Dairy farmers in East Africa face many barriers to entering the formal economy.
By helping more than 230,000 dairy farmers scale their businesses, the East African Dairy Development Project has emerged as one of the leading market-oriented development initiatives in the region.
From 2008-18, we worked with farmers to implement a sustainable system that would improve the quality and quantity of their milk production and connect them to reliable markets. Farmers in Kenya, Rwanda, Tanzania and Uganda received training to improve the health and yields of their cows, as well as guidance to improve their feed.
The project also supported the creation of a network of milk hubs, where farmers can get their milk tested for quality control, measured out and then chilled before being transported by the hub. The milk hubs are managed by farmer’s cooperatives, which sell directly to major dairy companies in the area. Because each cooperative provides a guaranteed supply of milk that passes quality tests, they are able to negotiate higher prices for farmers.
But the benefits of the hub system don’t stop there. One of the biggest barriers farmers face in trying to join the formal economy is that they typically have to wait as many as 90 days to get paid for their products, as opposed to immediately getting paid when they sell at local markets or directly to their neighbors. Through the milk hubs, farmers can borrow money against the milk they already delivered and use it to pay their monthly bills. The cooperatives also have relationships with local banks and credit agencies and can support farmers interested in borrowing money to invest in their farms – a service that is particularly important because many farmers do not have a formal credit rating.
The hubs also provide additional services, such as stores where farmers can purchase the products they need to keep their animals healthy and access to local veterinarians who have been trained by the project to provide basic services like vaccinations. This gives them access to critical supplies and expertise at a low cost, helping to increase yields on their farms and ultimately resulting in higher incomes.
Not only do the hubs bring together hundreds, even thousands, of farmers in each location, they also provide additional sources of income for other people within the villages. Some started to provide transportation options to farmers who are required to get milk to the hubs every morning, while others have built successful businesses by purchasing milk and turning it into products like yogurt and cheese.
In Tanzania, we have also supported a campaign to promote the health benefits of milk in an area of high malnutrition. Along with providing vital nutrients for children in schools, it helps build a sustainable market for farmers going forward, contributing to our goal of closing the living income gap.
Throughout the course of the 10-year East African Dairy Development Project, Heifer worked with partners including TechnoServe, the International Livestock Research Institute (ILRI), African Breeders Services, World Agroforestry Center and the Bill and Melinda Gates Foundation.
Private sector partners have also been important for the continued sustainability of the hubs. The hub model itself has created a secure base from which the farmer-owned organizations can continue to expand their businesses and meet demand within their countries.