What $100 million project means to Rwanda’s dairy industry

A six-year $100.37 million (approx. Rwf127 billion) project, which Rwanda is embarking on, will spur the growth of the country’s dairy industry through climate resilient farming practices, increased milk production, processing and marketing, among other interventions, according to people knowledgeable about the industry. The Rwanda Dairy Development Project - Phase 2 (RDDP) is the largest dairy project Rwanda has ever had, according to the Rwanda Agriculture and Animal Resources Development Board (RAB), and livestock sector actors. ALSO READ: Milk shortages, price hikes bite as drought takes its toll The project seeks to address the remaining challenges that limit the viability and sustainability of the dairy value chain. They include low milk productivity per cow due to limited access to quality forage and water, low capacity of producers and cooperatives, poor market information and infrastructure, and lack of investment across the value chain, The New Times understands. It will be implemented over a six-year period (2024-2029) in 27 districts. According to the project design report by International Fund for Agricultural Development (IFAD), the total number of cattle in Rwanda is estimated at 1.6 million heads, including 1.07 million crossed and exotic breeds. It added that 41 per cent of cattle are adult females, and the average productivity per cow is 3.5 litres per day, which is still low in comparison to the genetic potential of the national herd. The report pointed out that the project will target 175,000 households – of which 145,000 will be involved in dairy farming (mostly zero grazing) and 30,000 in agribusiness/SMEs along the dairy value chain – comprising 700,000 total number of beneficiaries. Ensuring milk supply sustainability amid high demand Gahiga Gashumba, a dairy farmer in Nyagatare District, Eastern Province, told The New Times that the project is timely and critical to Rwanda’s dairy sector, especially as a milk powder factory located in Nyagatare offers a ready market that should be supplied with enough milk in a sustainable manner. “We are in a period when we need to get more milk because of the new factory that will be processing powdered milk,” he said, adding that farmers need investments to achieve higher milk yields through improved cow breeds, access to feed/forage and water, which are catered for in the project. For him, the most pressing issue is lack of access to water for cattle consumption as some areas are far from water bodies, pointing out that efforts that can ensure sustainable provision of water to cows are laudable. ALSO READ: $45m milk powder factory to start production in May Denis Karamuzi, an agribusiness and livestock systems specialist, says that the milk powder factory in Nyagatare could be one of the motivations for investments in the country’s dairy sector, pointing out that the new project can help improve the efficiency of the dairy supply chain. He said that making milk powder requires large investments in increasing milk production, collection, and hygiene to get enough raw material to meet its demand. “So, I believe that certainly that investment [the new project] would be very key for us to reach that vision,” he said, pointing out that meeting the factory’s milk demand requires many targeted interventions. “$100 million is such a timely investment for now to help us align with the country’s ambition to grow the production of milk,” he said, pointing out that there was an increasing demand for quality milk in the country and that such investments respond to it as well as align with the country’s export-orientation to tap into international market through processed dairy products. Among other interventions, the project will support access to financial services to help milk processors acquire new machinery and adopt new technologies, and assist service providers, milk transporters/traders and smallholder milk producers’ access either working capital or investment capital to boost their businesses and capacities. Karamuzi said that investments in ensuring efficient farm management and temperature-controlled supply chain such as through cold trucks to ensure safe transportation of milk to distant places are needed. The Executive Secretary of Rwanda National Dairy Platform, Florence Musiime Murungi, told The New Times that the project will consolidate the gains achieved under the initial RDDP which invested $65.1 million into developing Rwanda's dairy sector, and contribute to its sustainability. The project will have socio-economic impact on communities and help address key factors in dairy farming such as lack of water access for dairy farmers. For her, interventions such as insurance support, and market availability and access, are an encouragement for dairy sector growth. “Before, dairy farmers were worried that there was no ready buyers for milk. But now, there is a milk powder factory in Nyagatare that is offering a ready market to dairy farmers, she said, pointing out that the project support including investments for increased milk production and capacity building for improved productivity is relevant. Rwanda’s annual milk production registered a steady growth, reaching more than one million tonnes (one billion litres) in 2023, from 891,326 tonnes in 2020, and more than 372,600 tonnes in 2010, according to data from the Ministry of Agriculture and Animal Resources (MINAGRI).

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What $100 million project means to Rwanda’s dairy industry