Dairy Quality Assurance Limited (DQAL)

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Dairy Quality Assurance Limited (DQAL)

Rwanda
Project Stage:
Scaling
Budget: 
$1,000 - $10,000
Project Summary
Elevator Pitch

Concise Summary: Help us pitch this solution! Provide an explanation within 3-4 short sentences.

Although dairy farming accounts for 80 percent of farming activity in Rwanda, over 90 percent of locally produced milk is sold in informal markets at a third of its potential value. David is unlocking the full economic potential of Rwanda’s dairy sector by creating the systems to support and incentivize the production of high quality milk at farm level.

About Project

Problem: What problem is this project trying to address?

Current estimates indicate that 70 percent of Rwanda’s population lives on less than a dollar a day. Most Rwandans live in rural areas and rely on subsistence agriculture for food and an income. Animal husbandry is common due to its year-round supply of livestock and poultry related produce such as milk, eggs and cheese. Dairy farming in particular accounts for 80 percent of Rwanda’s total farming activity. However, over 90 percent of the locally produced milk is sold through informal channels at a fraction of its potential market price. The Common Market for Eastern and Southern Africa (COMESA) has established regionally recognized dairy quality standards and offers premium prices for high quality milk. However, Rwanda’s dairy sector has struggled to take advantage of this opportunity. Rwanda still imports USD $3 million worth of high quality dairy products including UHT milk, butter and cheese to serve increasing local demand. Rwandan milk processing plants frequently reject low quality, locally produced milk and thus, are operating at only 20 percent of their capacity. The regional outlook for East Africa is not much better - processing plants in neighboring countries operate at an average of 40 percent of their capacity due to an inadequate local supply of high quality milk.90% of all the locally produced milk in Rwanda is sold through informal markets where it is unfortunately traded at only a third of its potential value in the formal market. Consequentially, the dairy sector as a whole has failed to capitalize on the full market potential locally produced milk and consequentially, most dairy farmers continue to live in poverty. David believes that the current state of Rwanda’s dairy sector is the culmination of several systemic factors. Farmers lack an effective support system and are, thus, unable to learn about practices for producing better quality milk. In addition, dairy farmers are often scattered across remote parts of the country and have little to no awareness of regional or local quality standards, let alone how adhering to such standards could increase their incomes and positively affect their lives. The One Cow Per Poor Household program forms a part of the Rwandan government’s larger poverty eradication plan. This program aims to increase the local population of dairy cows (currently estimated at 1.8 million) by a further 350,000 exotic high-yielding dairy cattle by 2017. While local breeds of cattle produce an average of three liters of milk a day, these exotic breeds are cable of producing up to 40 liters of milk a day. 14,000 exotic cows have been distributed to an equal number of Rwanda’s poorest households to date. However, the potential impact of this promising initiative is greatly hampered by the lack of an adequate grassroots-based extension service system to educate and support farmers in adopting best practices for feeding, hygiene, animal health and dairy quality. The amount of milk produced by these potentially high-yielding cows is as low as five liters a day due to poor feeding and substandard farm practices. Without improved quality, even this marginally increased amount of milk can only sell in the informal market for low prices. While there is clearly a shortage of high quality milk in Rwanda, current quality control mechanisms are limited to the top-end of the value chain with a bias towards consumer protection. The Rwanda Bureau of Standards (RBS) has established a regulatory framework for quality assurance that is targeted at processed goods. Consequentially, milk-processing plants are subject to strict standards that are applied to finished products intended for the market. The processing plants subsequently apply the same standards to the milk supplied by the farmers. It is at this point that most farmers without the support, know-how or incentive to produce high quality milk opt out and choose to sell their milk in the unregulated “anything goes” informal market. Farmers are left out of the quality conversation because there is only one government dairy-testing laboratory that works with processing plants to ensure that goods are safe for consumption. This top layer of quality control is undoubtedly important, especially to consumers - as demonstrated when all cheese-producing companies in Rwanda were forced by RBS to shut down due to the discovery of poor quality products that were entering the market. While this intervention certainly protected the consumers, it did little to ensure that the poor quality of milk supplied by farmers and to which the processors attributed the problem is addressed. It is easy to see why many farmers would pick the hassle-free informal market as the preferred destination for their milk when there are so many barriers related to producing higher quality milk and no clear incentive to go through the trouble. With unprocessed milk being sold in the informal market for close to three times less than what it would sell for when processed, the demand for unprocessed milk (mostly from low income consumers) encourages farmers to keep the cycle going.

Solution: What is the proposed solution? Please be specific!

David is building the architecture to support and encourage the production of high quality milk at farm level and in doing so increasing the income of dairy farmers at the bottom of the value chain. He is partnering with public Milk Collection Centers (MCCs) to redefine their role in the dairy value chain and establishing them as a national network of extension service agencies for dairy farmers. This service educates and supports dairy farmers in adopting better farm practices to drive up the quality of milk. Through his lab, Dairy Quality Assurance Labaratory (DQAL), he partners with the MCCs to boost the production capacity of dairy farmers and to provide farmers with access to important and previously inaccessible inputs that can improve the health of their animals and the hygiene and quality of their milk. In addition, David is partnering with the Rwandan government to develop and enforce regulatory policies for the dairy sector and to establish a National Dairy Strategy that focuses on boosting farm production of high quality milk. Along the same lines, he is advocating for the implementation of a price differentiation policy that will ensure that farmers are duly rewarded for improved quality by setting premium prices for such milk. David is currently working with 3,000 dairy farmers and his partnership with the government has allowed him to influence policy that will positively affect Rwandan dairy farmers and to act as a resource to other regional governments seeking to replicate his success. The farmers that David is working with have already experienced a two-fold increase in their income. The 24 MCCs that David has partnered with to date are supplying dairy processing companies-previously operating below their optimum capacity- with an increased volume of high quality milk to the point that these companies are now able to export high quality UHT long life milk to the regional market for the first time. The Rwanda government’s One Cow per Poor Family initiative aims to increase the cow population by 350,000 head and almost double the number of Milk Collection Centers by 2017. This promises to drastically expand the production base of Rwanda’s dairy sector. Likewise, David is scaling up his own capacity to partner with all of Rwanda’s Milk Collection Centers and eventually reach hundreds of thousands of dairy farmers across the country.