Post on 21-Apr-2017
Nathaniel Makoni, ABSTCM LtdRaphael Mwai, PPD ConsultantsTsehay Redda, EDBD ServicesAkke van der Zijpp, Wageningen UniversityJan 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
Study Countries
Outline1. Terms of Reference
2. Methods
3. Analysis & Findings
4. Key Issues & Recommendations• Regional level• Individual Country Level
5. Suggestions on Donor Contribution
6. Conclusion
Terms of Reference
Country assessments:• Value chains • Enabling environment (Policy dairy sector, organizations, training)
• Donor programs• General analysis• Recommendations for action.
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
Conceptual Framework
Shared Value
Dairy InvestmentsDemanded Services
Scale production
Gender balance
Youth
= increased dairy incomeInclu
sive Appro
ach
Social Capital.
Environment
Shared value
Analysis and Findings
Commercial
(High)
Small-scale(Low)
ProcessorAggregator/Transport MCC Transport RetailInputs &
services
To market –raw warm milk Consumer
To Market - Unpasteurized
To Market
To Market – raw milk
Cottage industry
To market –value added
Dairy Value Chains Scenarios – Ethiopia & East African Countries
Ethiopia & East Africa Informal Dairy Sector
Tanzania
Burundi
Ethiopia
Kenya
Rwanda
Uganda
97%
95%
90%
80%
80%
80%
Formal13%
In-for-mal87%
Formal:Informal Sector
Burundi
Ethiopia
Kenya
Rwanda
Tanzania
Uganda
0 100 200 300 400 500 600 700 800 900 1000
GDP /Capita WB 2012/13
US $
Economics Data
Burundi
Ethiopia
Kenya
Rwanda
Tanzania
Uganda
2.4
7
8
6
1.53
3
Dairy Contribution to GDP (%)
?<3
Burundi
Ethiopia
Kenya
Rwanda
Tanzania
Uganda
0.010.19
3.50.2
0.680.65
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
Burundi Ethiopia Kenya Rwanda Tanzania Uganda
0.360.41 0.39
0.220.18
0.14
Milk Farm Gate Price US$/Litre
Uganda has least cost/ ltr. for farm-gate and processed milkEthiopia risk to be uncompetitiveThe farm gate prices reflect breed, feed costs, warm chains
Farm Gate Prices
Burundi Ethiopia Kenya Rwanda Tanzania Uganda
0.980.87
0.59
1.19
0.65
0.38
Processed milk price US$/litre
Highest cost of pasteurized milk is in Rwanda & Burundi (OH & packaging 50%)Uganda has lowest price of pasteurized milk
Milk Processing & Packaging
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)
Total = 11.06 BillionPotential Demand =48.5 BPotential Gap = 37.4 B
National Milk Production & Consumption
Burundi
Ethiopia
Kenya
Rwanda
Tanzania
Uganda
FAO Rec.
0 20 40 60 80 100 120 140 160 180 200
6
19
99
40
23
55
200
Milk Consumption/Capita (litres)
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 (%)
Key Issues & Recommendations
Overarc
hing c
hallen
ges
Low milk consumptionPoor
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
1112
1. Low Milk Consumption in Ethiopia & East Africa Countries
Private Sector
1. Awareness campaigns2. Product diversification3. Improve milk quality4. Reduce costs e.g. transport, processing & packaging
Donors & Governments1. Policy incentives – encourage localized cottage industries 2. Increase education on importance of hygienic milk handling &
Quality3. School milk feeding - parent co-fund4. Fund programs for HIT, Girinka
- Suggested Solutions
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
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 models3.Improve road and power infrastructure4.Public cattle handling facilities
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:
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr0
200
400
600
800
1000
1200
4. National Milk Production (Litres)
Volu
me
(Bill
ion
Litre
s)Seasonal drop =58%
• 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%
Burundi Ethiopia Kenya Rwanda Tanzania Uganda
13
26
12 13 15 12
35
63
30
57
83 86
AI Cost/Service (US$) & Farmgate milk equivalent/Service (liters)
RDCP-II AssistanceUS$28,875
Inyange Franchise Model
5. Blessed Dairy Consolidation & Quality Improvement Model
Now 2 trucks
RwF 400RwF 320
RwF 300
RwF 300
RwF 180
• 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 & quarantinePrivate sector: – insurance and vaccination schedules
Lumpy skin FMD
Improve national and transnational veterinary services through establishment of coordinating bodies and disease surveillance & control
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
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
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
10. Inadequate Financial Services: Hub Integration
K KDFF EADD I R Mukamira Dairy GoR U UCCCU aBi Trust
APEX Federation
Union
Scale
MCC dependent on milk buyers and have no growth incentives. Finance MCC to integrate : form apex bodies & value add
JESA Integrated dairy model
JESA Commercial Farm Milk supply 50%
Smallholder Farms -Milk supply 50%
Price premium $0.4 vs $0.3AI, Extension, Finance & Veterinary services
Value Proposition
US$0.4/ litre
1. Burundi - Bukkeye Dairy Farm 2. Ethiopia - Genesis
3. Kenya - Githunguri Dairy 4. Tanzania - Tanga Fresh
Other Regional Integrated models
11. Lack of Conducive Policies and Incentives
• Support EADRAC to develop appropriate milk quality standards
• Formation & strengthening of dairy coordination and advocacy bodies
12. Low Female and Youth Involvement
Empower women through:1. Co-ownership of land and productive resources2. Gender equity land tenure 3. Reducing drudgery – adoption of equipment4. 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
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 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
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
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
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
Tanzania
1.Infant dairy sector requires entire DVC support2.Low demand for processed milk
3.Limited institutional capacity and compartmentalization/silos (Line ministry knowledge experts not linked to local government)
Uganda
1. Weak dairy public sector institutes2. 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
Suggestions on Donor Contribution
Development Projects Often Exclude Commercial Dairy Farms & Processors
Review Pro poor PolicyIntegrate them for• Knowledge &
technology transfer• Heifer and fodder
supply• Economies of scale• market access
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
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
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
1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 20080
200
400
600
800
1000
1200
1400
1600
Milk Production in Uganda 1991 -2008
Year
Litre
s (00
0)
Source DDA 2009
Some Programs Lack Shared Value, Synchrony & Duplicate
1. Consultation for priorities
2. Resource Mobilization
3. Capacity Building4. ParticipatoryImplementation
5. Dissemination & Adoption
• Shared vision, goals• Efficient operation• NRM• Regional Policy
ASARECA Model
Donor Funded Projects
Donor Collaboration: Production Level
Issues Suggested EngagementLow cow productivity Breeding, Extension & Finance
Poor veterinary national & trans-boundary diseases control
Regional veterinary labs, surveillance & vaccine production
Seasonal milk production Feed production
Issue Suggested EngagementTransformation 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
Issue Suggested EngagementLow 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
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
Murakoze cyane, Amesege'nallo’, Asante Sana, Weebale Nyo
Thank You
Characterization of East African vs South Africa Dairy Parameters
Item Description East Africa South AfricaAverage 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