Nathaniel Makoni, ABSTCM Ltd
Raphael Mwai, PPD Consultants
Tsehay Redda, EDBD Services
Akke van der Zijpp, Wageningen Univ...
Study Countries
Outline
1. Terms of Reference
2. Methods
3. Analysis & Findings
4. Key Issues & Recommendations
• Regional level
• Individ...
Terms of Reference
Country assessments:
• Value chains
• Enabling environment (Policy dairy
sector, organizations, trainin...
1. Desk Studies/Country Review
2. Country Studies & validation visit
• Key informant meetings
• Focus group discussions
• ...
Conceptual
Framework
Dairy Investments
Demanded Services
Scale production
Gender balance
Analysis and Findings
Processor
Aggregator
/Transport
MCC Transport RetailInputs &
services
To market –raw warm milk Consu...
Ethiopia & East Africa Informal Dairy Sector
Uganda
97%
95%
90%
80%
80%
80%
Formal
13%
Informal
87%
Formal:Informal Sector
0 200 400 600 800 1000
Burundi
Ethiopia
Kenya
Rwanda
Tanzania
Uganda
US $
GDP /Capita WB 2012/13
Economics Data
Burundi
Et...
Burundi
Ethiopia
Kenya
Rwanda
Tanzania
Uganda
0.01
0.19
3.5
0.2
0.68
0.65
Improved Dairy Breed Population
(Million)
Burund...
Burundi Ethiopia Kenya Rwanda Tanzania Uganda
0.36
0.41 0.39
0.22
0.18
0.14
Milk Farm Gate Price US$/Litre
Uganda has leas...
Burundi Ethiopia Kenya Rwanda Tanzania Uganda
0.98
0.87
0.59
1.19
0.65
0.38
Processed milk price US$/litre
Highest cost of...
Dairy Product Range (8)
Brookside, NKCC, Pearl & SALL
Burundi
Ethiopia
Kenya
Rwanda
Tanzania
Uganda
73
3300
4400
450
1650
1190
National Milk Production /Year (million litres)
T...
Burundi
Ethiopia
Kenya
Rwanda
Tanzania
Uganda
20000
210500
2900000
160000
410500
1018000
Milk processing Capacity (Litres/...
Key Issues & Recommendations
Poor
infrastructure
& access to
markets
Low cow
productivity:
feed&breed
Lack of
conducive
policy &
incentives
Limited
res...
1. Low Milk Consumption in Ethiopia & East Africa Countrie
Private Sector
1. Awareness campaigns
2. Product diversificatio...
Cezonyi MCC in Gishwati
Kidaco, Huye District Rwanda
Hajji Dairy Nyanza, Rwanda
Increased Local Good Quality Milk Consumpt...
2. Low adoption of technology, poor infrastructure
and market access
1.Co-funding entrepreneur investments e.g.
improve mi...
3.Low Cow Productivity: Feed & seasonal drop
• Commercialize production
of fodder and feed
conservation
• Research on appr...
• Improve AI delivery
efficiency & cost
• Support inclusive
horizontal growth
model i.e. 1 grows to 5
cows
Inappropriate d...
RDCP-II Assistance
US$28,875
5. Blessed Dairy Consolidation & Quality Improvement Model
Now 2 trucks
RwF 400RwF 320
RwF 30...
• Governments to address trans-
boundary non-notifiable &
notifiable diseases
• Enforce regulatory framework on
drug quali...
7. Limited Research & Extension
• Increase funding to strengthen
regional applied dairy research &
farmer demonstration fa...
8. Inadequate Farm Management
Low farmer education and
organization
• Improve skill base
• Establishment of training
infra...
9. Limited Official Industry Data
• Support development of data collection, collation
systems and studies (e.g. on marketi...
10. Inadequate Financial Services: Hub Integration
K KDFFEADD I R Mukamira DairyGoRU UCCCUaBi Trust
APEX
Federation
Union
...
JESA Integrated dairy model
JESA Commercial Farm Milk supply 50%
Smallholder Farms -Milk supply 50%
Price premium $0.4 vs ...
1. Burundi - Bukkeye Dairy Farm
2. Ethiopia - Genesis
3. Kenya - Githunguri Dairy
4. Tanzania - Tanga Fresh
Other Regional...
11. Lack of Conducive Policies and Incentives
• Support EADRAC to develop appropriate
milk quality standards
• Formation &...
12. Low Female and Youth Involvement
Empower women through:
1. Co-ownership of land and productive resources
2. Gender equ...
milk transportation
milk testing
fodder production
starting dairy farms
There is High Unemployment for Youth
Country Specific
Issues
Burundi
Issues
• Power shortage – Rusizi III project
• Lack of large volume milk buyers to serve the expanded
formal suppl...
Ethiopia
Issues
• Low Consumption - Religious & cultural fasting days
• Rural warm milk chain –Ayib & butter line
• Weak p...
Issues
• Milk quality & weak regulatory framework
• Oligopoly- 90% processing is under 3 companies
Kenya Dairy Board manag...
Rwanda
Issues
• Large involvement of public sector – ownership?
• Inadequate legislation and enforcement of milk quality
s...
Tanzania
1.Infant dairy sector requires entire DVC support
2.Low demand for processed milk
3.Limited institutional capacit...
Uganda
1. Weak dairy public sector institutes
2. Limited participation by dairy farmers across the
nation e.g. Northern an...
Suggestions on Donor Contribution
Development Projects Often Exclude
Commercial Dairy Farms & Processors
Integrate them for
• Knowledge &
technology transfe...
Promote innovation by entrepreneurs through
pooled investment grants and challenge funds
Inadequate Support of Value Chain...
Stakeholder Concern Some Projects are Distorting
Markets
Shared value
Harmonize
Align
Consult
Donors/Implementers collabor...
Uganda Dairy Rehabilitation Model
• United delivery approach & zero funding gaps-1986 to 2004
• Coordinated donor effort =...
1. Consultation
for priorities
2. Resource
Mobilization
3. Capacity
Building
4. Participatory
Implementation
5. Disseminat...
Donor Collaboration: Production Level
Issues Suggested Engagement
Low cow productivity Breeding, Extension & Finance
Poor ...
Issue Suggested Engagement
Transformation of informal to
formal sector
Diversified approaches e.g.
traders capacity & fina...
Issue Suggested Engagement
Low female & youth
involvement
Beneficiary quotas, skills development,&
empowerment
Environment...
Conclusion
• Sustained impact will come from increased
consumption, female & youth participation
• Slow formal value chain...
Murakoze cyane, Amesege'nallo’, Asante Sana, Weebale Nyo
Thank You
Characterization of East African vs South Africa Dairy Parameters
Item Description East Africa South Africa
Average cows p...
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White gold - Opportunities for Dairy Sector Development Collaboration in East Africa - Makoni et al. 2014

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This report presents findings from desk studies and country visits on the six East African countries (Burundi, Ethiopia, Kenya, Rwanda, Tanzania, and Uganda) made on request of the Inter-Agency Donor Group on Pro-poor Livestock Development, as per study terms of reference. It includes recommendations on areas of donor support and collaboration, a regional dairy sector analysis, country dairy profiles, and current donor programs in the dairy sector.

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White gold - Opportunities for Dairy Sector Development Collaboration in East Africa - Makoni et al. 2014

  1. 1. Nathaniel Makoni, ABSTCM Ltd Raphael Mwai, PPD Consultants Tsehay Redda, EDBD Services Akke van der Zijpp, Wageningen University Jan van der Lee, Centre for Development Innovation, Wageningen UR White Gold: Opportunities for Dairy Sector Development Collaboration in Ethiopia & East Africa Inter Agency Donor Group Meeting, Masaka-Mbarara, Uganda April 1 to 3, 2014
  2. 2. Study Countries
  3. 3. Outline 1. Terms of Reference 2. Methods 3. Analysis & Findings 4. Key Issues & Recommendations • Regional level • Individual Country Level 5. Suggestions on Donor Contribution 6. Conclusion
  4. 4. Terms of Reference Country assessments: • Value chains • Enabling environment (Policy dairy sector, organizations, training) • Donor programs • General analysis • Recommendations for action.
  5. 5. 1. Desk Studies/Country Review 2. Country Studies & validation visit • Key informant meetings • Focus group discussions • Field observations 3. Countries visited: Burundi, Ethiopia, Kenya, Rwanda Tanzania & Uganda 4. Stakeholders reached: Input suppliers, Farmers, Transporters, Milk Traders, Processors, Public sector, Supermarkets & Kiosks Methods
  6. 6. Conceptual Framework Dairy Investments Demanded Services Scale production Gender balance
  7. 7. Analysis and Findings Processor Aggregator /Transport MCC Transport RetailInputs & services To market –raw warm milk Consumer ToMarket Cottage industry Dairy Value Chains Scenarios – Ethiopia & East African Countries
  8. 8. Ethiopia & East Africa Informal Dairy Sector Uganda 97% 95% 90% 80% 80% 80% Formal 13% Informal 87% Formal:Informal Sector
  9. 9. 0 200 400 600 800 1000 Burundi Ethiopia Kenya Rwanda Tanzania Uganda US $ GDP /Capita WB 2012/13 Economics Data Burundi Ethiopia Kenya Rwanda Tanzania Uganda 2.4 7 8 6 1.53 3 Dairy Contribution to GDP (%) ? <3
  10. 10. Burundi Ethiopia Kenya Rwanda Tanzania Uganda 0.01 0.19 3.5 0.2 0.68 0.65 Improved Dairy Breed Population (Million) Burundi Ethiopia Kenya Rwanda Tanzania Uganda 0.645 49.2 18 1.5 21 12.8 National Cattle Population (Million) Dairy and National Cattle Data
  11. 11. Burundi Ethiopia Kenya Rwanda Tanzania Uganda 0.36 0.41 0.39 0.22 0.18 0.14 Milk Farm Gate Price US$/Litre Uganda has least cost/ ltr. for farm-gate and processed milk Ethiopia risk to be uncompetitive The farm gate prices reflect breed, feed costs, warm chains Farm Gate Prices
  12. 12. Burundi Ethiopia Kenya Rwanda Tanzania Uganda 0.98 0.87 0.59 1.19 0.65 0.38 Processed milk price US$/litre Highest cost of pasteurized milk is in Rwanda & Burundi (OH & packaging 50%) Uganda has lowest price of pasteurized milk Milk Processing & Packaging
  13. 13. Dairy Product Range (8) Brookside, NKCC, Pearl & SALL
  14. 14. Burundi Ethiopia Kenya Rwanda Tanzania Uganda 73 3300 4400 450 1650 1190 National Milk Production /Year (million litres) Total = 11.06 Billion Potential Demand =48.5 B Potential Gap = 37.4 B National Milk Production & Consumption 0 50 100 150 200 Burundi Ethiopia Kenya Rwanda Tanzania Uganda FAO Rec. 6 19 99 40 23 55 200 Milk Consumption/Capita (litres)
  15. 15. Burundi Ethiopia Kenya Rwanda Tanzania Uganda 20000 210500 2900000 160000 410500 1018000 Milk processing Capacity (Litres/day) Milk Processing & Utilized Capacity Burundi Ethiopia Kenya Rwanda Tanzania Uganda Average 85 60 40 20 27 61 49 Utilized Capacity (%)
  16. 16. Key Issues & Recommendations
  17. 17. Poor infrastructure & access to markets Low cow productivity: feed&breed Lack of conducive policy & incentives Limited research & extension Inadequate farm management National & Trans-boundary diseases Limited official industry data Low female & youth involvement Seasonal milk supply Poor milk quality Inadequate financial services 1 10 9 8 7 6 5 4 3 2 11 12
  18. 18. 1. Low Milk Consumption in Ethiopia & East Africa Countrie Private Sector 1. Awareness campaigns 2. Product diversification 3. Improve milk quality 4. Reduce costs e.g. transport, processing & packaging Donors & Governments 1. Policy incentives – encourage localized cottage industries 2. Increase education on importance of hygienic milk handling & Quality 3. School milk feeding - parent co-fund 4. Fund programs for HIT, Girinka - Suggested Solutions
  19. 19. Cezonyi MCC in Gishwati Kidaco, Huye District Rwanda Hajji Dairy Nyanza, Rwanda Increased Local Good Quality Milk Consumption Inclusive approach – finance licensed trained milk traders for low overhead value addition
  20. 20. 2. Low adoption of technology, poor infrastructure and market access 1.Co-funding entrepreneur investments e.g. improve milk transportation 2.Promote innovative milk marketing models 3.Improve road and power infrastructure 4.Public cattle handling facilities
  21. 21. 3.Low Cow Productivity: Feed & seasonal drop • Commercialize production of fodder and feed conservation • Research on appropriate fodder materials & pasture management • Invest in irrigation of high biomass fodder crops & legumes Low feed supply: 0 200 400 600 800 1000 1200 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr Volume(BillionLitres) 4. National Milk Production (Litres) Seasonal drop
  22. 22. • Improve AI delivery efficiency & cost • Support inclusive horizontal growth model i.e. 1 grows to 5 cows Inappropriate dairy breeds & herd size for smallholder business viability Burundi Ethiopia Kenya Rwanda Tanzania Uganda 0.2 0.3 18 12 5.8 4.6 Annual Artificial Inseminations As % National Herd <20% 13 26 12 13 15 12 35 63 30 57 83 86 AI Cost/Service (US$) & Farmgate milk equivalent/Service (liters)
  23. 23. RDCP-II Assistance US$28,875 5. Blessed Dairy Consolidation & Quality Improvement Model Now 2 trucks RwF 400RwF 320 RwF 300 RwF 300 RwF 180
  24. 24. • Governments to address trans- boundary non-notifiable & notifiable diseases • Enforce regulatory framework on drug quality and administration • Reduce market distortions where veterinary services are privatized 6. Poor National and Transnational Disease Control Donors: regional policy, capacity in vaccine production eg GALVMED Government: budget, surveillance, animal movement & quarantine Private sector: – insurance and vaccination schedules Lumpy skin FMD Improve national and transnational veterinary services through establishment of coordinating bodies and disease surveillance & control
  25. 25. 7. Limited Research & Extension • Increase funding to strengthen regional applied dairy research & farmer demonstration farms • Match research programs with stakeholder needs • Improve dairy extension experience & extension agent to farmer ratio • Reconsider public extension role vs private Alfalfa Research Farmer demonstration
  26. 26. 8. Inadequate Farm Management Low farmer education and organization • Improve skill base • Establishment of training infrastructure • Decentralized colleges - regional campuses • Mandatory industry attachment for all DVC players • Organizational & business skills, dairy technology, financial literacy, & mentoring
  27. 27. 9. Limited Official Industry Data • Support development of data collection, collation systems and studies (e.g. on marketing & milk demand projections) • Strengthen project MLE programs & share data with national data repositories
  28. 28. 10. Inadequate Financial Services: Hub Integration K KDFFEADD I R Mukamira DairyGoRU UCCCUaBi Trust APEX Federation Union MCC dependent on milk buyers and have no growth incentives. Finance MCC to integrate : form apex bodies & value add
  29. 29. JESA Integrated dairy model JESA Commercial Farm Milk supply 50% Smallholder Farms -Milk supply 50% Price premium $0.4 vs $0.3 AI, Extension, Finance & Veterinary services US$0.4/ litre
  30. 30. 1. Burundi - Bukkeye Dairy Farm 2. Ethiopia - Genesis 3. Kenya - Githunguri Dairy 4. Tanzania - Tanga Fresh Other Regional Integrated models
  31. 31. 11. Lack of Conducive Policies and Incentives • Support EADRAC to develop appropriate milk quality standards • Formation & strengthening of dairy coordination and advocacy bodies
  32. 32. 12. Low Female and Youth Involvement Empower women through: 1. Co-ownership of land and productive resources 2. Gender equity land tenure 3. Reducing drudgery – adoption of equipment 4. Equitable earning through inclusive business & 5. Facilitate involvement of youth in the dairy sub-sector Abby Sugrue 2012 - LOL/USAID KDSCP 70% of dairy smallholder farmers are women
  33. 33. milk transportation milk testing fodder production starting dairy farms There is High Unemployment for Youth
  34. 34. Country Specific Issues
  35. 35. Burundi Issues • Power shortage – Rusizi III project • Lack of large volume milk buyers to serve the expanded formal supply base • Competitiveness of local milk supply with imports • Challenge to expand & maintain cold chain • Credit & Finance –short term & unstable currency • Weak farmer advocacy bodies & lack of dairy coordinator
  36. 36. Ethiopia Issues • Low Consumption - Religious & cultural fasting days • Rural warm milk chain –Ayib & butter line • Weak private sector contribution • Weak farmer advocacy bodies & lack of dairy coordinator
  37. 37. Issues • Milk quality & weak regulatory framework • Oligopoly- 90% processing is under 3 companies Kenya Dairy Board managing director Machira Gichohi said they banned milk hawking in urban areas because some "unscrupulous" businesspeople are adulterating . Kenya
  38. 38. Rwanda Issues • Large involvement of public sector – ownership? • Inadequate legislation and enforcement of milk quality standards • Gishwati milk basin poor road infrastructure • High cost packaging as result of plastic ban
  39. 39. Tanzania 1.Infant dairy sector requires entire DVC support 2.Low demand for processed milk 3.Limited institutional capacity and compartmentalization/silos (Line ministry knowledge experts not linked to local government)
  40. 40. Uganda 1. Weak dairy public sector institutes 2. Limited participation by dairy farmers across the nation e.g. Northern and Eastern regions 3. Inadequate supply of good quality milk for value- added products e.g. milk powder
  41. 41. Suggestions on Donor Contribution
  42. 42. Development Projects Often Exclude Commercial Dairy Farms & Processors Integrate them for • Knowledge & technology transfer • Heifer and fodder supply • Economies of scale • market access
  43. 43. Promote innovation by entrepreneurs through pooled investment grants and challenge funds Inadequate Support of Value Chain Entrepreneurs AECF Kenya grant to entrepreneur for commercial production of quality dairy heifers
  44. 44. Stakeholder Concern Some Projects are Distorting Markets Shared value Harmonize Align Consult Donors/Implementers collaborate with lead milk buyers & private actors to allay concerns about market distortions
  45. 45. Uganda Dairy Rehabilitation Model • United delivery approach & zero funding gaps-1986 to 2004 • Coordinated donor effort = Dairy sector growth >4%/ yr. 1. GoU – Policy 2. UNDP/FAO – Coordinator, TA, DDC Secretariat 3. DANIDA – DCL, DMP study 4. ADB – DCL lab equipment, Bulk tankers ,MCCs, restocking 5. WFP – DDC, Powder/Butter oil, inputs, MCC, EDT Sch., vehicles 0 200 400 600 800 1000 1200 1400 1600 1985 1990 1995 2000 2005 2010 Litres(000) Year Milk Production in Uganda 1991 -2008 Source DDA 2009 Some Programs Lack Shared Value, Synchrony & Duplicate
  46. 46. 1. Consultation for priorities 2. Resource Mobilization 3. Capacity Building 4. Participatory Implementation 5. Dissemination & Adoption • Shared vision, goals • Efficient operation • NRM • Regional Policy ASARECA Model Donor Funded Projects
  47. 47. Donor Collaboration: Production Level Issues Suggested Engagement Low cow productivity Breeding, Extension & Finance Poor veterinary national & trans- boundary diseases control Regional veterinary labs, surveillance & vaccine production Seasonal milk production Feed production
  48. 48. Issue Suggested Engagement Transformation of informal to formal sector Diversified approaches e.g. traders capacity & financing Low milk consumption Milk consumption campaigns & school milk feeding programs Milk quality Infrastructure, Training programs Donor Collaboration: Market Level
  49. 49. Issue Suggested Engagement Low female & youth involvement Beneficiary quotas, skills development,& empowerment Environment climate smart technologies & NRM Weak policy Policy studies & advocacy - land tenure, tax incentives Inadequate financial services Design innovative financial products e.g. RDCP II Inspired Donor Collaboration: Cross Cutting Issues
  50. 50. Conclusion • Sustained impact will come from increased consumption, female & youth participation • Slow formal value chain growth calls for diversified approach to development of informal sector • Opportunity for donor collaboration on improving production, market access & enabling environment • Donor collaboration should promote private sector innovation, integration & investment
  51. 51. Murakoze cyane, Amesege'nallo’, Asante Sana, Weebale Nyo Thank You
  52. 52. Characterization of East African vs South Africa Dairy Parameters Item Description East Africa South Africa Average cows per farm 2 to 10 209 No. of Producers 20,000 to >600,000 2,686 Informal market channel (%) >80 3 Average milk production /cow/day <8 17.3 Seasonality drop (%) 58 25 Processing Capacity Utilization <60 >80 Processed dairy products <9 13 % Smallholder farms 80 < 5% Dairy Breed composition (%) <20 >90 Commercial fodder (%) <10 >90
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