Dairy Sector FINAL
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Engaging Private Sector for Green Growth in the Lake Victoria Basin (EPSGG) Greening Value Chain Study Technical Report No. 2 Greening of Value Chains through Resource Efficiency and Cleaner Production in the Lake Victoria Basin: Analysis and Options for the Dairy Value Chain The World Bank First Draft June 2019 Final Draft March 2020 1 Table of Contents Table of Contents ............................................................................................................................................. 2 Acknowledgements .......................................................................................................................................... 4 Abbreviations and Acronyms ........................................................................................................................... 5 Executive Summary .......................................................................................................................................... 6 Key recommendations ........................................................................................................................................ 9 1. Introduction ............................................................................................................................................... 11 2. Development Context ................................................................................................................................ 14 2.1 General observations of the dairy sector in the LVB countries ................................................................... 14 2.2 Country-specific information ...................................................................................................................... 18 Burundi ........................................................................................................................................................ 19 Kenya ........................................................................................................................................................... 19 Rwanda ........................................................................................................................................................ 20 Tanzania ....................................................................................................................................................... 20 Uganda......................................................................................................................................................... 21 3. Climate change and the dairy value chain .................................................................................................. 22 3.1 The dairy value chain and GHG emissions .................................................................................................. 22 3.2 Grassland management ............................................................................................................................. 25 4. Analysis of the Dairy Value Chain ............................................................................................................... 26 4.1 General overview of the dairy value chain ................................................................................................. 26 4.2 Input supply and service provision.............................................................................................................. 30 4.2.1 Grassland / pasture ............................................................................................................................ 30 4.2.2 Feed and Fodder ................................................................................................................................. 31 4.2.3 Water .................................................................................................................................................. 33 4.2.4 Genetics and reproduction ................................................................................................................. 36 4.2.5 Animal healthcare ............................................................................................................................... 38 4.2.6 Equipment and infrastructure ............................................................................................................ 38 4.2.7 Farm advice ........................................................................................................................................ 39 4.2.8 Financial services ................................................................................................................................ 40 4.3 Milk production .......................................................................................................................................... 40 4.4 Bulking and chilling..................................................................................................................................... 42 4.5 Transportation and trading ........................................................................................................................ 43 4.6 Milk processing ........................................................................................................................................... 44 4.6.1 Overview of milk processing ............................................................................................................... 44 4.6.2 Environmental Impact of Milk Processing .......................................................................................... 46 4.7 Marketing and distribution......................................................................................................................... 48 4.8 Export ......................................................................................................................................................... 52 5. Potential RECP interventions in the production of milk .............................................................................. 54 6. Potential RECP interventions in dairy logistics ............................................................................................ 62 2 7. Potential RECP interventions in milk processing ......................................................................................... 67 8. Proposed interventions in the marketing of dairy products........................................................................ 70 9. Policy recommendations ............................................................................................................................ 72 10. Concluding remarks and next steps .......................................................................................................... 74 References ..................................................................................................................................................... 76 Annex 1: The dairy sector profiles of the LVB countries ................................................................................. 78 Overview dairy sector Uganda .................................................................................................................... 78 Overview dairy sector Kenya ....................................................................................................................... 80 Overview dairy sector Tanzania................................................................................................................... 82 Overview dairy sector Rwanda .................................................................................................................... 85 Overview dairy sector Burundi .................................................................................................................... 87 Annex 2: Export of dairy products in the LVB countries .................................................................................. 90 3 Acknowledgements This report is one of the three Greening Value Chains sectoral study outputs under the World Bank project “Engaging Private Sector for Green Growth in the Lake Victoria Basin Project (EPSGG-LVB)” The report was written by Bob van der Bijl and Kelvin Khisa (Consultant), under the guidance of Jian Xie (Task Team Leader and Senior Environmental Specialist) and Nicholas Zmijewski (Co-Task Team Leader and Environmental Specialist) of the World Bank. Valuable input and comments were provided by Silver Ssebagala and James Ludigo from the Uganda Cleaner Production Centre. The authors also like to acknowledge the technical assistance and review of Jane Nyakang'o and Steve Nyamori of Kenya National Cleaner Production Center and the administrative assistance of Paul Kariuki, Regional Project Coordinator, the Lake Victoria Basin Commission (LVBC). The EPSGG Project was funded by the Nordic Development Fund (NDF) and executed through the World Bank. The project has benefited from the general guidance of Iain Shuker, Practice Manager in Environment, Natural Resources and Blue Economy (ENB) Global Practice at the World Bank, and Ali Said Matano, Executive Secretary of LVBC. 4 Abbreviations and Acronyms 3R Recharge, Retention and Reuse AI artificial insemination ATM automated teller machines CBPP Contagious Bovine Plural Pneumonia CFCs chlorofluorocarbons CFU colony-forming unit CWU consumptive water use EAC East African Community ECF East Coast Fever ECM Energy-Corrected Milk EPSGG Engaging the Private Sector in Green Growth FAO Food and Agriculture