East Africa Dairy Development

Funded by the Bill & Melinda Gates Foundation and implemented in partnership with Heifer International, the East Africa Dairy Development (EADD) program is designed to boost the milk yields and incomes of small-scale farmers so they can lift their families and communities out of poverty.

Phase II builds on the success and learning from Phase I (2008-2013), which helped 179,000 smallholder farming families in Kenya, Uganda and Rwanda double their dairy incomes. The overall vision for EADD is to transform the lives of farming families with improved market access to a robust dairy value chain that benefits all industry stakeholders.

Context

A majority of East Africa’s population is engaged in the agricultural sector, growing staple crops, cash crops and raising livestock. In Kenya, Rwanda, Tanzania and Uganda, a large portion of total household income comes from dairy. However, many dairy producers lack business skills, knowledge of proper production technologies, and access to inputs and services.

Opportunity

Dairy cows are one of the most valuable and profitable assets for African farming families. They provide a dependable source of income, producing milk for substantial periods that farmers can sell and rely on short-turnaround for payment. Smallholder dairy husbandry provides a secure livelihood for families while respecting cultural values and promoting women’s social and economic status. Given the right tools and opportunities, East African dairy farmers can increase their incomes and contribute to the growth of the dairy market across the region.

Strategy

The vision of success for EADD is to transform the lives of farming families with improved market access to a wealth-creating, robust dairy value chain that benefits all industry stakeholders. Funded by the Bill & Melinda Gates Foundation and implemented in partnership with Heifer International, International Livestock Research Institute, World Agroforestry Center and African Breeder Services, the program facilitates improved dairy production, business practices and market access by supporting the formation of competitive dairy business hubs and knowledge application.

In the first five-year phase, TechnoServe worked with new and existing community farmer groups to organize into dairy business associations that managed dairy chilling plants. These chilling plants allow farmers to access formal dairy markets and improve the quality of milk sold in traditional markets. Additionally, they serve as business hubs that provide dairy farmers access to a variety of services, including access to finance, agricultural inputs and health care. The hub model helps farmers improve milk productivity and quality by facilitating access to genetic improvement technologies and community-based animal health services. A “checkoff system” allows farmers to access these services and products even when they have no money, upon which a deduction is made from their monthly earnings.

Results for Phase I

Developing sustainable farmer enterprises: During the first project phase, completed in October 2013, TechnoServe implemented all business development-related components of the program. As a result, 82 farmer-owned dairy enterprises have been established and supported, reflecting $8.3 million in equity investments by more than 200,000 smallholder farmers in Kenya, Uganda and Rwanda.

Improving market access: TechnoServe has facilitated and improved market linkages between farmer enterprises and leading processors in the region. Overall, EADD-supported businesses have earned $131 million in revenue since 2008, with farmers earning $113 million for milk deliveries. Milk aggregation has empowered farmer enterprises to negotiate for better prices, and processors have started to recognize the farmer enterprises as important partners.

Increasing productivity and incomes: Average monthly milk intake at the dairy enterprises has increased from 529,000 liters to 3 million liters. Farmers now earn an average of $0.3 per liter of milk delivered, 50 percent more than they earned in 2008.

Expanding access to finance: EADD integrated access to financial services as a critical component of the program. TechnoServe developed a financing model that resulted in partnership with five leading commercial banks, providing access to credit and commercial loans to farmers at competitive rates. Before EADD, banks exhibited restraint in lending to farmer businesses and considered lending to agriculture a risky venture. Farmer enterprises in Kenya have also established 13 financial services associations (FSAs), which have improved access to rural financial services and spurred an array of business opportunities and innovations. Improved access to financial services allowed farmers to save $11 million over the course of Phase I.

Building a more competitive dairy sector: EADD-supported dairies in East Africa supply a substantial amount of milk volumes processed by dairy companies, especially in Kenya. This has catalyzed greater competition, competitive farmer milk prices and a shift in marketing strategies by processors. As a result, processors have entered into strategic alliances with farmer enterprises that go beyond milk supply contracts. Processors in Kenya are now offering technical assistance to farmers to improve milk quality, financing field days and farmer training, and providing access to low-cost inputs and transport services.

Catalyzing national markets: The project has made key contributions in facilitating the expansion of dairy markets and traditional milk products in the target countries. In Rwanda, TechnoServe conducted a national study, which found that national per capita milk consumption was low, with the highest proportion of milk sold through informal market channels. TechnoServe shared these findings with stakeholders and influenced key government ministries to recognize the need for change. The Government of Rwanda responded positively by commissioning the development of a National Dairy Strategy, launched in April 2013 which aims to double milk consumption in Rwanda by 2020.

Promoting sustainability: TechnoServe designed a sustainability assessment tool, the stage gate framework, which allows farmer enterprises and program implementers to identify sustainability gaps and serves as a basis for strategic and operational plans. TechnoServe successfully piloted, refined and applied this framework to all supported businesses.

Partners

Heifer International’s mission is to end hunger and poverty while caring for the Earth. Since 1944, Heifer International has provided livestock and environmentally sound agricultural training to improve the lives of those who struggle daily for reliable sources of food and income.

Guided by the belief that every life has equal value, the Bill & Melinda Gates Foundation works to help all people lead healthy, productive lives.

The International Livestock Research Institute works to improve food security and reduce poverty in developing countries through research for better and more sustainable use of livestock.

The World Agroforestry Centre is part of The Alliance of the CGIAR Centres — a global network of 15 centres, funded by the Consultative Group on International Agricultural Research.

African Breeders Services Total Cattle Management Limited is a distributor of ABS Global, Inc., a division of Genus Plc.