Processed Milk Strategy

Effective 9^th March 2012, Inyange and Nyagatare Dairy Farmers’ Union have signed an agreement (contract) that stipulates that on a daily basis a minimum quantity of 35,000 litres of milk will be supplied by the Union, and in turn, purchased by Inyange for 190 Rwandan francs per litre. This is the breakdown of  the purchase price:

The above contract has been mutually agreed upon and has addressed previous issues that had caused farmers to supply less milk to Inyange and will also stabilize supply irrespective of seasons.  Previous farmer grievances like timely payment and price have also been dealt with; per the new contract payment period will be 7-working days and a higher farmgate price of Rwf 150.  The actual landed cost of one litre of milk at Inyange's factory is Rwf 220 which includes costs of chilling and transportation from Nyagatare to Masaka.  Inyange has also increased its purchase prices to farmers who deliver milk directly to the Masaka factory to Rwf 200 per litre if the milk is not chilled and Rwf 220 per litre if the milk is chilled; this is expected to increase milk supply beyond the contracted 35,000 liters to about 50,000 litres per day so that Inyange can utilize most of its installed capacity which stands at 100,000 litres per day.   

On Tuesday the 6^th March 2012, Inyange took over Savannah Dairy located in Nyagatare and is immediately investing in increasing its chilling capacity from 2,500 litres per hour to 15,000 litres per hour and storage capacity from 10,000 litres to 40,000 litres to further boost handling capacity and quality control.  Inyange intends to invest up to $2m over a 5-year period in Savannah and the supply chain to meet its requirements.

Based on consumer feedback, there was a need for a more diverse product offering to offer milk in smaller quantities and at more affordable prices.  Therefore Inyange has invested in a Tetra-fino machine which will package milk in half litre (500ml) and quarter litre (250ml) for the market. Inyange expects this to boost the mass market significantly and to ensure affordability in various consumer segments.

Inyange has acquired Milk Dispensers (vending machines) which will be strategically located with the Company's new distributors enabling customers to buy their desired quantity of pasteurized milk and carry it away using their own containers.  Dispensing technology has been used in other parts of the world and has been successful in mass markets and will be in the Rwandan market for the first time next week.  The benefit is that consumers will be able to buy processed milk at much lower prices (Rwf 400-450) which provides a better alternative to buying unprocessed milk (amasukano) at Rwf 300-350 yet no value has been addded and still pose a significant health risk to consumers.  This lower price is also because there is no packaging required and thus costs of packaging are completely eliminated. 

Inyange is committed to continue making its milk products available and affordable for its consumers and has recently signed on new distributors with the necessary capabilities to develope the market and work in harmony with ratailers.  Below are Inyange's  recommended retail prices for its milk products:

The above entails that 1-Litre of pastuerized milk in jerrycans is at a price range of Rwf 600-650 reflecting that bigger quantities purchased yield a lower price per litre.  

Respective of all seasons and unpredictable periods of shortage, Inyange strives to ensure that recommended retail prices are consistent.  Inyange together with its distributors intend to partner with the Ministry of Commerce, Trade & Industry, Ministry of Agriculture, RBS and other stakeholders to develop a regulatory framework for controlling retail prices to ensure that the above recommended retail prices are adhered to.  This is to ensure that retailers are not taking advantage of consumers by hiking up prices in order to increase their profits, especially during dry seasons or periods of milk shortages.