Dairy Farmers in Rwanda...

I had an opportunity to visit dairy farmers in Nyagatare on August 11th with a couple of people from Rwanda Development Bank (BRD). BRD is a government-owned bank focusing on the development of the Rwanda's infrastructure. UOB signed an MoU with BRD for business cooperation in helping the rural farmers and this field trip was the first step towards the goal.

[Some cows of a farmer who wants to buy 15 more]

We met with Augustine, the Chairman of the Union of 19 cooperatives for cattle farmers, and his staff, Fred and Sylvia. The union's membership totals more than 4,000 in Nyagatare District only.

Later we visited a cattle farmer that currently has 12 cows and desires to buy 15 more. It was the BRD's site visitation for their loan request. We found that the farmer was not ready to raise additional 15. The farmer agreed.

[=>The milk storage tank at a milk collection center]

Each dairy cow produces 20-40 litres of milk each day. The farmers milk their cows twice a day: 4AM and 4PM. This milk is brought to one of the milk collection centers and stored into a chilled tank with preliminary filtering. Then this milk is transported to a dairy for pasteurizing or to an agregator who collects the milk and sell it in bulk to a dairy.

[<= Milk transport truck]

The raw milk is sold by farmers at RWF150 (less than 25 cents) per liter. This raw milk price goes up to RWF800-1,000 per liter at the retail store.

While we were visiting a milk collection center, one farmer arrived on his bike with a 40-liter container in the back. When measured, the container had 20 liters of milk. It translates to RWF3,000 in value or RWF6,000 per day. (Remember that they are milking twice a day) I was told that the farmer will net the sales at 70% of the sales price. So the net profit will be RWF4,200 per day or approximately $8.00 per day. This translates into $240 a month and $2,900 a year. Assuming a family of 7, this farmer's income is approximately the same as the national per capita income of a little less than $400. The assumption is that the farmer does not do anything else, but normally farmers are engaged in other economic activities, such as growing other animals or vegetables for their own consumption or for sale. So most likely this particular farmer is better off than the average household in Rwanda.

[The only dairy in Nyagatare still under installation]

Each dairy cow a farmer buys should be at least six month pregnant so that the farmer may be able to produce milk soon after the purchase. Each cow is costing RWF500,000 to 1 million, or $900 to $1,800, depending on the breed and the health. This price is far higher than traditional cows. Nonetheless, each dairy cow returns the farmer's original investment within 4 to 8 months, plus another cow in three months. Not bad. That is why the Rwandan government is promoting the dairy cows in the Eastern Province where the land is flat and the pasture is wide. The business is good, but it is a tough business, too, since the farmers have to get up early to milk the cow and take good care of them.

It was a wonderful experience. - Jeffrey