Dairy chains: Why milk collection centres still operate below capacity

The implementation of the milk collection centres (MCCs) project has been marred with challenges, including the fact that most of those dairy facilities are operating below capacity, according to the Auditor General’s Report for the fiscal year ended June 30, 2021. The report that was presented to parliament on May 12, 2022, showed that the government had invested Rwf12.9 billion in MCCs project with aim of building raw milk gathering points, where processors can get bigger volumes and quality milk to make various dairy products. And, even other buyers or consumers would get milk from these facilities, which are owned by dairy farmers’ cooperatives. But the audit of this project revealed problems inducing milk collection centres to operate below their installed production capacity, where 90 out of the 132 MCCs constructed (or 68 percent of them) were operating below 50 per cent of their capacity, while 17 MCCs (13 per cent) were operating between 50 -75 per cent. This problem was caused by factors including MCCs which were set up in some districts without comprehensive studies, low price of milk at farmer level where some MCCs paid farmers between Rwf130-Rwf200 per litre which is lower than the informal market price that ranged between Rwf250-Rwf350. Inaccessible roads linking MCCs, livestock farmers and milk buyers was also cited by the report as a major cause of underutilisation of the capacity of MCCs from Gishwati area. As a result, they were unable to supply the collected milk to Mukamira Dairy. Gad Tegeri Gahiya, the president of Nyabihu Dairy Farmers Cooperatives Union, told The New Times that the biggest problem dairy farmers have been facing is the lack of good roads in Gishwati. “Because of the lack of good roads, farmers in Gishwati are paid between Rwf130 and Rwf150 a litre of milk,” he said. And even MCCs which are near roads in good condition, Gahiya said, dairy farmers still get Rwf228 a litre, which is less than at least Rwf250 that they get from other buyers outside the formal collection points. “During the dry season [especially in July], other buyers pay Rwf300 a litre, while the price at MCCs remains the same during all seasons,” he said. This situation, he indicated, makes MCCs get low milk supply as dairy farmers tend to give their produce to those buyers who pay them more. “And because MCCs invest in milk testing and dairy equipment as well as electricity for proper milk handling, they do not get enough profit for them in case of limited supply,” he said, explaining that MCCs’ income depends on the quantity of milk they have received as they generally get Rwf20 per each litre they sell. Actions to address identified issues Solange Uwituze, Deputy Director General in charge of Animal Resources Development at the Rwanda Agriculture and Animal Resources Development Board (RAB) told The New Times that the Government is working on ways to address those issues. For the unpractical feeder roads which hamper the smooth supply of milk, Uwituze said that advocacy to maintain/repair the feeder roads in question was undertaken toward districts covering the Gishwati Milk shade – Nyabihu, Rubavu, Ngororero and Rutsiro. “A project to rehabilitate these feeder roads has been initiated by MININFRA [Ministry of Infrastructure] and is expected to solve the problem of milk supply to the existing MCCs, as well as dairy processing plants sourced from Gishwati,” she observed. On the managerial issues in MCC cooperatives that discourage farmers to supply milk to the same facilities, Uwituze indicated that MCCs with such issues are regularly reported to districts and Rwanda Cooperative Agency (RCA), which is the competent authority in charge of cooperatives so as they can be deeply assessed and resolved appropriately. Concerning the reported lack of a reliable market for the MCCs – with one-third of the visited MCCs being unable to get reliable buyers for their milk, she said that they are being linked with dairy processing plants to assure the market for the collected milk. Additionally, she said, MCCs are supported in getting upgraded into SMEs adding value to the collected milk through processing milk into value added dairy products to extend the market for the collected milk. “So far more than 40 MCCs have already been upgraded into SMEs,” Uwituze remarked. Regarding the relatively low milk price paid at MCCs in comparison to the informal market, Uwituze indicated that in partnership with the Ministry of Trade and Industry (MINICOM), the price of milk that was set in 2018 was revised to cover the current cost of production in dairy farming. “The farm gate milk price was increased from [Rwf] 200 to Rwf228 /L effective April 6th, 2022,” she said. Commenting on the milk price concern, Cassien Karangwa, Director of Domestic Trade at the Ministry of Trade and Industry, said there was a need to ensure that the new minimum milk price at which milk should be bought from the stockbreeders is observed. “The remaining work is the enforcement of compliance of the new price, which requires intervention of different institutions,” he pointed out. Rwanda produces an average of over 2.4 million litres of milk per day. Yet, only an estimated 10 per cent of this is processed (into dairy products like cheese and yogurts among others). Workers on duty filling milk at a milk collection center in Gicumbi District. / Courtesy

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Dairy chains: Why milk collection centres still operate below capacity