EADD Annual Planning & Review

Meeting- 2012

EADD-2 Progress Review

Alice Makochieng & Team. 25th to 30th November 2012

Mt. Kenya Safari Club, Nanyuki, Kenya

2

Rwanda

Presentation Content:

Update on EADD 2 Development so far, where we are at

Approaches being used in market access and production

models (what, where, when, how many (key stats on # farmer

numbers, DFBA’s, extension/feed strategies etc),

Response to the key questions raised after Seattle including

external reviewers comments

Key partners and co-fundraising update –

Next steps and Discussion Questions

3

Rwanda

EADD 2 Overarching Goal

That the lives of 480 000 smallholder farming

families is transformed through a competitive

and inclusive dairy industry in East Africa

NB: Each country then has its own vision how it is going to

fulfill the above goal

1. production and

productivity practices by

small holder farmers

2. Sustainable Natural

Resources management

3. Increased access to input s

and service provision

4. Increased consumption of

milk and other food groups

at household level

5. Appropriate Milk

1. Functional DFBAs that

effectively bulk, process

and market milk and milk

products

2. Diversified markets for

milk and milk products

3. Increased quantity &

quality milk and milk

products

4. Increased consumption of

milk, and milk products

1. Increased women and

youth access to & control

over productive assets

2. Improved gender relations

at household and

community level

3. Increased participation of

women and youth in

leadership positions at

DFBA level and beyond

1. Appropriate dairy

policies and

regulations in place

and enforced

2. Appropriate public

/private partnerships

established and

strengthened

1. Improved

knowledge

management &

communication

system in place

2. Evidence-based

knowledge and

information

available for

decision-making

Improved sustainable livelihoods of 480,000 small holder

farm families through a competitive and inclusive dairy

industry in East Africa

Leve

rs o

f ch

ange

P

reco

nd

itio

ns

G

oal

EADD ’s Theory of Change

Increased dairy income of small

holder farm families and other

value chain actors* with specific

attention to women and youth

Enhanced market driven

competitive dairy industry

that benefits smallholder

farmers

Improved food security

in dairy farmers

households

Key

ch

ange

s

(im

pac

t Le

vel)

Sustainable

dairy

production &

productivity

Expanded market

& equitable

access to markets

for dairy value

chain actors

Conducive

policy and

regulatory

environment

Learning &

knowledge

driven dairy

industry

Women and

youth

empowerment

* Value chain actors- at the DFBA level.

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Rwanda

A draft look at the nos. & funding

Country no. of Farmers

Co-Funding to be Raised

BMGF Core Funding

Total Budget USD (Millions)

Regional Office

0.00 0.0 10.5 10.5

Kenya 116 000 16.5 8.2 24.7

Uganda 43 000 12.5 6.5 19.0

Ethiopia 65 000 14.0 12.3 26.3

Tanzania 50 000 13.0 7.5 20.5

Total USD 274 000 56.00 mn. 45.00 mn. 101.00 mn.

Needs to

raise more

money!!

Funding

Gap

6

Rwanda

A draft look at the nos. & funding

Country no. of Farmers

Regional Office 0.00

Kenya 116 000

Uganda 43 000

Ethiopia 65 000

Tanzania 50 000

Total 274 000

Total EADD 2 Budget 101 000 000

BMGF Funding 45 000 000

Co-funding to be raised 56 000 000

Fund-raising has to meet budget or

substantial reduction in activities and farmer

numbers

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EADD 2 : Where we are at in the proposal design

Key Activities J J A S O N D J F M

VCA finished and Concept Notes written

First write-shop Held

First Draft Submitted to Foundation

Little Rock Write-shop

EADD 2 Version 2 submitted to Foundation

Seattle Workshop held

EADD 2 Version 3 developed n submitted

Revision & Submission of version 4

Design a project that is clear, concise and above all, Bankable to Donors/Investors

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EADD2 Process Development

HQ

Regional

Country Plans:

KE, UG, ET, TZ Reaching targeted EADD Dairy Farmers

Corporate level

decisions/oversight

incl. Steering

Committee

Regional support and

partners/partnerships

Operational

implementation

BMGF mandate

9

Rwanda

EADD 2 Design Imperatives

Cost

Time

IDEAL Project

Quality

Project is designed on

lowest cost; esp. in old

countries leveraging

from efficiencies in

learning. Capital

raising targets

met/optimized

Approaches being

used are customized

to the country and

adopt the best

conditions/indicators

Project devt

proposal finished

on time.

Sequencing and

timing of activities

and entry

strategies per

country

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Rwanda

EADD 2 Funding impreatives

Hub model study

results

Leverage on Learning

• Demonstrate lower cost of dong the project in Phase 2 (x-1)

• Learning led to innovation and efficiency

Leadership Gaps filled

• Under Heifer HQ and BMGF Mandate

• Underway

Co-funding targets

• Attract Private and and local investors

• Partners to fund-raise too/bring funded projects

EADD 2

•Is the Hub model delivering

and reaching farmers?

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Rwanda

Key Issues after Seattle Workshop

The definition of the Hub model and how they relate to farmer

productivity levels

State of industry evolution in each country

Production and extension models

Sustainable livelihoods and creating a competitive dairy

industry, do the two mix?

Stage-gating results and readiness for exit?

Environment & Nutrition

Partners in each country

Demand-led strategies especially in Kenya, is this a

comparative advantage? SASHA (sweet potato proposal) and overall feed strategy.

Michael Porter’s 5 forces of Industry Analysis

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EADD 2 : Dairy Industry Evolution Overview

Key Activities Kenya Uganda

Structure, number and entry of new processors into Industry

Concentrated competitive market with three large big processors and all poised for growth, investing in new facilities

Monopolistic market, dominated by Sameer

Rivalry and competition amongst processors Strong Almost a moderate

Bargaining Power of Suppliers (Farmers) Growing especially with formation of and aggregation of milk by DFBA’s Federation

Exploitative; farmer’s voices still weak

Bargaining power of Buyers (Retail) Formal market growing, retailers powers growing as formal milk market grows

Retail is small, informal milk is predominant

Availability of substitutes Local milk consumption is high Processed milk not meeting demand and regional importation is common

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EADD 2 : Dairy Industry Evolution Overview

Key Activities Tanzania Ethiopia

Structure, capacity and entry of new processors into Industry

Fragmented, small capacity of existing processors

Numerous small processors, small players

Rivalry amongst processors Weak, more imports Weak, more imports

Bargaining Power of Suppliers (Farmers) Dairy farming is not aggregated and processors collect milk from individual farmers, small Hubs

Mistrustful relationships

Bargaining power of Buyers (Retail) High Imported milk in retail, local milk sold in informal channels

Formal channel is small

Availability of substitutes High imports to meet urban demand

Consumption of local dairy products dominant as opposed to formal products. Small Imports

16

Rwanda

EADD 2 Impacting on the Supply Chain

Farmers DFBA Processor Retail

Artisanal processing and niche

marketing as a minor strategy

Increased

productivity

through better

training &

extension and

BDS support

Different models of

‘Hubs’ that suit the

context Backward linkages with DFBA

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Rwanda

Three indicators of a Project Design

Designing a multi-country Regional Project has its

challenges; but also its opportunities. A good fit/test

would be to answer the following questions:

1. Can the Approaches in this project deliver?- Right

design for right conditions (strategy and size)

2. Connectivity- Can we connect with other

projects/partners in the industry? Diversify risk and

resources

3. Scalability- Can we scale up, deep and wide?

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Rwanda

Co-Funding- Partnerships Developed

Resource Mobilization

Potential Investor Partners- Ethiopia

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Name of partner Type of partner Area of intervention in

DVC Target group Potential

Budget (in

USD)

Remark

EDGET/SNV-Addis Devt Partner DVC SHs 10 million TA signed

ACDI/VOCA Devt Partner Feed Smallholder producers, dairy coops and unions

~ 6 million

ELEMTU integrated milk Inc

Value chain actor- private sector

Feed, health, breed improvement,

Smallholder producers, dairy cooperatives and unions

4 million Support Letter received

MoFA/UNDP Govt + UN agency DVC and finance Smallholders

Barry Shapiro, ILRI Strategic planning & MoA policy support unit

Policy & planning Fed MoA & Reg. board Keen interest

Ada’a Cooperative Dairy coop Feed, collection/ bulking, processing and packaging, distribution/ marketing

Dairy cooperatives and unions Keen interest

ALPPIS AI/Breeding Feed, health, breed improvement

Producers Support Letter received

LIVES/ILRI-Addis Research& Knowledge

R and D Smallholder producers 20 million Keen

TIMRET Agro Industry

Private Processor Prodt/Processing/Distribution

Smallholder producers, dairy coops and unions

Velocity dairy PLc Private Processor Collection/processing Smallholder producers, dairy coops and Unions

38-42 million Keen to set up

Selale Dairy Cooperative

Cooperatives DBH Dairy coops/unions 1.5 million USD

Main COOP

AGP Govt DVC Smallholder farmers Awarded CRGE Govt Climate Smart Agri. Keen Mama/Sebeta/Lame/Sholla

Private processors

TOTAL PROJECTION 79.5

Potential EADD Partners -Tanzania Target Institution.

Category Area of support Potential amount (USD)

Comment

Ministry LFD Public sector Policy and governance Keen to co-fund mostly in kind

Tanzania Dairy Board

Public Sector Stakeholder coordination and regulatory

0.6m Pledged

Local Government

Public Sector Extension services and rural infrastructure

2m Through DADPS estimate

MTI Public sector Policy and SME development

Follow-up required

NARS Public sector Dairy Research and dissemination– feeds and breeds

1m EAAP Program with USD3million funding

SUA/ILRI/CIAT Public/CGIAR Dairy value chain research and feeding

USD6m Close collaboration -

Potential EADD Partners- Tanzania Target Institution/org.

Category Area of support Potential amount (USD)

Comment

MIVARF project Public/Multilateral support

Market access, cold chain equipments and infrastructure

SNV NGO Organizational and Gender development in dairy

1.5m Secured

SAGCOT Private Sector Linkages with potential investors in the target milk sheds

Further negotiation

Processors Tanga Fresh, ASAS, Tan Dairies/CEFA

Private sector Support the Milk supply chain

0.6m 10% of the proposed six year investment

NMB Foundation Private Sector Financial services Piloting in Tanga milk shed – require further negotiation

Potential EADD Partners- Tanzania

Target Institution/org.

Category Area of support Potential amount (USD)

Comment

SCF – Small Scale competitive Facility

Development program

Market access support to SMEs

Currently supporting some Processors

TAMPA, TAMPRODA, SHILDA, NJOLIFA

Dairy associations

Farmer organization and empowerment

In kind contribution

Private Sector Support Program

Development Program

Farmer support in accessing financial services

Further negotiation

Total potential 11.7 mn.

Potential Investor Partners- Uganda Targeted Investor Organization Category Area of support Potential

Amount Status/comment

Dairy Devt. Authority, DDA Public sector/Regulator Policy and regulation 0.20 Keen

MAAIF (Ministry of Agric) Public sector Policy 0.30 Keen

NAADS/ATAAS Public sector National Extension 1.00 Keen

Private Sector Foundation/WB Development Partner Capacity building 0.50 Committed

District Local Government Public sector Infrastructure dev’t 2.00 Engaged

SNV/ABi Trust Development Partner Policy coordination 2.20 Engaged

UNDATA Traders Association Market access 0.10 Keen

Sameer Processor Processing/extension 1.20 Committed

Pearl Dairy Ltd Processor Processing/extension 15.00 Committed

Jessa Dairy Ltd Processor Procession/extension 0.40 keen

UCCU Farmer COOP/Processor Bulking/DFBA set-ups 4.00 Keen

Farmer Organizations (DFBA’s) Farmers Equity/Hubs Bulking & BDS 1.20 Engaged

Grameen Foundation Development Partner Advisory/extension info 0.40 Committed

ABI Trust Development Partner Value-chain financing 6.50 Engaged

Makerere University/COVAB Research & Training Training 0.10 Keen

Microfinance Support Centre Microfinance Finance 1.00 Engaged

Centenary Bank Financing Investment Fund mgmt 0.50 Engaged

Estimated Total 36.6 mn. USD 24

Potential Co-Investors for Kenya

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Targeted Investor Organization

Type of Partner Area of intervention Potential USD Amount

Remarks

UNDP Development Partner Extension 0.15 Approved

Land O Lakes Devt Partner Innovation Fund 0.1 Engaged

SNV Devt Partner Capacity building 1.0 Keen

KTDA Agribusiness Co-investment 0.1 Keen

SDCP/IFAD Devt Partner Capacity building 3.0 Keen

New KCC Processor Milk production 1.4 Commitment Letter

Tetra Pak Packaging/processor Milk production 0.5 Committed

Kenya Rural Rds Authority Public sector Roads ? TBC

CDF Funds Public sector Agribusiness ? TBC

Brookside Processor Milk production ? Keen

Nestle/Kabiyet processor Milk production ? Keen

Daima (Sameer) processor Milk production 0.4 Engaged

Buzeki/Molo Milk processor Milk production 0.3 keen

CFC Bank Bank Direct DFBA financing 5.0 Committed

Cooperative Bank Bank Direct DFBA financing 5.0 Committed

Family Bank Bank Direct DFBA financing 1.2 Engaged

Juhudi Kilimo Micro-finance Direct financing to farmers 1.0 Committed

Pearl Capital/Dyer & Blair Private Equity Venture capital arrangers 1.0 Keen

Safaricom Foundation Private sector IT /Mobile payments 0.7 New prospect

Coca Cola Private sector Water development ? New prospect

Total Potential Co-funding 16.75 mn. USD

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Rwanda

Potential Project Risks

• Low productivity of milk hence Hub model may have

challenges esp. in the new countries. Finding the right

market access models and milk diversion is also still a

challenge in many sites.

•Fundraising may fall short of target/timing mismatch

•Sustainability of DFBA’s is a long process to reach exit

level and embedding services e.g. extension;

•Lack of right local partners hence requiring prolonged EADD support and costly project.

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