Inyange Industries is set to invest an outlay of $20.8 million (about Rwf20.5 billion) to set up a milk powder plant, a move that could help transform the country’s dairy sector.
The country’s largest agro-processing firm intends to set up the facility in Nyagatare District.
The proposed plant will have capacity to process 500,000 litres of milk a day, according to information from Crystal Ventures Ltd (CVL), the parent company of Inyange Industries Ltd.
Of the projected investment cost, CVL says, 72 per cent will be spent on machinery and 28 per cent on land acquisition and construction,
The plant will have an annual capacity to produce 14,000 tonnes or 14 million kilogrammes of milk powder and 5,460 tonnes of fat.
In the first year, the plant is expected to operate at 40 per cent capacity before upgrading to 80 per cent in five years.
CVL said that pre-engineering activities started this month and are expected to be concluded in March, before commencing construction works, subject to regulatory approvals.
According to CVL, production is expected to commence in the next 15 months.
Trimming the import bill
The plant could help the country trim its huge import bill on powder milk.
In 2019, Rwanda spent a staggering $10.7 million (over Rwf10 billion) on importing powdered milk, statistics from the Ministry of Trade and Industry show. In the same year, the country imported 4,000 tonnes of powdered milk.
The figures reflect a 25 per cent rise compared to 2018 when the country spent $8.5 million (Rwf8 billion) to ship in 3.6 million 3,600 tonnes of powdered.
Rwanda largely relies on Germany, Netherlands, New Zealand and Belgium for milk powder imports.
Thus the plant is expected to bolster domestic manufacturing and improve the country’s trade balance.
Rwanda produces 2.2 million litres of milk per day. Yet, only an estimated 10 per cent of this is processed into products like cheese and yogurts among others.
This means there’s a lot of milk that goes to waste, a loss the proposed plant could help eliminate.
With the new plant, CVL is eyeing regional markets, which could be untenable with fresh milk.
CVL says national milk collection system, which is built around Milk Collection Centres (MCCs) especially in Eastern and Northern provinces, has matured enough and is capable of supplying the required volumes of raw milk to sustain a milk powder plant.
Moreover, the quantities of raw milk collected from MCCs have been suppressed in the past due to limited market (in peak season) for processed milk.
"The supply of raw material to the plant is guaranteed and supply will seamlessly adjust to demand levels,” the firm said in an email response to The New Times.
Gahiga Gashumba, the Chairperson of Nyagatare Dairy Farmers’ Union, told The New Times that the powdered milk factory will provide a ready market for dairy farmers.
Nyagatare District alone produces 35,000 litres of milk every day during the rainy season when production is high.
"There’s need for a factory to help preserve the milk for longer shelf-life,” Gashumba said.
Implications on sector
CVL says that the proposed factory will, among other advantages, benefit about 25,000 farmers and their families by disbursing an average of about Rwf18 billion per year, thus improving their welfare.
It will also create opportunity for various small-scale entrepreneurs in the milk value chain such as producers of ice cream, flavoured milk, yoghurt, infant formula and confectionaries, and contribute towards fighting malnutrition by supplying inputs for the production of fortified products.
On the significance of the plant, the Minister for Agriculture and Animal Resources, Gerardine Mukeshimana, said it would be a very important investment in the livestock sector, and for the economy at large.
"At the moment, farmers produce a lot of milk, especially during the rainy season, which is not sold or marketed. Therefore, a powder milk plant would absorb that extra milk and transform it into powder that can be kept for long and can be used to make extra products,” she said.
Market
According to information from the Ministry of Agriculture and Animal Resources, the marketing plan includes securing off-take contract from Africa Improved Foods (AIF) for 2,000 tonnes annually.
However, the ministry says, over 80 per cent will be exported to neighbouring countries in the East African Community, COMESA, and the Middle East where there is more demand than supply can meet.
Meanwhile, construction works for another powdered milk factory were expected to commence in Gicumbi District late 2020, but that was not possible owing to funding. It remains unclear when the Rwf37 billion project will kick off. The proposed Gicumbi plant, a joint venture between South African firm TRIOMF East Africa and local dairy farmers, was expected to process 252,000 litres of milk a day.