Trader-led milk chain transforming dairy businesses in South-western Uganda

Trader-led milk chain transforming dairy businesses in South-western Uganda

SNV Uganda's partnership with Abesigwa Dairies to develop Dairy Business Centres has led to a rise in milk production by 38% within a period of one year.

SNV formed a partnership with Abesigwa Dairies to develop Dairy Business Centres (DBC) to strategically improve the incomes of all actors (dairy farmers, bulk milk buyers like Abesigwa Dairies, input suppliers and the extension service providers) in the dairy value chain.

SNV identified Abesigwa Dairies as a suitable partner because they were buying milk from over 1,300 farmers and had the capacity to increase this number. Through the partnership, there was potential for 1,800 farmers to increase their milk production and sales and subsequently incomes through linkages with the Dairy Business Centres. In 2013 Abesigwa Dairies was collecting 13,020 litres per day from 1,364 dairy farmers. By the end of 2014 the number of farmers supplying milk to Abesigwa had increased by 47%, leading to an increase in the volume of milk collected from 13,020 litres per day to 18,000 litres.

The DBC is beneficial in two ways:
• It provides a way for independent small-scale producers to bulk their milk and access markets.
• It gives farmers in the DBC access to services. These include agro-vet input services and trainings in animal husbandry and marketing.

SNV and Abesigwa Dairies introduced the DBC model in all Abesigwa’s collection centres. All farmers in the catchment area were eligible for trainings, regardless of whether they were already supplying milk to Abesigwa Dairies. The training modules covered animal husbandry, calf management, milk handling and hygiene, pasture management, and feed conservation. After the DBCs were formed, implementers met with dairy farmers and their associations around Abesigwa’s milk collection centres to collect the following data: 
• The number of milking cows
• The amount of milk produced
• Marketing channels and prices
• Costs and returns

The DBC approach in the Kiruhura and Kyegegwa districts in Southwestern Uganda has been fundamental in organising dairy farmers. It has increased both their productivity and their access to dairy services and markets because of the critical mass generated when dairy farmers collectively bulk their milk. To handle the increase, Abesigwa Dairies added two additional milk collection centres in 2014, raising the total to eight. Its investment has paid off. Because of farmers’ training in milk handling and hygiene, milk rejects due to poor quality have reduced from 5% to just 1%.

“Our boys used to wake up at 3:00 am to deliver milk to the buyers at 5:00 am. If the buyers arrived earlier than our boys, they would not wait and our milk would all go to waste. Ever since Abesigwa Dairies started buying our milk, we no longer live in fear of our milk getting spoilt because the milk collection centre is close-by and has a milk cooler, and they allow us to deliver milk up to 8:00 am.”  Ms Phoebe Ijukira, a dairy farmer in South-western Uganda

The farmers have now registered a cooperative society constituted by the farmer associations that host the DBCs. This arrangement has enabled the farmers to acquire 200 milking cans from the Uganda Dairy Development Authority. Abesigwa Dairies is exploring co-ownership of the milk collection centres with farmer associations so that they can concentrate on chilling and transporting the milk.