Originally published on November 7, 2014.
Following a series of negotiations with the country’s largest dairy processing plant, Inyange Industries Ltd., USAID’s Rwanda Dairy Competitiveness Project II (RDCP II) has managed to establish a strong market linkage between one of the country’s largest processors and a bulk milk collector, Angeana Fresh Dairy Ltd. This partnership is expected to benefit 4,400 farmers based in northern Rwanda’s hilly districts of Gicumbi and Rulindo, which border the Republic of Uganda.
Through the USAID-funded program, which is being implemented by Land O’Lakes International Development, RDCP II brokered a lucrative deal that will enable Angeana to supply 20,000 liters of milk to Inyange every day. Previously, without a dedicated buyer, Angeana had to distribute to 50 small scale suppliers across Rwandan capital, Kigali. This resulted in high logistics and distribution costs and lower payouts to farmers.
To Angeana and the farmer-members within the dairy cooperatives who provide the raw milk, this contract came as a huge relief because of two essential outcomes: the availability of a bigger market and a lower-cost operation in transportation and logistics.
Having a ready market has encouraged me to double my efforts to collect more milk from the various cooperatives that are linked with farmers deeper in remote areas.
According to the founder and Managing Director Mr. Milton Ngirente, the contract facilitated by RDCP II has enabled him to save US $920 each day, which translates into a savings of $27,600 a month and $331,200 each year. By enabling this critical market linkage, Angeana earns $7,400 each day through just one transaction.
“Having a ready market has encouraged me to double my efforts to collect more milk from the various cooperatives that are linked with farmers deeper in remote areas,” Mr. Ngirente noted.
The advantages of facilitating this type of market linkage are multi-pronged, as they benefit the entire value chain – including farmers, cooperatives, transporters, bulk milk collectors and the processor itself. In addition, Inyange Industries is relieved of the burden of allocating resources, energy and time to collect milk from this part of the country.
“Since Inyange Industries gave us a contract to supply milk, we have increased our collection efforts by extending to other parts of the country so that we maintain our old retail chain. This means more business to us,” Mr. Ngirente added.
In addition, USAID’s support of RDCP II has enabled Land O’Lakes to help strengthen and build the capacity of Angeana to collect and transport higher volumes of milk. The program granted the small scale firm an 8,000-liter insulated mobile tank worth US $30,000, which was provided at the end of November 2013. The large mobile tank has enabled Angeana’s milk collection volumes to surge from 15,000 liters to 20,000 liters a day as a result of this equipment and market linkage.
Grant funds should kick-start agricultural investments, and Angeana seems to have realized the potential of this collaboration. The firm is already contemplating further investments for the future. “We are now in a position to purchase a 12,000-liter mobile insulated tank and another truck so that we can explore additional opportunities that dairy sector can offer,” Mr. Milton said.