A Kenyan dairy farmer feeds her cow (photo on Flickr by eadairy).

‘A chilling tale of cows in Kenya shows how market access is key to impact investing. . . .

‘It started with a mid-term report I was handed called Milking for Profit. The report details a project that works to uplift subsistence dairy farmers in Kenya, Rwanda and Uganda run by a consortium of dairy experts called East Africa Dairy Development.

‘In 2008 the consortium started its first project in Kenya. The collapse of the state-owned processor in 1999 had opened the country’s dairy market to competition, which suited large-scale producers and further isolated the small farmer.

‘These folk typically produced and sold an average of three to five litres of milk a day, generating insufficient income to invest in stock and good feed to boost yields. Compounding their problems was the lack of facilities to chill milk, low standards in stock and poor animal care.

This is a common scenario: households that own a goat, a cow and a few chickens dot rural landscapes across the continent. . . .

East Africa Dairy Development ignored the traditionalists and took a business approach to the problem. Instead of providing funding and support to their beneficiaries, they connected their participants to markets.

Milk reception at Nyala Dairy in Kenya (photo on Flickr by eadairy).

‘They did this firstly by building chilling plants—22 to date—so that the quality of milk could be maintained. They signed up 90 000 farmers and ran extensive programmes to improve the quality of care for animals. They made the chilling plants accessible to farmers so that they could easily bring their milk to fill up the 10 000 litre tanks.

‘Within two years, those signed up were earning an average wage of $4 500 a year from the sale of milk and heifers—that is $12 a day, six times more than the previous income standard of $2 a day.

‘The chilling plants reported an average monthly profit of $1 300, giving investors a return on their investment within one year (though they are keen to point out that this is not the primary reason for the investment).

‘It is a remarkable story and a strong model, which East Africa Dairy Development is replicating in Uganda and Rwanda. . . .’

The chilling plant at Ol Kalou, Kenya (photo on Flickr by eadairy).

The International Livestock Research Institute (ILRI) is one of the partner organizations supporting this project, which is led by Heifer International. Other partners in the East Africa Dairy Development project are TechnoServe, the World Agroforestry Centre (ICRAF) and the African Breeders Service Total Cattle Management. The project is being implemented in Kenya, Rwanda and Uganda. The goal of this project is to help one million people—179,000 families living on small 1–5 acre farms—lift themselves out of poverty through more profitable production and marketing of milk. Following the completion of the first phase of the project in 2012, the second phase is planned for 2013 to 2017 and will include Ethiopia and Tanzania. The project is funded by the Bill & Melinda Gates Foundation. For more information, visit the project’s page on the  ILRI website.

Read the whole article at the Mail & Guardian (South Africa): Milking profits, 26 Apr 2013.