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1. GERALD
MUTINDA
REGIONAL
MANAGER
EAST
AFRICA
DAIRY
DEVELOPMENT
PROJECT

2. HOW DAIRY BUSINESS HUBS
HAVE UNLOCKED RURAL
ECONOMIES IN EAST
AFRICA

3. East Africa Dairy Development Project
¨ Implemented by a consortium of 5 partners
led by Heifer International
¨ Funded by a grant from The Bill and Melinda
Gates Foundation
¨ 5.5 year (2008 – 2013) farm-to-table
industry development project
¨ Primary objective of doubling incomes of
179,000 small holder dairy famers,
transforming livelihoods of 1 million people
¨ Implemented in Kenya, Uganda and Rwanda

4. The Basis for the project
Why Dairy in East Africa (EA)
EA is an agricultural economy
¨ With conducive ecology and enormous growth potential
¨ Over 100 million people, half subsisting on less than $2 per day
¨ Smallholders dominate with low yields/cow (1.5-3lts/cow)
¨ Women responsible for (70%) of food produced in Africa, but reap little benefits from it
Opportunities
• Growing middle class and urbanization boosting demand for processed milk & products,
• Dairying=source of regular HH incomes, Nutrition & employment = a powerful antipoverty means
• Milk paradox- producers unable to access formal markets & processors unable to secure
supplies
• Increased investments= Government-infrastructure, agribusiness players- processing capacity

5. Dairy Landscape in EA-a brief
¨ Over 10 billion liters of milk produced/year
¨ Over 70% by Small holder farmers; 02-15% of production is processed
¨ 50-60% of dairy farmers subsist on less than 2 dollars per day

6. Challenges facing the small holder farmers
¨ Economics = poor efficiencies (e.g.1.5-3lts/cow/
day)
¨ Fragmentation = majority of small holders not
organized
¤ Limiting access to inputs and services
¤ limiting bargaining & influencing power
¤ Limiting attractiveness to agribusiness players
(processors, input dealers)
¤ Over-reliance on informal markets
¨ Diluted government led extension/Farmer
advisory
¨ Climate change & environmental sustainability

7. Why the dairy hub approach?
Unlocks potential of rural economies
¨ Attracts investment to rural Africa
¨ One stop for collection of quality milk for processors
¨ Contract = assurance of market
¨ Access to services/input for farmers- check off/credit
¨ Stimulates employment opportunities
¨ More sustainable compared to government & donor
support
‘dairy hub’ or cluster of services from which farmers are able to access inputs and services,
including market for their milk. Inputs and services providers find it profitable to offer their
services thanks to the economies of scale generated by the hub. The Producers Organisation
plays a central coordination role

8. The Solution – Transforming Chilling plants to Business Hubs
TRANSPORTERS
TESTING
FARMERS
FIELD DAYS
OTHER RELATED MEs
VILLAGE BANKS
AI & EXTENSION FEED SUPPLY
HARDWARE SUPPLIERS
CHILLING HUB

9. How to facilitate a dairy Hub: EADD’s experience

10. How it Gets Done
1. Farmers are mobilized into associations to set up and run
producer companies/cooperatives.
2. Companies/coops are assisted to set up infrastructure to
market milk and deliver inputs to members through the
‘Dairy Hub.’
3. EADD staff provide technical assistance to producer
Organizations to achieve farmer goals in sustainable
manner

11. Examples of success:
11
• Over 200,000 farmers in collective action
(in 81 POs)
• Over 77M Lts/Yr of milk aggregated in the
last 3.5 years of the project support
• An average of 23M USD paid out to farmers
annually
• 54% average increase in milk yield per cow
(exotic & cross breeds)
• Women constitute 31.5% of registered
dairy farmers
Before/baseline
• Thousands of disfranchised
dairy farmers
• Less than 20M Lts/Yr of milk
aggregated/marketed by POs
• Less than 5M USD milk
payments to farmers annually
• Few women (13.8%) signing up
in dairy POs
Now

12. Examples of success:
Total volume of milk of aggregated (2013 is up
POs net profit trend (USD)-
2013 covers up to June
$103 M (2009-
June 2013)
Over 348 M
Liters (2009-
June 2013)
to June)
Over 40% PO farmers active
in aggregating milk
Uganda/Kenya
s•u PpOpsl
ye
srtealabClisohn
smhiilpks
/
cporonctreascstosr
sw
&it
hm
milka
jtorra
ders
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
2009 2010 2011 2012 2013
POs net profit
trend (USD)- 2013
covers up to June

13. Some lessons learnt
From a Hub model to a hub
Approach
Embed extension services as an
integral part of PO’s core business

14. www.eadairy.org
EADD PHASE II (Tanzania, Uganda, Kenya)
Looking for partners:
Financiers
Government agencies
Input providers

15. Thank you!