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

African Dairy Conference & Exhibition

KICC, Nairobi

September 26, 2014

Study Countries

Outline

1. Dairy Status

2. Key Issues• Regional level• Country Level

4. Follow up Donor Collaboration Agenda

5. Conclusion

Dairy Status

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 - East African Countries

East Africa Dairy Development Trajectory

Tanzania

Burundi

Ethiopia

Kenya

Rwanda

Uganda

> 80% Informal Sector

97%

95%

90%

80%

Formal13%

Informal87%

Formal:Informal Sector

80%

80%

Regional Economics Data

Kenya Rwanda Tanzania Uganda Ethiopia Burundi

943

620 609547

454

251

GDP /Capita WB 2012/13

Kenya Rwanda Ethiopia Uganda Burundi Tanzania

8

6 6

3 3

1.53

Dairy Contribution to GDP (%)

?

Significant investments in dairy production

National Cattle, & Dairy Cattle Data

Ethiopia Tanzania Kenya Uganda Rwanda Burundi

49.2

21 1812.8

1.5 0.7

National Cattle Population (Million)

Kenya Tanzania Uganda Rwanda Ethiopia Burundi

3.5

0.68 0.650.2 0.19 0.01

Improved Dairy Breed Population (Million)

Kenya Rwanda Uganda Tanzania Burundi Ethiopia

19

13

53

1.4 1

Improved Dairy Cattle as % of Na-tional Cattle Population

Kenya & Rwanda lead in dairy genetics infusion

Improve artificial insemination cost & efficiency of delivery

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)

AI use <20%Sexed <2%

Kenya Rwanda Tanzania Uganda Ethiopia Burundi

18.0

12.0

5.84.6

0.3 0.2

Annual AI as % of National Herd

Regional AI Status

National bull studs in all Countries

National Milk Production / Year (Million Liters)

Kenya Ethiopia Tanzania Uganda Rwanda Burundi

4400

3300

16501190

45073

Total Regional Production = 11.06 Billion

Potential Demand = 48.5 Billion

Estimated Gap = 37.4 Billion

Uganda has least cost/ ltr. for farm-gate and processed milkEthiopia risks to be uncompetitiveThe farm gate prices reflect feed costs

Regional Farm Gate Prices/Liter (US$)

Ethiopia Kenya Burundi Rwanda Tanzania Uganda

0.41 0.390.36

0.220.18

0.14

Kenya Uganda Tanzania Ethiopia Rwanda Burundi

2.9

1.0

0.40.2 0.2 0.2

1.2

0.6

0.1 0.1 0.0 0.2

Installed vs Utilized Capacity (Million Liters)

Milk Processing Capacity

Kenya has the dominant regional dairy processor

Some claimed installed capacity is uninstalled Under-utilized capacity across the region averages 49%

What is the effect of low capacity utilization on milk price & consumption?

• Rwanda & Burundi have high cost of pasteurized milk due to (OH & packaging 50%)

• Uganda has lowest price of pasteurized milk

Regional Milk Processing and Packaging

Rwanda Burundi Ethiopia Tanzania Kenya Uganda

1.19

0.980.87

0.650.59

0.38

Processed Milk Price/Liter

Dairy Product Range (8)

Brookside, NKCC, Pearl & SALL

Ethiopia Tanzania Kenya Uganda Rwanda Burundi

92

4943

36

12 11

24

12 8 6 2 14 4 4 6 5 4

National, Urban Population (Million) & % Urban Growth Rate

Population Urban Urban Gr. Rate

Burundi

Ethiopia

Uganda

Rwanda

Tanzania

Kenya

270

470

510

620

630

930

Gross National Income Per Capita - East Africa (USD)

Population, Urbanization, Income Growth and Milk Consumption/Capita

Kenya Uganda Rwanda Tanzania Ethiopia Burundi

99

5540

23 196

Milk Consumption/Capita (liters)

1. Region’s consumption < FAO rec. 200l/Capita

2. Potential demand remains high

Overarch

ing challe

nges &

Issues

Low milk consumptionPoor

infrastructure & access to

markets

Low cow productivity:feed&breed

Lack of conducive policy &

incentives

Limited research & extension

Low farmer education & organization

National & Tranboundary diseases

Limited official industry data

Low female & youth

involvement

Seasonal milk supply

Poor milk quality

Inadequate financial services

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

RDCP-II AssistanceUS$28,875

Inyange Franchise Model

Blessed Dairy Consolidation & Quality improvement Model

Now 2 trucks

RwF 300RwF 320

RwF 250

RwF 400

RwF 180

Follow-up activitiesafter Expert Consultation

Masaka-Mbarara, Uganda, April 2014

Follow up

1. National level – stakeholder processes ongoing or coming soon

2. Donor collaboration – thematic priorities affirmed by IADG meeting Sept 16-18followed up by lead agency per theme

Donor agenda - Thematic priorities

1. More milk from roughage2. Breeding for more and better animals3. Healthy animals4. Strengthening of farmer organizations and access to finance5. Safeguarding and rewarding good milk quality6. Better policy through better availability of data on farm/firm-,

chain-, and sector level 7. Competency of dairy farmers, staff, and entrepreneurs along

the value chain 8. Sustainable intensification related issues – biogas and closing

the nutrient cycle

Thank You

“White Gold” report can be downloaded from:

edepot.wur.nl/307878