How Profitable Is Dairy Farming in Uganda?

Background

I used to be at all times afraid of cows (known as "ente" within the native language), significantly throughout milking. When rising up, I watched from a distance whereas my grandfather milked. I could not belief the cow to not get offended (for its mammary glands being touched) and ship a well-aimed again kick to the gonads!

From the dietary viewpoint (for these readers who're unaware, akin to aliens and Martians), milk is an important meals substance wanted for our development all the best way from youngster hood to grownup hood, offering important proteins and calcium for the physique.

In Uganda, an enormous variety of households devour unprocessed milk offered on the retail worth of Shs. 1,400 shillings for a litre as in comparison with processed milk which is offered at Shs. 2,000 shillings a litre

Why spend money on dairy-farming in Uganda?

In Uganda milk and milk merchandise are largely acquired from cattle and a small proportion from goats and sheep. The districts of Mbarara, Moroto, Bushenyi, Kotido, Masaka, Mbale, Kabarole, Mukono, Ntungamo, and Kamuli dominate manufacturing on this sector.

The cattle inhabitants in Uganda was final estimated as per the 2008 livestock census to be 11.4m. It's estimated that indigenous breeds account for approx 84% whereas the unique and cross breeds account for the stability. It is also estimated that Uganda at present produces 1- 1.5 billion liters of milk per 12 months of which 30% is consumed on the farm (or households) and 70% is offered.

Though the home market constitutes the key marketplace for milk and dairy merchandise, among the processed milk and worth added dairy merchandise are exported to regional markets akin to Kenya, Rwanda, Democratic republic of Congo, South Sudan and Tanzania.

The place are the funding alternatives within the diary sector in Uganda?

Contemplating that Uganda's inhabitants will proceed to develop by over three% every year, in addition to get wealthier (with individuals under the poverty line decreasing) there are alternatives significantly within the distribution and processing of milk. Particularly, the home windows of alternative that I word for the dairy Sector embody the next:

1. Funding in milk assortment centres


2. Funding in provide milk tankers


3. Funding in packaged pasteurized milk distribution system


4. Improve of Casual actors into mini dairies


5. Improve of current dairy vegetation


6. Funding in built-in farming/processing dairy enterprise


7. Funding in transportation tanker cleansing facility.

So with the above in thoughts, how do you attempt to earn cash ("sente" within the native language) from cows ("ente")?

FIRST THE CONS

1. Advertising bottlenecks

Some of the crucial issues dealing with dairy farmers in Uganda has been acknowledged as that of selling their milk.

This is because of poor market entry (for instance as a consequence of dangerous roads and lack of understanding on market costs).

The answer for the "superior considering" farmer could be to companion with regional cooperatives within the provide of milk as they have already got nicely established transport and infrastructure methods.

There may be additionally the choice of getting in contact with the big scale milk processors to produce them. The draw back is that their costs are sometimes decrease than retail costs, however the upside is the assured market to your product.

2. Low animal productiveness

In Uganda, dairy farmers are largely small holder farmers. Many produce for house consumption and solely provide the accessible surplus to the market. Most depend on the normal indigenous herd, identified to have very low productiveness. Moreover they primarily depend on the pure inexperienced pastures for feeding with none meals dietary supplements

For the superior considering farmer, it could be clever to make use of improved native and unique dairy breeds that are identified for producing excessive portions of milk and on the similar time perform zero grazing whereas providing feed dietary supplements to spice up the animals' vitamin.

I additionally advocate planting elephant (napier) grass about three months earlier than establishing the farm.

three. Availability of financing

Historically the agriculture sector has been seen as excessive danger and so there are restricted financing choices, say from enterprise capital corporations and personal fairness corporations (a few of whom particularly do not lend to the sector).

Nonetheless, there are more and more a variety of regional and worldwide industrial banks together with improvement banks that supply long run financing for viable tasks within the sector.

I might advocate that to ensure that the farmer to have increased possibilities of accessing loans, they preserve information of their agriculture produce to indicate that they don't have excessive incidences of low milk yields (which is without doubt one of the elements that makes the sector excessive danger to lend to).

An alternative choice is to get affiliation to a co-operative or comparable group the place they'll get entry to group loans by way of SACCO schemes. Donors and different assist tasks for agriculture additionally usually choose to lend to co-operatives and comparable farmer teams.

Industrial financial institution lending charges in April 2013 averaged about 25% whereas SACCOs appear to lend quantity within the vary of 10%.

THE PROS

1. Excessive demand for milk in each home and export markets

Dependable information on milk consumption in Uganda is significantly missing. Nevertheless, there are robust indicators to indicate that the dairy merchandise market is rising at a quick and regular price. Milk manufacturing development price has been estimated at over eight% every year. However there's unfulfilled provide for milk within the export market with the main processing and distribution corporations unable to satisfy their provide markets. The most important milk processor, Sameer Agricultural and Livestock Restricted (SALL), for instance claims to have current markets in 17 nations, however is constrained by low provide in servicing these nations.

The "superior considering" farmer has the chance to enter into partnership with the milk processors to provide for them. He'll nonetheless want to verify he has methods in place to adjust to the rigorous high quality management necessities of those processors.

2. Meals and wealth safety

A major variety of households in Uganda personal a cow (albeit many personal indigenous breeds) for the easy purpose that each milk and the cows are extremely tradeable and so within the occasion of economic misery, they supply meals safety (milk for the household) and may be simply offered, significantly the extremely desired unique breeds.

Oh and let's not overlook (on the danger of ire from feminists) that these cows are a vital supply of dowry (or "bride worth") in Uganda.

three. Return on funding

From a monetary forecasting mannequin, I've developed; I estimate the Return on Funding (ROI) for this sector is as follows:

· Startup capital (A): Shs.44, 273,900

· Profitability (B): Shs. 10, 589,863

· Return on Capital (A/B): four.18 years

Now the fundamentals you should get proper earlier than investing on this sector.

1. Feeding. Along with meals dietary supplements, plant elephant grass prematurely. It will make sure the cows are fed adequately. Feeding and milk manufacturing are straight correlated;


2. Buy of cows. I counsel you purchase pregnant heifers. My analysis exhibits you will get them cheaper than the non pregnant ones. You therefore double your inventory shortly. In buying, make sure you select breeds (presumably cross breeds) which can be suited to the native space (local weather and illness resistance);


3. Technical assist. Go to an indication farm that practices good farm administration to enhance your information;


4. Data. Hold farm information to make sure you can assess your day by day milk yields in addition to assess the standard of your milk. This might be significantly crucial as you develop and say wish to provide the bigger scale milk processors; and


5. Water. Guarantee you've got enough water close by. Cows drink a number of water and therefore you both want a tank or as you advance, assemble a bore gap to offer the water.

Ultimate phrase

I nonetheless concern being kicked by a cow being milked so, I nonetheless say, "no thanks sir, I'll persist with hiring a herdsman from a good friend's village in Nyakahita, Mbarara."

The lighter humor apart, dairy manufacturing has the potential to be a worthwhile enterprise alternative for farmers in Uganda. There may be at all times room to develop, each for startup farmers in addition to the extra established gamers.