David Mupenzi is unlocking the potential of Rwanda’s dairy sector by facilitating the application of a price differentiation program that allows dairy farmers to know exactly how much more money they will earn if they invest in producing higher quality milk. This predictability, combined with a new support system to enable investing, is reviving the economic possibilities for one of Rwanda’s most neglected groups.
The New Idea
David is partnering with key players—from the Rwandan government to the East Africa Dairy Development—to establish a transparent pricing system that will guarantee dairy farmers high economic rewards for high-quality milk. He is also creating the infrastructure that will enable farmers to produce quality milk on a consistent basis. This includes the creation of Rwanda’s first dairy-focused extension services system and the establishment of a lab which offers milk testing at 10 percent of market rate. This is boosting incomes for current dairy farmers, and has the potential to provide income for many poor Rwandans currently supplied cattle through the government’s One Cow per Poor Household initiative.
While the Common Market for Eastern and Southern Africa (COMESA) has established standards that identify what qualifies as high-quality milk, and thus what will fetch premium prices on the market, Rwanda has struggled to create an environment within its borders that enables dairy farmers to take advantage of this. Often scattered in remote parts of the country, dairy farmers often have little awareness of regional standards or of how to produce and certify quality milk. The current agricultural extension services system does not focus on livestock or husbandry. The milk testing services needed by farmers who do somehow become educated on the importance of ascertaining the quality of their milk are expensive and inaccessible. The culmination of these factors leads to a situation where regional producers dominate the Rwandan dairy market as local producers simply cannot compete with the quality that is associated with the foreign brands. Instead, they rely on informal channels to sell their milk to whoever will buy, and often earn a fraction of the price they could.
With a renewed emphasis on development, the government has recently become keen on boosting the productivity of the dairy sector and is attempting to do so through the One Cow per Poor Household program. However, supplying cattle without addressing the aforementioned gaps in the current system threatens to derail this ambitious program.
Since launching his social enterprise, Dairy Quality Assurance Lab, in 2008, David is creating the infrastructure for Rwandan dairy farmers to produce and improve the quality of their milk. He realized that in order for farmers to consistently produce quality milk, they need to combine good animal husbandry with good post-milking practices. As a result, David has formed partnerships with and trained personnel at each of the 24 milk collection centers in the country to go beyond their current duties and actually begin providing extension services to all dairy farmers. Skills passed on to farmers through the collection centers include farm hygiene and udder care for cows, among many others. David has consolidated these important practices into training manuals which the collection centers use to train farmers. This ensures that teaching is standardized across all the collection centers in the country.
To verify that milk quality has improved with the new practices, David opened a lab in Kigali that offers milk-testing services to the collection centers and farmers. Through his partnership with government, which has provided him with in-kind support, including a rent-free facility and donated equipment, David is able to offer these services at extremely low rates. Milk samples can be tested twice a month to continuously track its quality. For farmers unable to afford it, David provides group testing services for five farmers to split the cost.
Having established a reliable way for farmers to produce high quality milk, David turned his attention to instituting a formal price differentiation policy in Rwanda. David used payment tiers to firmly outline the level of quality of the milk produced as the best way to signal to farmers that investing will lead to predictable financial rewards and ensure that the rewards would go to them and not be swallowed by any other actor in the value chain. He knew the government would be an important ally to enforce a price control mechanism. It is indeed the norm to have governments play this important, impartial role in other countries around East Africa. To this end, David is working with strategic national level institutions, including the Rwanda Dairy Authority, East Africa Dairy Development and the Rwanda Animal Organization Authority. Through these strategic alliances, David has been able to introduce and push for the idea of price differentiation at all levels, leading up to the presentation of a draft price differentiation bill in the parliament of Rwanda. When the bill is passed into law, milk prices will be regulated according to quality (much of the language around quality will be borrowed from that established by COMESA), and farmers will be able to earn more from the milk they produce; likely jolting Rwanda’s dairy industry.
Working with 2,000 of the current 12,000 dairy farmers in Rwanda, David is gearing up to reach the remaining farmers and prepare for the growth that is likely to occur through the government’s One Cow per Poor Household initiative. The government of Rwanda has already embarked on a plan to increase the number of collection centers from 24 to 40 in anticipation of this growth, and David plans to add the new 16 centers to his extension network to reach more farmers. He wants increase the capacity of facility equipment so that the rate of testing increases from 100 samples per hour to 300 per day. David’s vision is to help every dairy farmer in Rwanda be able to consistently produce quality milk that fetches premium prices on the market, before expanding regionally to other areas in East Africa that struggle to engage remote dairy farmers.
Though of Rwandan origin, David was born in Uganda to a cattle-keeping family which returned to the Eastern province of Rwanda, when he was five years old. The Eastern province of Rwanda is where the majority of the country’s cattle are found, and David’s love for livestock cattle was nurtured throughout his childhood.
While at university pursuing a degree in Food Science and Technology, David was a member of the student organization, AIESEC, which he credits for his passion for entrepreneurship. For his undergraduate research project, David explored the challenges and opportunities of dairy farming in Rwanda. To collect data on the subject, he returned home. During this time, David’s passion for cattle-keeping was reignited. He realized during his research that in addition to the obvious high levels of poverty cattle-keepers are faced with, they were oblivious to the health risks associated with poorly produced milk. No government or development sector program existed to educate farmers about techniques for quality milk production as well as its economic and health benefits.
The combination of these factors undermined the economic potential of Rwanda’s dairy sector; and cattle-keepers continued to live in abject poverty. Given the prevailing situation at the time, David deduced that the combination of a powerful incentive, a regulatory framework and a support system is what Rwanda’s dairy industry needed to unlock its potential and get cattle farmers out of poverty.
After graduation, David teamed up with a friend to start a mushroom growing business while he waited for an opportunity to follow his heart and work with and for Rwanda’s cattle farmers. The opportunity presented itself two years later in the form of a USAID-funded dairy competitiveness project. David received his first grant of US$50,000 to set up a milk testing lab and training program for farmers in the Eastern province.