be a quick and enthusiasticlearner. For a small facilitation fee provided by EADD,EADD MIDTERM REPORT 2008 – 2010 16

Kenya Banks Pioneer SmallLoans to FarmersJustus Ndigwa, 33, is an independent AI technicianattached to Kenya’s Ol Kalou chilling plant. He visitsclients in his catchment area on his fully paid-upmotorbike. He often trains Dairy Management Groupson breeding, feeding, milk quality and good husbandry.And for a fee, he will organize farmer exchangevisits. Justus, who can count on a minimum monthlyrevenue of $1,000, will soon be moving his wife andtwo children into a newly constructed, $11,250 three-bedroom home. In sum, his prospects are bright. It was not always that way. Four years ago Justuswas earning $125 a month as an extension servicesmanager at a dairy farmers cooperative. He could noteven afford to rent a room in which to lodge his newbride. Then he linked up with the Ol Kalou chillingplant as an accredited professional AI service provider.Ol Kalou provided progeny-proven semen togetherwith an AI kit and facilitated an interest-free loanto cover their cost. Justus still needed $1,560 for amotorbike so that he could reach his clients’ scatteredfarms. He approached a bank for a commercial loan,knowing that his association with Ol Kalou wouldestablish his creditworthiness. Women lead as account holders, savers and borrowers in financial Before EADD had a presence in Ol Kalou, Justus services associations.would not have been able to secure a loan for amotorbike and, arguably, would not have been able tostart up his business. The agriculture sector has been farmers. Then in 2010 a dialogue was started withhabitually shunned as a poor risk. Now, with advice Family Bank, which was already lending to Kenyan teafrom EADD’s business advisers, the tables have been farmers, most of whom received monthly payments forturned. their tea leaves of less than $60. EADD has been able to open up this avenue through Excited by the prospect of expanding into the dairyits evolving partnerships with commercial banks. While sector and reassured by EADD’s track record, Familybanks showed interest in financing chilling plants, Bank dispatched team members to attend Dairythey were less inclined to become involved in the Management Group meetings and visit homesteadstime-consuming prospect of small loans to individual and chilling plants to gauge the farmers’ needs. The EADD MIDTERM REPORT 2008 – 201017

result of this footwork is a unique financing packagetailored to the input requirements of Kenyan dairy Good Feeding Makesfarmers. Working through the dairy hubs, Family Bank Healthy Cowsintends to build up a portfolio of 5,000 customers bythe end of 2011. The loans are usually for businessstart-up and expansion and tend to be less than Fodder makes a big difference to milk production,$1,250. particularly during the dry season. Sound feeding ‘We serve those who once were considered practices using homemade feed concentrates, hayunbankable,’ explains David Odongo, who heads and silage sustain steady milk yields. This, in turn,Family Bank’s agribusiness department, ‘Thanks to stabilizes the year-round milk supply and thereforeEADD and the dairy hubs, we can ascertain a farmer’s farm-gate prices. East Africa has constantly changingsecurity and assets. The chilling plant verifies average mini ecosystems across the region. It took EADDmonthly earnings which equates to the company pay feed specialists two years to fine tune the feedingslip. We also collateralize the farmer’s most important requirements for each site. In fact, the process isasset, which is the cow. Each cow is entered in a ongoing. When farmers upgrade their herds to exoticsdatabase and given a performance rating based on and crossbreeds, the feeding strategy changes again.its yields. This has a bearing on the value we give it. Feed comprises up to 70% of the cost of milkSome are worth $1,000.’ production on small holdings and is a key component Commercial banks are definitely filling a financing of cost-benefit analysis. EADD recommends farmersgap for transporters and service providers. In the first improve pasture by planting Napier grass and legumesquarter of 2011 Family Bank disbursed 234 loans for such as Chloris gayana, Mucuna prurien, and Lablabthe purchase of motorbikes. Another 170 applications uncinatum to provide protein. It also recommendsare in the pipeline. Other loan applications are for the that farmers mix their crop residues with molasses topurchase of fodder seed, veterinary drugs, AI, stocking make silage. Solutions such as these go a long way toherds and the partial financing of domestic biogas boosting profit margins.installations. EADD also supports the invention of new technology. Kenyan George Kinuthia modified a hammer mill by adding a cutting blade and came up with a low-cost EADD pulverizer for on-farm silage making. This model has been replicated in all three countries where it is made locally for sale and rent through chilling plants. EADD emphasizes farmer education on feeding and growing fodder through training, exchange visits and demonstration plots belonging to EADD model farmers. To date some 2,000 farmer trainers have been trained in improved feed practices. As a result, more than 125,000 farmers (75% of the Phase 1 target) are using quality feeds. In Uganda, more than 38,000 farmers are alreadyA farmer gets a receipt for milk delivered at Ol Kalou dairy in Kenya. using high-value feed for their milking cattle, partlyEADD MIDTERM REPORT 2008 – 2010 18

FARMERs ADOPTING IMPROvED PRACTICEs Catchment beneficiaries KENyA 100 Catchment non-beneficiaries 90 ControlCatchment area in percentage 80 70 60 50 40 30 20 10 0 Feed conservation Feed concentrates AI Improved fodder practices crops Catchment beneficiaries UGANDA 100 Catchment non-beneficiaries 90 ControlCatchment area in percentage 80 70 60 50 40 30 20 10 0 Feed conservation Feed concentrates AI Improved fodder practices crops Catchment beneficiaries RWANDA 100 Catchment non-beneficiaries 90 ControlCatchment area in percentage 80 70 60 50 40 30 20 10 0 Feed conservation Feed concentrates AI Improved fodder practices crops source: EADD Midterm Evaluation Report 2010 EADD MIDTERM REPORT 2008 – 2010 19

source: EADD Midterm Evaluation Report 2010thanks to commercial feed companies that supply on EADD also encourages Dairy Farmers’ Businesscredit to many of the agrovet stores. The bulk retailing Associations to introduce Dairy Management Groupscomes with a discount which means that farmers can to the idea of growing fodder commercially and tobuy mineral licks, premixes and meal more cheaply link interested farmers to banks that will fund start-than at other retail outlets. Local seed supply systems up costs. Even so, most farmers do not considerare also being developed so that farmer groups can growing fodder for sale to be a worthwhile commercialgrow and bulk pasture seeds for sale. In Kenya, where enterprise. But if they knew the story of Pharothe prolonged dry season can last up to six months, Ngaranbe, a Rwandan smallholder, they might changethree out of four farmers have attributed their high milk their minds.yields to improved feeding. Pharo, 55 and a primary-school leaver, was barely George Kariuki lives on the family farm perched making a living growing sorghum, beans, sweet2,000 meters above Nakuru town on the floor of the potatoes and bananas on his one-hectare farm.Rift Valley. He is an EADD farmer trainer and model Then he met Bernard Nzigamasabo, the EADD feedsfarmer who grows frost-resistant varieties of Napier specialist, and expressed an interest in startinggrass in his demonstration plots. George, who up fodder demonstration plots. EADD gave Pharofacilitates exchange visits for local farmers, pioneered improved fodder seeds and helped him negotiate ahis own variation of the pulverizer and uses it to make supply contract with the nearby Umutara Polytechnicthree tons of silage to carry his milking herd through University’s livestock department.the dry season. As a result, his cows have doubled Three years on, Pharo has bought a second hectaretheir production to up to 40 liters a day. ‘I’m very of land from a neighbor and is renting another sixhappy with EADD,’ he beams, ‘We see people doing hectares on which he grows commercial quantitiesthings differently, and it plants ideas in our minds and of Brachiaria grass. He also has his own small herdmakes us ambitious. Without knowledge, you can’t of zero-grazing Jersey crossbreed cows and growsmove.’ improved fodder seeds for sale to other farmers.EADD MIDTERM REPORT 2008 – 2010 20

Bubusi Feed Mill In Uganda it is not unusual to see cows wandering by the side of the road or on the common land around villages and towns. This free-grazing method cuts down on fodder and labor costs, but cows are not able to find sufficient food. And their diet lacks vital minerals and proteins. Supplementary feeds can make up the balance, but they are costly and hard to find. Even when farmers travel up to 30 kilometers to the nearest town, there is no guarantee they will find concentrates in stock or that the sales assistant will be able to advise on the correct feed amounts. EADD’s Uganda feeds team considered how best farmers could access quality supplementary feed at a reasonable cost and concluded that a localized feed mill was the answer. They partnered with the Bubusi Dairy Farmers’ Business Association and the National Agriculture Advisory Service for the pilot turnkeyA model farmer pulverizes fodder for the dry season. project. Bubusi is a traditional market hub north of Kampala where farming is intensive, a mix of crops and two to five cows on plots of land not larger thanHe advertises his wares on a local radio station. His two hectares.annual income has been sufficient to build a new EADD came up with a formula for the meal andhouse and to send his seven children to private school concentrates and helped the farmers to sourceand university. ingredients that were relatively cheap but which To maintain his commercial fodder business Pharo provided quality. The team also helped the farmersemployees 50 laborers and has taken out medical to draw up a business plan and linked them to ancover for each of them. So far he has trained more equipment supplier that offered flexible repaymentthan 350 dairy farmers on fodder and feeds best terms. The start-up capital was funded by farmers’practices. Recently his fodder store was blown down share contributions and a soft loan guaranteed byin a storm. He intends to raise a loan from the bank to EADD. The mill came on stream in November 2010. Itrebuild it using his fodder account to demonstrate his has a production capacity of 1.2 tons a day and doescreditworthiness. a brisk business. ‘I learned all this through the training I got from ‘We want to put a smile on farmers’ faces. That’sEADD. It’s a question of maximizing my skills and our homework,’ says Jane Kugonza, EADD’s teamknowledge. Now I want to help my neighbors escape leader for feeds in Uganda.poverty too,’ he says. EADD MIDTERM REPORT 2008 – 201021

Reversing the Urban DriftYoung people in their 20s and 30s know only toowell that dairy provides a route out of enduring,generational poverty. The Silanga Youth Group atKabiyet borrowed $600 from the District Youth Fundto purchase three heifers for members who did not yetown cows. Now all have seen a substantial rise in theirstandards of living. The group also helps to supportthe community’s orphans and people living with HIV. Selly Cherotich, 33, is a Silanga member. She andher husband own a Friesian and a Jersey and are Purity Chipchirchir, 28, dropped out of school but now runs herpaid-up shareholders at Kabiyet. Like their fellow own store and milk-trading business.shareholders, they have learned how to prepare hayand silage to feed their cows through the dry season. in calf. She has also built a cow barn to store hay. SheConsistent milk yields is one of the reasons why is never behind with school fees and there is alwaysKabiyet was able to more than double the farm-gate nutritious food on the table at mealtimes.price when negotiating a contract with New Kenya Juliana banks at the Tanyikina Financial ServicesCooperative Creameries. Association which is managed by 24-year-old Selly is the mother of seven children including two Jasper Langat. It pays advances against milksets of twins. She supports and schools them on milk delivery for anything customers need. This includesproceeds. ‘I’m a school graduate, but most of our health insurance through the dairy hub’s Tanyikinaparents couldn’t find the money to let us finish school. Community Health Program. In just over a year theAnyway, I’ve never been able to find a job. We want it bank’s members have grown tenfold to 2,000.to be different for our children, and EADD has raised ‘Women make up the highest number of accountour morale,’ she says. holders. They seem to have a better grasp of saving In neighboring North Nandi District Juliana and borrowing. One of my female clients dropped outMaiyo is treasurer of the all-women Kemeliet Dairy of secondary school because her parents couldn’tManagement Group. The women formed it in 2008 afford the fees. She bought a share in Tanyikina Dairyeven though none of them owned cows, because they and in the bank too. Now she has 28,000 shares and issaw the potential in dairy. They began to buy milk from about to build her own store,’ Jasper says.farmers and to transport it in bulk to the Tanyikina ‘At first it was difficult to persuade people to entrustDairy Plant. At the same time, because they were us with their money.’ he continues, ‘They wouldalready organized, the Kemeliet group was among the deposit it and then withdraw it three days later to seefirst to receive EADD training on fodder establishment, if it was still all there. That’s changed now, of course.’animal health, farming as a business, silage making Jasper, who is native to the district, left a job in Nairobiand water harvesting. These improved methods have to run the bank. Since his return home a year ago,paid off for Juliana. She has been able to buy another several brick buildings have been constructed atcrossbreed cow for $375 and her other two cows are Tanyikina, he says.EADD MIDTERM REPORT 2008 – 2010 22

Corporates Help Expand DairyMarketsEADD’s business-based approach to development hasattracted multinationals such as Nestlé and Tetra Pak.When Nestlé established its regional headquartersin Nairobi, Kenya in 2008, it knew that workingwith EADD would dovetail with its own corporatephilosophy of supporting rural development throughstimulating processor demand for chilled milk. The Tetra Pak seals its agreement with EADD andcompany chose Kabiyet Dairies in Kenya’s Rift Valley Metkei Multipurpose Co. Ltd. with a cheque of $31,250.Province to pilot a blueprint for milk collection andmarketing. Kabiyet is developing operating procedures One of Nestlé’s strategies is ‘Keep it simple. Keepfor hygiene and quality norms that meet rigorous it small’. New chilling plants and those undergoinginternational standards. A technical expert seconded expansion have adopted the multinational’sto the dairy from Nestlé provides assistance with raw- recommendation for installing low-tech, low-cost,milk quality and safety management from farm gate to low-capacity (1,500 – 2,500 liters) coolers. Similarfactory. Once established as a model of export-quality partnerships with local processors have been enteredmilk production, the dairy will be able to market its into with local processors - New Kenya Cooperativemilk to Nestlé for regional export as powdered milk. Creameries (Kenya), Sameer (Uganda) and InyangeIt will also become a training ground for other chilling (Rwanda) – to establish dairy-hub benchmarks for raw-plants in the region. milk quality. Tetra Pak is assisting with the introduction of quality protocols at Kenya’s Metkei and Kokiche chilling plants. As a result, some 30,000 farmers have been able to negotiate competitive prices for supplying milk to the New Kenya Cooperative Creameries UHT processing plant. Tetra Pak intends to offer its package of a value-chain performance, milk-quality assurance and management training to more chilling plants. EADD sees the partnerships with Nestlé and Tetra Pak, the world’s largest milk buyer and milk packager, as a marketing incentive for processors to adopt a quality-based pricing scheme. This in turn would be an incentive for farmers to invest in good feeding,Group photo of the Kabiyet-EADD-Nestlé partnership breeding and hygiene practices. EADD MIDTERM REPORT 2008 – 201023

Much in CommonMadeline Madamu and Stephen Kaberuka areexceptional examples of courage and determinationtriumphing over adversity. Most likely they havenever met, but they share similar experiences. Theyboth own purebred Friesian cows and are EADDCommunity Animal Health Practitioners. Both aremodel farmers who have swapped best practices inexchange visits with Kenyan and Ugandan farmers. With a monthly income of about $385 from milk sales alone, stephen Kaberuka is regarded as a wealthy man in the community.Both are survivors of the 1994 Rwanda genocide. Just a few years ago neither knew much aboutcattle or the dairy industry. Madeline lived in a mud- to light his house. His wife runs a bakery business.brick house empty of furniture and grew barely enough His son uses one of his two motorbikes to deliver milkto feed her six children. Stephen was a penniless to the local chilling plant. His children and the fourmanual laborer who worked piecemeal for his orphans who live with the family attend private school.neighbors. Left for dead from a bullet wound, he had He is in the throes of constructing a fee-paying schoollost 26 family members including his wife and children. from where he will teach good farming methods.Madeline had lost her husband, parents and siblings. With a monthly income of about $385 from milk salesTheir homes had been burned to the ground. alone, he is regarded as a wealthy man in the eyes of Today Stephen, who has remarried, is a prosperous the community. He traces his success back to 2008entrepreneur who runs several micro-businesses when he received a gift of a cow. He then joined afrom his hillside homestead overlooking the town of dairy hub which gave him access to bank credit and aRwamagana. He rents his neighbor’s land to grow succession of loans to improve his farm.chloris and Napier grass as fodder for his four cows. In Like Stephen, Madeline’s life changed for thea good year he harvests 30,000 pineapples for export. better thanks to the cow she was given by HeiferHe has installed a biodigester fuelled by cow waste International. Madeline also joined a dairy hub and opened a bank account where she deposited the $670 she had saved from her $200 per month milk sales. Putting up her cow and hectare of land as collateral, she took out three successive loans and repaid them through the check-off system. She now lives in a brick house with piped water and electricity. Her cow shed has a cement floor and the vegetable garden and fodder plot are expanding. All of her children are at private school except for her eldest who is studying to be a doctor in Kigali.Madeline Madamu and her cow, which she named Imararungu. It ‘This would not have happened without my cow,’means ‘she who has taken away the loneliness’. says Madeline.EADD MIDTERM REPORT 2008 – 2010 24

A Town Called LusoziHip hop blares from the ‘boom box’ on the table nextto Robert Atugonza as he holds a test tube of milk upto the light. He is the technician in charge of qualitycontrol for the chilling plant owned by the shareholdersof the Kiboga West Livestock Cooperative SocietyLtd. It is Robert’s job to make sure that milk has notbeen diluted and is fresh and hygienic. Robert alsooversees the transition from plastic containers to theeasily cleaned metal churns that can be obtainedthrough the dairy hub on credit. Known as a stickler Robert Atugonza checks milk quality at the Kiboga West Livestockfor safeguarding standards, once he gives his okay, Cooperative society Ltd.the milk is pumped into a 5,000-liter chilling tank. Theplant bought a second, 3,000-liter tank a few monthsback because during the rainy season when yields promised us they would get us a market for our milk.soar, the daily intake tops 9,000 liters. They said they would take us on exchange visits, Several hours’ drive north of Kampala and 32 which they did. I have even been to India to see thekilometers along a featureless dirt road, Lusozi could Nestlé factory. It was started by farmers like us andbe considered remote by anyone’s yardstick. A few their land isn’t even as good as ours.’years ago farmers were frustrated by their inability True to its word, EADD has helped the Kiboga Westto reach markets. Traders conned them and then chilling plant to secure a contract for its milk withleft. During the months of milk surplus they made Uganda’s major processor at double the price farmerscheese for the family to eat or simply poured excess were getting before. ‘We have helped to organizeproduction onto the ground. farmers to bulk and market as a cooperative. We built Then along came Norah Kanyana, now the chair the foundations. Now it’s a matter of branding theof the Kiboga West Livestock Cooperative, to build concept and getting more farmers to buy in and take itLusozi’s first primary school. She saw it as an obvious on as their own enterprise,’ observes William Matovu,money spinner. The only other school in the area was EADD’s Country Program Manager in Uganda.20 kilometers away. But the demand for education Just as important, the plant has injected new lifewas not what she had anticipated. Parents were into the town. Disposable income is being spent indisinterested because they were too poor to pay the ways that were never before contemplated. Farmersfees. can spruce up their appearance at the laundry and Undeterred, Norah organized some of the the barbershop. A shop sells cornmeal on one-weektownspeople into a community-based group to build credit. A hardware store does a brisk trade in buildinga chilling plant to bring in money. ‘We were flying here materials for all the houses that are going up.and there when EADD came to the district looking We are still a remote area, but we are making itfor organized groups. Our group was already known modern,’ says Norah, who no longer has troublebecause we had registered,’ she explains, ‘They collecting fees from parents. EADD MIDTERM REPORT 2008 – 201025

Women and Youth to the ForeIf women around the world had the same access toland, technology, financial services, education andmarkets as men, agricultural production in developingcountries could grow by 4%, according to the UN’sFood and Agricultural Organization. Seeing thatwomen get a fair deal is not just a moral obligation.It has sound practical consequences. When womenare in charge of income, it is a proven strategy forimproving the health, nutrition and education of theirchildren. EADD takes the inclusion of women in the dairysector seriously. There is an annual gender action planfor each country while performance indicators andtargets track what share of the benefits women arereceiving. In March 2010 EADD staff underwent gendertraining and sensitization. EADD intends to continuechampioning women until it crosses the threshold ifhas set to effect a societal change. With equal opportunity for women and youngpeople as a watchword, EADD does its best toensure they are well represented at every level of theproject. To date significant progress has been madein breaking the dairy sector’s gender ceiling. Mostchilling plants have women sitting on the board. Awoman manages one of EADD’s leading chilling plants AI service provider Martha Mukabasanga at Kabiyet in Kenya. Women also hold jobs at chilling plants in milk collection, quality testing, accountingBeing a woman, people told me I couldn’t do and running agrovet stores. To date the ratio of womenartificial insemination. I’ve broken that myth. I’ve to men across the board in EADD project activitiesshown the men that I get a higher conception rate tends to be 1:4. The target is 1:3.with the cows than they do. Young people are very involved in the EADD project.Martha Mukabasanga Their participation keeps the dairy sector vibrantAI service provider and sustainable. It also reverses the ageing of theEADD MIDTERM REPORT 2008 – 2010 26

WOMEN AND yOUTh DECIsION-MAKERs Project target Total end 2010 % Project target Women in leadership positions 162 243 150% Youth in leadership positions 118 203 172% Farmers trained in group Adult male 63,199 51,609 82% dynamics and governance Adult female 70,000 42,789 61% Youth 35,800 19,990 56%countryside as youngsters stop migrating to cities managers, women are much better at using theirand towns. The majority of transporters, Community money. In other words, they not only save but theyAnimal Health Practitioners, AI service providers and take out loans to expand their homesteads, startthose involved with banking and agrovet stores are businesses and put their children through school. Thisunder 35. stimulates local economies, which is exactly what Most women on private farms still do the majority of EADD likes to see.the work without controlling the assets or being party Women’s groups have proved to be dynamic andto making decisions. It has been estimated that 70% effective in all three countries. Women have opened aof the labor for dairy is done by women, but according joint milk-supply account at Kenya’s Tanyikina Dairyto EADD’s gender baseline survey, 73% of farms are Plant to bulk their milk and sell it as a group. Incomemanaged by men irrespective of whether the head of from the sales is put into an education kitty. It is usedhousehold is a man or a woman. Only 1.7% of farms by members to upgrade their cows, pay school feesare jointly managed by a husband and wife. and do maintenance and improvements on their farms. Women make an important contribution to milk ‘When there are women in cooperatives, theproduction. An EADD target is to ensure that in all numbers who sign up to be members of a chillingtraining and other interventions, 30% of those who plant soar,’ says Emmanuel Munyandinda, EADD’sbenefit are women and 30% are young people. Keen former Country Program Manager in Rwanda. ‘Womento be in charge of raising their families’ incomes, more are very keen to get involved as they get accessand more women are now buying shares alongside to inputs that they didn’t have before. One womantheir husbands so that they can access services, mobilized 502 shareholders in a month.’training and credit. Women’s shareholding had soaredby end 2010. At Kabiyet Dairies Co. Ltd., for instance,it was almost 40%. In Rwanda it was on target at30%. And more women than men attended Rwanda’straining courses in group dynamics and governance. According to village bankers and the SACCO EADD MIDTERM REPORT 2008 – 201027

Communicating Keeping TrackIn Uganda, as elsewhere in East Africa, television and EADD is developing a pool of knowledge, lessonsnewspapers are still considered luxury items in many learned and best practices that will inform pro-poorrural areas, but the radio is ubiquitous. In 2010 EADD’s policy for the dairy sector. Independent externalUganda communications team launched a farmers’ valuators work with EADD’s monitoring and evaluationradio program called Ente Bugagga (Livestock Is (M&E) team and have already conducted a baselineWealth). The program reaches thousands of farmers survey and midterm evaluation. Final and impactwith information on the dairy industry and provides a evaluations will be conducted at the conclusion offorum where farmers can phone in or text-message Phase 1. All M&E is reported twice a year so thattheir milk-production problems. The one-hour program partners and key players can gauge whether or notalso broadcasts weekly milk market prices at the interventions are being efficiently adopted and havedifferent EADD project sites. the intended impact on farmers and their families. All Radio is not the only medium for educating farmers. data is being disaggregated by gender and age so thatEADD has developed and disseminated high-quality women and youth can be tracked and targeted.pamphlets on project activities and hub locations Longer than anticipated M&E staff recruitmentand a variety of technical topics including AI and milk delayed the rolling out of comprehensive M&E systemsquality. In addition to producing its own quarterly until the second half of 2009. Project goals are a mixproject newsletter, EADD contributes articles on of activities, outputs, outcomes and targets, knownproject activities to other publications. as milestones. They are used to constantly monitor EADD training material is user-friendly and progress. In light of a 2010 midterm evaluation,specifically tailored to the project’s objectives. For milestones have been rationalized and reduced frominstance, most manuals recommend feeding systems more than 200 to 125 to streamline the reportingbased on target yields without heeding the cost system and the verification processes. Field reportsinvolved. EADD feeding manuals are based on cost- from the EADD consortium’s five partners arebenefit analysis. synthesized and validated through random and systematic quality checks. At the same time, the system has been made more user friendly by initiating structures that put the Dairy Farmers’ Business Associations in charge of their own information. A computerized information management system for entering and analyzing data has been installed at the chilling plant accounts sections. The dairy hubs then upload their data where it is collated and cleaned by the country offices before being posted on the regional database on the EADD website. The periodic evaluations and assessments thathamzat senoga captures farmers’ voices for the weekly farmers’ are conducted, such as for milk quality, are used astraining radio program. a basis for presentations to the chilling plants so thatEADD MIDTERM REPORT 2008 – 2010 28

members, management and board can see how they ‘A monitoring system is not effective if it doesn’tare faring. To ensure knowledge penetration, the M&E inform its institution. This is why we have built theteam has created a graduation system that serves as capacity of the Dairy Farmers’ Business Associationsthe farmers’ passport to knowledge. Every farmer is so that they can use this information,’ says Gaitanoissued with a training card that is a catalogue of all Simiyu, the regional director of planning, monitoringthe EADD training modules. This allows the farmers to and evaluation.control the choice and pace of their tuition. PROJECT EXPENDITURE 2008 – 2010 IN $ Country 2008 2009 2010 Total expenditure Total project budget Regional* 2,141,208 2,165,941 1,473,620 5,780,769 9,014,411 Kenya 2,435,256 2,853,401 3,291,853 8,580,510 13,877,452 Rwanda 1,241,516 1,649,281 1,894,354 4,785,151 6,817,843 Uganda 1,973,287 1,894,680 2,231,009 6,098,975 10,640,294 Investment Fund * 736,347 505,828 881,389 2,123,564 2,500,000 Totals 8,527,614 9,069,130 9,772,225 27,368,969 42,850,000 * Regional expenditure refers to project costs incurred at the EADD Regional Office, Regional and Head Offices of Heifer International and TechnoServe and all costs incurred by ILRI for the implementation of project activities. * The Investment Fund is a loan.FARMERs MOBILIzED Target Achieved by 2010 % of target Kenya 110,000 91,024 83 Uganda 45,000 30,692 68 Rwanda 24,000 21,003 88 Total 179,000 142,719 80 EADD MIDTERM REPORT 2008 – 201029

ChILLING PLANT LOANs Kenya Pre-financing equipment $ Total estimated bank loans 2011 $ Lelan 120,038 168,463 Metkei 111,127 149,101 Chepkorio 25,316 SOT - Longisa 99,835 134,536 Tarakoon - Kipkabus 25,316 Chepkorio 68,418 68,418 Kokiche - Cheptalal 79,456 79,456 Meteitei 146,785 216,389 Sirikwa - Ziwa 82,228 137,363 Kaptumo 161,671 234,165 sub-total 869,558 1,187,891 Uganda Kiboga 84,928 86,928 Masindi 17,800 20,000 Kinyogoga 47,104 47,104 Nabitanga 94,020 94,020 Kamira 30,000 32,000 Lugusulu 78,919 78,919 sub-total 352,771 358,971 Total 1,222,329 1,546,862* Pre-financed equipment is paid back or taken over as a commercial loan.* Bank loans are based on draft business plans.BUsINEss sERvICEs Project target 2010 target 2010 actual Total through 2010 Business development service providers trained 520 281 1323 1990 FSAs/SACCOs established 19 7 11 18EADD MIDTERM REPORT 2008 – 2010 30

ChILLING PLANT PERFORMANCE 2010 Milk received (ltr) Paid farmers $ Net profit $ Gross profit $ January 5,125,140 1,432,126.85 91,128 227,279 February 4,615,870 1,121,082 64,731 193,817 March 5,293,563 1,207,717 63,294 204,658 April 4,618,842 986,559 85,182 217,472 May 5,869,300 1,190,469 86,850 241,861 June 5,1165,388 1,089,954 66,340 222,116 July 4,878,008 1,137,516 86,938 223,670 August 4,291,893 1,085,415 69,672 195,935 september 4,442,463 1,180,231 60,846 194,049 October 5,693,448 1,832,895 101,150 266,106 November 6,846,416 2,235,936 133,520 343,583 December 7,215,565 2,289,162 140,141 379,412*This chart shows aggregate performance. Some Dairy Farmers’ Business Associations are not yet profitable.sTAGE-GATING PERFORMANCE 6 3 5 0 4 12 5 6 0 0 20 21 16 0 4 15 11 4 0 12 0 0 31 31 7 3 4 8 5 5 0 0 0 0 16 16 29 6 13 23 20 21 5 18 0 0 67 68stage 1 (3-9 months)Farmers on board, positive feasibility study, Dairy Farmers’ Business Associations in placestage 2 (5-15 months)Business plan, registration, equity in placestage 3 (12-24 months)Chilling plant and milk collection operationalstage 4 (21-30 months)Dairy hub and Business Development Services operational, exit strategy in placestage 5 (24-36 months)Exit with hub fully operational or with short-term transitional support EADD MIDTERM REPORT 2008 – 201031

DAIRy hUB sTATUs 2010 Kenya Uganda Rwanda TotalExtension departmentsManagersStaffTrainers/advisorsAgrovet shopsvet servicesVetsAHW/CAHPsAI providersFinancial servicesBanksServicesFSAs/ SACCOsMilk marketing contracts signedEADD MIDTERM REPORT 2008 – 2010 32

Steering Committee and Staff Members Sahr Lebbie Kristin Grote Steve Staal Kindra Halvorson Steering Committee Chair Steering Committee Member Steering Committee Member Steering Committee Member Vice President for Africa Program Officer Theme Director East Africa Regional Director Heifer International Bill & Melinda Gates Foundation ILRI TechnoServe Saeed Bancie Moses Nyabila Nathaniel Makoni Isabelle Baltenweck Steering Committee Member Steering Committee Member Team Leader Agricultural Economist Program Manager Regional Director ABS TCM ILRI Heifer International Heifer International-EADD Luke Potter Douglas Mwendwa Gaitano Simiyu Josephine Kirui Regional Director Regional Director Regional Business ManagerSenior Dissemination Facilitator TechnoServe-EADD Finance & Administration Planning, Monitoring & Evaluation ICRAF-EADD Heifer International-EADD Heifer International-EADD Gerald Mutinda Josphat Njeru Augustine Cheruiyot Country Program Manager William Matovu Dennis Karamuzi Regional Gender and Youth Regional Compliance Manager Country Program Manager Country Program Manager Coordinator Heifer International-EADD Heifer International- EADD Heifer International-EADD Heifer International-EADD Heifer International-EADD Kenya Uganda Rwanda33

Our children go toschool thanks to EADD.Selly CherotichKenyan Dairy Farmer

Eadd mid term report 2008 2010

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Eadd mid term report 2008 2010 Document Transcript

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