east africa dairy development phase ii

xc1904 u annual report 2014

2www.heifer.org

reaching our goals

u phase i

Initiated in 2008 and funded by the Bill & Melinda Gates

Foundation, the East Africa Dairy Development (EADD)

project provided extensive training on dairy husbandry,

business practices and operation, and marketing of dairy

products to 179,000 farming families in Kenya, Rwanda

and Uganda. Since its inception, Phase I has supported

82 Dairy Farmer Business Associations, or Producer

Organizations (PO)/Hubs, both pre-existing and newly

formed.

Heifer International and our partners made a strategic

choice to extend most of our support through PO/Hubs

with the view to equip farmers/livestock producers

through training so they could respond to market

opportunities. In EADD, these self-sustaining, collective

farmer-owned enterprises are precursor to dairy based

business hubs.

EADD has grown to be one of the leading market-oriented

development initiatives in Eastern Africa, earning local

farming families more than $131 million. Farmers sold

about 94 million gallons of milk and saved approximately

$11 million.

u phase ii

In January 2014, we launched EADD Phase II with the

goal of strengthening the approach implemented in

Phase I and making the project scalable and replicable.

Phase II expanded into Tanzania while continuing work

in Kenya and Uganda.

We are prioritizing four objectives (farmer sustainability,

hub sustainability, gender equality, and replication) to

benefit an additional 136,000 farm families. Our program

is employing new technologies and practices around

fodder production, alternative energy sources and milk

transport systems.

As EADD transitioned from Phase I to the first year of

Phase II, we experienced delays as the completion of

some activities took longer than anticipated. Additionally,

delays in recruiting and hiring staff in all three countries

(Kenya, Uganda and Tanzania) resulted in overall delays

for the project, including the development of operational

plans, new site selections and the baseline study for

Phase II. The last element has resulted in a slight gap in

monitoring progress at the farm level.

To address these challenges and ensure we meet our

goals, we have accelerated project activities in 2015.

Activities will include the graduation, or exit process, for

select PO/Hubs. A PO/Hub graduates once it can operate

without direct assistance. We monitor and evaluate their

development, such as business performance, active

membership and administration. Some PO/Hubs could

be transferred to other supporting entities depending on

their particular circumstances and local opportunities.

Despite a slower than anticipated launch, the first year of

Phase II has resulted in a strong, integrated team that has

built a robust project foundation.

Joseph Irungu, 21, stands next to milk cooling tanks at Ol’Kalou Dairy Limited, Kenya.

3www.heifer.org

u farmer sustainability

We measure farmer sustainability primarily, but not

solely, by the amount a farmer’s milk productivity is

increasing per cow per day. The training we provide is

vital to farmers’ success and to creating long-lasting

change among their communities. We train farmers

to properly manage the health and well-being of

their animals, including improved livestock breeding

practices and feed production. As farmers apply what

they learn, their dairy cows are producing higher

volumes of quality milk.

Farmers participating in EADD have increased their

daily milk production by 1.5 liters in Kenya, and by 1.1

liters in Uganda (see graph below). u 3 Key strategies

These positive strides can be attributed to the lasting

impact of Phase I, initiatives implemented among PO/

Hubs, and our continued focus on three strategies:

• Livestock Breeding – We address breeding gaps

through the development of a breeding strategy.

This includes reducing calving intervals, advancing

genetic potential, and improving calf rearing

techniques, among others.

• Feed Plans - We assist PO/Hubs in developing feed

plans and ensure that they are utilized by farmers

to better address forage choices and storage,

concentrates and supplements, as well as land and

water use.

• Animal Health - We teach farmers how to take

preventive health measures to ensure the well-

being of their animals, such as methods for disease

prevention, disease treatment and milk hygiene.

* Tanzania is new to Phase II and will be measuring increases in milk production against the baseline going forward.

Ugandan farmers ready the collected milk to be transported to a nearby processing plant.

objective 1 through training and new technologies, eadd phase ii will help farmers double their income by increasing milk production per household to a minimum of six liters per day.

milK production (per cow, per day)

6 liters

5 liters

4 liters

3 liters

2 liters

1 liters

0

4.3

Kenya uganda tanzania*

5.8

3.4

4.54.2

phase i final evaluation 2013

phase ii baseline survey 2014

n/a

4www.heifer.org

u equipping farmers We are training farmers

in skills that will help

them optimize costs

and increase revenue

from milk sales so they

can earn more income.

PO/Hubs are learning

to negotiate better

pricing, and longer-

term contracts with

dairy processors, as

well as gain improved

transparency around

their costs.

They are also working

with processors to

better understand

consumer/product

trends through market

studies that will guide

future decisions.

The number of farmers

registered with PO/

Hubs was lower than

expected by the end of

2014:

• Kenya – 29,368

• Uganda - 22,763

• Tanzania - 2,285

The challenge

remains in converting

registered, small-scale

farmers into active

and semi-active milk

suppliers.

Our hub model (see

page 10) is designed to

offer farmers desirable

and cost-effective

services, and access to

find buyers.

John Okello Otiep (62) his wife Paris Atieno Okello (38) and children Vincent Otieno (15), David Okuta (13), Jane Achieng (11), Anne Awuor (6), and Sephan Odhiambo (3), in front of a house they’re building thanks to increased income from their participation in the project.

farmers registered with po/hubs

(active and semi-active)

136,000150,000

125,000

100,000

75,000

50,000

25,000

0

54,41652,131

dec. 2014 march 2015 by 2018

5www.heifer.org

u hub sustainability

Twenty-nine PO/Hubs from Phase I (21 in Uganda and

eight in Kenya) continued working with EADD in Phase

II. In Tanzania, 2,285 farmers are registered with PO/

Hubs that have been selected for Phase II.

A notable success for the project is that 23 out of 29

PO/Hubs are profitable (16 in Uganda and seven in

Kenya). Additionally, four out of eight PO/Hubs in

Kenya consistently paid their loans, operated above

capacity and explored ways of adding more coolers to

accommodate excess milk volumes.

Their success can be attributed to improved

administration and sound financial management.

Aggregated PO/HUB profitability shows improvement

in 2014 compared to 2013 in both Kenya and Uganda

(see graph to the left), with a higher rate of increase

occurring in Kenya.

Although the majority of PO/Hubs are on course, at

least one (Kapcheno) has faced financial challenges. As

a result, this PO/Hub has recently elected a new board

and hired a new manager. Over the next six months

their progress will be monitored and assessed to guide

future decisions.

In 2015, four PO/Hubs in Kenya are scheduled to

graduate, out of which three are already economically

and socially viable for the long-term. The remaining

four Kenyan PO/Hubs are scheduled to exit the project

the following year.

Additionally, the Kiboga cluster in Uganda is

anticipated to graduate in June 2015, and the

remaining 21 PO/Hubs in the country are scheduled to

graduate by the end of 2015.

A worker prepares milk for transport at Ol’Kalou Dairy Limited, Kenya.

objective 2small-scale dairy farmers buy shares in a milk chilling hub through a regional business association. through that hub they sell a dependable, quality supply of milk to dairy processors and receive income in return. they also gain access to banks and credit as well as private goods and services they need to sustain and grow their dairy businesses.

po/hub net profit 2013-2014

$250,000

$200,000

$150,000

$100,000

$50,000

02013 2014

Kenya

uganda

6www.heifer.org

u supporting partnerships

We have established partnerships with private and

public sector organizations who are investing in

Phase II farmers and ensuring that PO/Hubs will be

sustainable long after our EADD project ends.

Our partners have provided in-kind and financial

contributions directly to the PO/Hubs that either

directly support or complement project activities. We

met the 2014 financial commitment for EADD - mostly

through the support of our corporate partners - raising

$1.7 million before December 30, 2014. Our partners

and donors also contributed to meeting our co-

funding goal for the year.

global corporate partners

• The U.S. based animal health company, Elanco, has

pledged $500,000 to support EADD activities.

• Eli Lilly, the parent company of Elanco, has approved

a $1 million grant.

Kenya

• The Bomet County Government donated six coolers

that are benefiting the Siongiroi and Sot PO/Hubs,

and have committed to providing one additional

cooler to the Kokiche PO/Hub in 2015.

• Development Alternatives Initiative (DAI) with

funding from USAID provided financial services

training and facilitated the development of strategic

plans for financial services association of four PO/

Hubs (Lelchego, Sot, Lessos & Sirikwa).

uganda

• During 2014, relationships between market actors in

the dairy value chain yielded more than $341,250 to

PO/Hubs in the form of loans, capacity development

trainings and other in-kind contributions.

• Dwaniro Livestock Cooperative secured a loan of

$160,000 to purchase improved breed dairy cows

and $58,593 to purchase a 5,000 liter cooler and its

accessories from the Uganda Development Bank

Limited (UDBL). The cooperative society received

the loan at a subsidized rate (10 percent interest rate)

compared to the market rate of 25 percent, resulting

in savings of $48,000 over two years.

• Kiboga Livestock Cooperative Society secured a loan

of $185,000 to purchase a truck and heifers. The

two-year loan was given at a 10 percent interest rate

compared to the 25 percent market rate resulting in

savings of $36,000.

• Post Bank Uganda Limited is providing individual

life improvement loans to dairy farmers through

their PO/Hubs.

• Swiss Contact Uganda, an NGO based in Uganda,

organized a three day training on financial literacy

and intends to pilot a micro leasing loan product

with one of the PO/Hubs in Masaka. The traders

control nearly 80 percent of the milk market in

Uganda.

• Through the Luwero – Rwezori livelihoods program,

the government supported one PO/Hub with a

generator and has committed a second to a Kagavu

Mawaga Dairy Farmers Cooperative Ltd (Zigoti).

tanzania

• The Government of Tanzania (both central and local

authorities) has shown interest in our hub model

and has committed to supporting the development

and replication of PO/Hubs in Tanzania. In the

Buokelo District, the council has already ordered

a cooling tank with a capacity of 2,000 liters to be

installed at the Isange PO/Hub.

• Other local government authorities have designated

funds to purchase bulk milk cooling tanks to

support local dairy farmers. The government is also

providing extension services and other support to

the PO/Hubs.

• To date, investments and partnerships have provided

a total of $21,500 in cash and in-kind to support our

hub model in Tanzania.

7www.heifer.org

u addressing challenges

• Weather conditions can hinder milk production, leading to fluctuations in milk collection volumes among PO/

Hubs and affecting returns to dairy farmers. Limited rainfall in Uganda contributed to a 7.9 percent decrease in

overall milk collection in 2014 compared to 2013. However, Kenya experienced above average rainfall during its

dry season. This contributed to a 17 percent increase in milk collection in 2014 compared to the previous year.

In most cases, PO/Hub prices are governed by the dairy processors. The price PO/Hubs offer compared to the

private trader is a critical determining factor as to where farmers will sell their milk. When milk production

decreases, traders give a more lucrative price compared to the PO/Hubs. The reverse is true when there is

surplus milk.

By implementing feeding plans, which is one of our three key strategies, farmers will be prepared for

emergencies with enough feed and water for their livestock.

• Most small-scale farmers who sign buyer contracts do not ensure a minimum price is determined for the milk

they supply. We are equipping farmers to facilitate negotiations with buyers for long term contracts, and to

ensure that the contracts include minimum milk prices and volumes.

• Similarly, PO/Hubs are currently borrowing capital to meet the regular needs of their organizations. We are

working to mobilize shared capital for new investments, and presenting the option of leasing versus borrowing

to attain necessities.

Heifer International President and CEO, Pierre Ferrari, meets Agnes Luwessi, a Ugandan business owner (left). She collects milk from farmers and sells it to a processing plant as well as local community members.

8www.heifer.org

u gender equality

Following the launch of Phase II, we conducted a

baseline survey to determine the current levels at which

women are participating within their PO/Hubs, and

their participation in household decision-making. This

also allowed us to develop a strategy that would identify

gender inequality in each project area and guide our

interventions to empower more women, more quickly.

The Phase II baseline survey (2014) provided further

insight on how we could adjust and mobilize our work

to ensure men and women are equal partners in the

planning, work and benefits of the project.

It revealed that women’s current participation in solo/

joint decision-making (as seen in the graph below) is

considerably higher for Tanzania in the categories of

land cultivation and the control of productive assets.

Kenya’s rates remain fairly high for women’s decision-

making around milk sales. However, the rates are lower

than those reported in the Phase I final report, which

showed 43 percent for solo/joint decision-making

around milk sales. Similarly, at the end of Phase I,

Uganda reported 37 percent of women participating in

solo/joint decision-making around milk sales. Men still

maintain greater control in the categories of financial

rewards, such as how to spend proceeds from milk

sales.

To address these issues, we are training men and

women in gender equity so that women can express

their unique needs and have opportunities to gain

new respect in their families and communities. We

are also training women (as well as youth) in skills

that lead to self-reliance, such as improved animal

management, financial records, business management

and leadership.

objective 3women will be empowered through leadership and financial services that help improve their access to and control over productive assets. as a result, women farmers will contribute to their families’ well-being as vital milk suppliers, gaining access to new business opportunities and increasing their savings.

women participation in solo/joint decision-maKing at the household level eadd phase ii baseline survey 2014

100

75

50

25

0land cultivation morning milk

proceeds

Kenya

uganda

tanzania

evening milk proceeds

control of production assets

28%30%

62%

livestock sale proceeds

30%

14%12%9% 8% 8%

14%

62%

53%

77%

14% 14%

9www.heifer.org

u empowering women

Kenya: We have recruited volunteer trainers who

not only educate farmers, but also establish gender

working groups with men, women and youth. These

groups are designed to encourage open discussion

on farm-related issues and increase women’s

participation in the project and in their communities.

We have engaged three financial institutions (Women

Enterprise Fund, Equity Bank and Uwezo Fund)

to facilitate trainings for women on financial and

business management, and help farmers access

credit for productive assets.

Through the Uwezo Fund and the Women Enterprise

Fund, 698 farmers (502 women) from 44 groups were

trained on bookkeeping, loan/credit management,

identification and implementation of businesses, and

group leadership, responsibilities and dynamics. The

Uwezo Fund provided 25 women-led groups with

loans each valued at about $1,100, and the Women

Enterprise Fund gave 11 groups loans valued between

about $1,100 - $5,500.

uganda: Our staff completed a four day training

on gender equity that focused on applying that

knowledge to empower women to become active

participants in the country’s developing dairy

sector. Staff also established proactive strategies to

integrate gender equity into their various roles and

responsibilities in the EADD project.

Additionally, we have developed and disseminated

a country-wide plan to guide our efforts in

empowering women. This plan has led to the

formation of PO/Hub gender committees that

consist of volunteer farmers and representatives

of the PO/Hub boards (5 members per PO/

Hub). The committees will reach out to women

at the household and PO/Hub levels to increase

accountability and ownership.

tanzania: Our staff completed gender equity

training and conducted an assessment to reveal

gender specific needs among our own team. They

found that they needed a better understanding of

how to highlight key concepts and incorporate those

topics into project activities.

A team of seven staff from across the project area

have formed a gender committee. The committee has

been instrumental in developing plans and activities

to empower local women. We will provide continued

support throughout 2015 to ensure staff are equipped

to effectively incorporate gender equity in their roles

and responsibilities.

women participation at po/hub level po/hub business reports 2014

100

75

50

25

0active farmer semi-active farmer decision-making po/hub shareholder

50% 50%

34%24%

34% 34%27%

39%34%

45%

Kenya

uganda

tanzania

10www.heifer.org

u replication

Our hub model is being adopted and replicated by

other organizations outside the geographic areas of

the EADD project. However, because information on

replication is currently limited to Eastern Africa, we

are researching whether replication has occurred in

a wider geographic area.

• In Kenya, Send a Cow, an NGO working in East

Africa together with Heifer Kenya through the

Wealth Creation Project has established three PO/

Hubs in Khwisero, Nambale and Rongo Districts.

• The India-Kenya Dairy Innovation Bridge Project

in Nakuru implemented by Heifer Kenya has

also adopted and replicated our hub model by

establishing two PO/Hubs in Nakuru County in

Kenya.

• The County Government of Bomet through

partnership with EADD and the Kenya Dairy

Farmers Federation (KDFF)* is replicating our

hub model in nine sites: Labotiet, Makimeny,

Olbutyo, Sigor, Longisa, Mariny, Kipsonoy,

Chepkalwal and Merigi. They aim to establish an

additional eight PO/Hubs in 2015.

• The Elgeyo Marakwet County Government has

also established two PO/Hubs after learning

about our model through EADD and KDFF staff.

• KDFF is developing three dairy PO/Hubs in the

Naitiri area of Bungoma County, Torongo in

Baringo County and Ndanai in Bomet County.

• In South West Uganda, Pearl Dairy, a large milk

processor with a capacity of 200k liters drier/day,

has expressed interest in working with EADD,

to expand our hub model outside current EADD

sites to meet Pearl’s growing demand for milk.

* The Kenya Dairy Farmers Federation (KDFF) is an apex association that receives technical support from EADD. KDFF has been provided trainings and other capacity building initiatives to promote good governance, accountability, democracy and leadership at the PO/hub level. The end goal is to enhance the ability of the PO/Hubs to serve their members/farmers more effectively. Staff have helped facilitate PO/Hub development with five years of strategic plans/annual operating plans and budgets, as well as plans for animal feed, health and breeding. Linkages have also been established with the Kenya Dairy Board that included leading government ministries and business development service providers. These connections will further contribute toward the sustainability of the PO/Hubs.

East Africa Dairy Development (EADD) Project Hub Model.

objective 4 each country participating in eadd will work toward replicating the sustainable hub model with at least one other organization by the end of the program.

11www.heifer.org

Dairy farming brings

fond memories of

childhood to Rachael

Singo, a communications

officer for Heifer Tanzania.

“My grandfather would

be up by 6 a.m. and the first

thing he would do was milk

the cows,” Rachael recalls. “As

a child, I saw dairy farming as

a job for the old and retired

who had returned to the

village or who had nothing

better to do in the city.”

The average dairy farmer

in Tanzania is 58 years old.

How soon should young

people be engaged in dairy

farming? Rachael believes it’s

time to look at how to best

engage and empower youth

to take over dairy activities in

their households.

“It is not surprising to

see many youth moving out

of local townships and into

big cities looking for white

collar jobs,” Rachael says.

“These youth walk the city

streets looking for food and a

place to sleep, leaving behind

large plots of land in their

villages that could be used for

farming.

Dairy farming holds

promise for great economic

growth and livelihood

sustainability, and

responsibility for its future

must be shared with the

youth, not just left for the

elderly.”

One of Heifer’s objectives

through the East Africa

Dairy Development (EADD)

project is to give youth more

ownership and involvement

in dairy farming.

For example, Daudi

Muyoya, 21, received a dairy

cow this year through Passing

on the Gift®. “I believe this

is the turning point in my

life,” he says. “I am going to

be a large-scale livestock

farmer someday. I want to be

an exemplary leader for the

youth in Tanzania. Why go

into town to sing bongo flava

(local hip-hop songs) while

there is so much money I can

make by raising livestock?”

Daudi’s dream of being

a livestock farmer started

when he was a 15 year old

raising rabbits and chickens.

Since then, he has managed

to buy land to grow rice

and peanuts, and he has

diversified his revenue by

raising livestock. Currently he

has 50 chickens, nine rabbits,

and a cow, which he received

from Heifer Tanzania.

Racheal says, “With this

kind of ambition, he is an

inspiring dairy farmer and an

ambassador for his peers.”

Daudi urges Heifer to

support more young boys and

girls by giving them heifers,

which he calls “capital of

being a millionaire farmer.”

— Article and photos by Rachael Singo, Communications Officer, Heifer Tanzania

— Edited by Chelsey Louzeiro, Program Coordinator, Heifer International

youth reap rewards of dairy farming

Daudi Muyoya, 21 (left), received a dairy cow through Passing on the Gift.

i believe this is the turning point in my life. i am going to be a large-scale livestock farmer someday. i want to be an exemplary leader for the youth of tanzania.”— Daudi Muyoya, 21

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