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.

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. Study Countries

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. Terms of Reference
Country assessments:
• Value chains
• Enabling environment (Policy dairy
sector, organizations, training)
• Donor programs
• General analysis
• Recommendations for action.

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. Conceptual
Framework
Dairy Investments
Demanded Services
Scale production
Gender balance

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. Ethiopia & East Africa Informal Dairy Sector
Uganda
97%
95%
90%
80%
80%
80%
Formal
13%
Informal
87%
Formal:Informal Sector

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. 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. 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. 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. Dairy Product Range (8)
Brookside, NKCC, Pearl & SALL

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. 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. Key Issues & Recommendations

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. 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. 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. 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. 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. • 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. 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. • 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. 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. 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. 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. 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. 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. 1. Burundi - Bukkeye Dairy Farm
2. Ethiopia - Genesis
3. Kenya - Githunguri Dairy
4. Tanzania - Tanga Fresh
Other Regional Integrated models

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. 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. milk transportation
milk testing
fodder production
starting dairy farms
There is High Unemployment for Youth

34. Country Specific
Issues

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. 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. 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. 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. 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. 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. Suggestions on Donor Contribution

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. 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. 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. 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. 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. 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. 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. 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. 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. Murakoze cyane, Amesege'nallo’, Asante Sana, Weebale Nyo
Thank You

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