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How Profitable Is Dairy Farming in Uganda?
I am afraid of cows (called “ente” in the local language), especially when they are milking. When I was growing up, I watched from afar while my grandfather made milk. I can not trust the cow not to be angry (for its mammary glands touched) and put a well-planned back kick to the gonads!
From a nutritional point of view (for those readers who don’t know, such as aliens and Martians), milk is an essential nutrient needed for our development all the way from infancy to adulthood, providing essential proteins and calcium for We buy.
In Uganda, a large number of families consume unprocessed milk sold at a retail price of Shs. 1,400 shillings per liter as compared to processed milk sold at Shs. 2,000 shillings a litre
Why invest in agriculture in Uganda?
In Uganda milk and milk products are mostly from cows and a small portion from goats and sheep. The districts of Mbarara, Moroto, Bushenyi, Kotido, Masaka, Mbale, Kabarole, Mukono, Ntungamo, and Kamali dominate production in this sector.
The livestock population in Uganda was last estimated according to the 2008 livestock census to be 11.4m. It is estimated that indigenous breeds account for approximately 84% while large breeds and cross breeds account for the balance. It is also estimated that Uganda currently produces 1- 1.5 billion liters of milk per year of which 30% is consumed on the farm (or households) and 70% is sold.
Although the domestic market is the major market for milk and dairy products, some processed milk and value-added dairy products are exported to regional markets such as Kenya, Rwanda, Democratic Republic of Congo, South Sudan and Tanzania.
Where are the investment opportunities in the diary sector in Uganda?
Considering that Uganda’s population will continue to grow by more than 3% per year, as well as rich (including people below the poverty line) there are opportunities especially in the distribution and processing of milk. In particular, the windows of opportunity I observed for the dairy sector include the following:
- Investment in milk collection companies
- Investment in the supply of milk tankers
- Investment in pasteurized milk distribution system
- Promotion of informal participants into mini dairies
- There is already an increase in dairy plants
- Investment in integrated agricultural/dairy business
- Invest in clean tanker shipping.
So with the above in mind, how do you try to make money (“snte” in the local language) from cows (“ente”)?
LEARN the cons
1. Marketing bottlenecks
One of the most serious problems facing dairy farmers in Uganda has been identified as the marketing of their milk.
This is due to poor market access (for example due to bad roads and lack of information on market prices).
The solution for the “advanced thinking” farmer would be to partner with local cooperatives in milk supply because they have well organized transportation and infrastructure systems.
There is also the option of getting in touch with large scale milk producers to supply them. The downside is that their prices are often lower than retail prices, but the upside is a guaranteed market for your product.
2. Small animal work
In Uganda, dairy farmers are the majority of farmers. There are many products for home use and it offers a surplus that is only available to the market. Most rely on traditional indigenous herds, known to have very low productivity. In addition they depend on natural green grasses for eating without any food additives
For the advanced farmer, it would be wise to use improved local and large dairies which are known for producing large quantities of milk and at the same time feeding the young while offering additional feeds to increase the nutrition of the cows. animal.
I also recommend planting elephant grass (napier) about 3 months before setting up the farm.
3. Availability of money
Traditionally, the agricultural sector has been viewed as high risk and therefore there are limited financing options, say from venture capital firms and equity firms (some of which do not invest in the sector).
However, the number of local and international banks is increasing including development banks that offer long-term financing for viable projects in the sector.
I would recommend that in order for the farmer to have higher chances of accessing loans, they keep records of their agricultural products to show that they do not have high incidences of low milk yields (which is one of the factors that make the sector high risk). to lend to).
Another option is to be related to a cooperative or similar group where they can have access to group loans through SACCO schemes. Donors and other support services for agriculture also often prefer to lend to cooperatives and similar farmer groups.
Commercial bank lending rates in April 2013 averaged about 25% while SACCOs seem to be borrowing at around 10%.
1. High demand for milk in domestic and export markets
Reliable data on milk consumption in Uganda is seriously lacking. However, there are strong indications to show that the dairy product market is growing at a fast and steady rate. The growth rate of milk production is estimated at more than 8% per year. On the other hand there is an insufficient supply of milk in the export market with primary producers and distribution companies unable to fulfill their supply requirements. The largest dairy producer, Sameer Agricultural and Livestock Limited (SALL), for example claims to have products in 17 countries, but is hampered by low supply in these countries.
A “progressive” farmer has the opportunity to enter into a partnership with milk producers to produce for them. He will however need to ensure that he has systems in place to comply with the strict quality control requirements of these regulations.
2. Food and security issues
A significant number of families in Uganda have a cow (although many of their own indigenous breeds) for the simple reason that both milk and cows are very commercial and therefore in the event of financial distress, they provide food security (milk for the family) and can be easily sold, even the larger breeds you really want.
Oh and let’s not forget (at the risk of a favor from feminists) that these cows are a major source of income (or “bride money”) in Uganda.
3. Return on investment
From the financial forecasting model, I have developed; I calculated the Return on Investment (ROI) for this sector as follows:
· initial capital (A): Shs.44, 273,900
· Premium (B): Shs. 10, 589,863
· Return on Capital (A / B): 4.18 years
Now the basics you must get right before investing in this sector.
- Giving. In addition to food supplements, plant elephant grass in advance. This will ensure that the cows are well fed. Feeding and milk production are directly related;
- Purchase of cattle. I suggest that you buy pregnant women. My research shows that you can get them cheaper than those who are not pregnant. That here doubles your stock quickly. When buying, be sure to choose breeds (possibly cross) that are suitable for the local environment (climate and disease prevention);
- Technical support. Visit a demonstration farm that practices good farm management to improve your knowledge;
- Records. Keep farm records to ensure you can check your daily milk yields as well as check the quality of your milk. This will be especially important as you expand and say you want to provide large-scale milk processors; we had
- Water. Make sure you have enough water nearby. Cows drink a lot of water and therefore need a tank or as you progress, build a hole to provide the water.
I was also afraid that a cow was kicking so, I again said, “No thank you sir, I will wait to get a shepherd from a friend’s village in Nyakahita, Mbarara.”
A lighter side, dairy production has the potential to be a profitable business opportunity for farmers in Uganda. There is always room to grow, both for beginning farmers and more established players.
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