ZADF´s Hosts First Ever Dairy Multi Stakeholder Indaba

On the 8th of December ZADF hosted their first ever Multi stakeholder Indaba. The reason why ZADF arranged this meeting was to get all the stakeholder in the dairy industry together to discuss around the topic: Is dairy viable?

According to research from International Farm Comparison Network (IFCN) Zimbabwe has the world’s highest cost for doing dairy: USD 59.50 per 100kg of milk while the global average is less than USD 40 per 100kg. This is not viable.

Therefore ZADF together with Eddington Gororo carried out a study to find fact based evidence on the cost of doing dairy in different scales of farms in Zimbabwe to show different stakeholders the challenges that the industry faces and to start discussions on what all of us can do to contribute to a change toward a more viable dairy industry in Zimbabwe.

Therefore the studies main objectives were:

  1. To demarcate dairy business models existing in Zimbabwe, including their technical and economic efficiencies
  2. To identify the major milk production cost drivers and their bearing on viability and growth potential

On the first objective, the results of the study shows that Zimbabwe has four key dairy models that are delineated based on dairy herd size and defined in terms of key drivers, production levels, labour organization, feeding systems, resource endowments, use of technology and marketing. These are as follows:

·  Subsistence scale

·  Small Scale

·  Intermediate scale

·  Large scale

The average milk yield between all these four models showed a shocking 10.2 KG/day, which indicates that on average our yield per cow per day is far too low and needs to be improved.

Further, the second objective of the study shows the differences between these categories in their milk production costs. Figure 1 shows “the average farms”, a combined average between the farms studied in each category and also the “model farm” that shows the costs of the most efficient farm in each category.

Figure 1

Figure 2

Figure 2 shows us that typical farms are making negative or very marginal returns, except in the intermediate scale sector. This sector is the only one with a chance of making profit in the existing structure of dairy production.

The bottom line from the study is that:

Typical farms in Zimbabwe are making negative or very small positive returns. The production costs of dairy farming in Zimbabwe are:

·  Per litre milk: $0.46 to $0.64

·  Per cow: $720 to $2800 per annum

·  Feed costs: $0.28-$0.42 per litre milk

·  Labour: $0.07 to $0.16/litre

However, there exists scope to improve margins through feed and labour efficiencies and there is evidence from the study on what efficient or model farms are doing to lower their costs of production.

After we presented the results, the different groups of stakeholders were asked to discuss and present their ideas of how they could move forward to reduce the cost of production. The discussion was lively and fruitful with everyone contributing with ideas of moving forward. The key points from each stakeholder group are presented below:

Regulators

  1. An improved effort on the behalf of the farmers
  2. Increased productivity in milk per cow
  3. Systems of regulation, improved equipment, farmers need to understand the regulatory and laws of Zimbabwe, we need to focus on the knowledge in this area among farmers

Finance

  1. Registration of the farmers and their industry, so that we can be better monitor growth
  2. Value chain financing and syndication – donor funds, NGOs target small scale, syndications with finance institutions
  3. We need a better consistency of policy by the department of agriculture. An example is of the land framework, this keeps changing, there is no consistency

Farmers

We as farmers want to focus on improvement on our behalf and need assistance with:

  1. Improving our quality and type of fodder. Reduce the cost of production by silage and our feed formula (mixing of feed, more than just maize)
  2. Using AI to control and manage our herds
  3. We need better loans with low interest to be able to capitalize
  4. Improve our calf rearing and management
  5. Reducing the labor costs by: involving family members, working in groups and involving youth in the dairy industry. Both farmer and MCC level

Donors

Our focus will mainly be within the small scale and intermediate farmers.

  1. Look at Kenya and SA as examples and revisit the productions system, focus on seasonal calving to reduce the costs. Focus on small scale farmers
  2. We recognize that this is a long-term progress, an idea could be to secure links between different programs to create a longer program cycle
  3. Focus on the calf rearing training, to secure the milk volumes
  4. Need for better coordination between us donors, look at the coordination to organize our self, we need to be better organized among our self
  5. Look more on research, funding more research and also in the existing institutions in the country

Advocacy

  1. Promote the use of GMO maize, mixed crops silage, encourage mixing between different fodders
  2. Promote other power resources than ZESA, solar, wind, water
  3. Look at promoting other silage, legumes and maize

Processors

1.  Processors are having to pay the highest raw milk price in the world while having to live with depressed selling price, thus gradually being squeezed out of business. The reason processors continue to pay this price is: to keep the farmers in business and sustain the industry. There is need for Government to remove VAT on locally produced dairy products to make them competitive and affordable to the general populace.

2.  In order to be competitive, there is need to gauge the size of the market and correctly determine the type, quantity and price of products identified. There is also need to benchmark local products against regional and global equivalents;

3.  The processing industry needs to work together with Government in drafting a document highlighting the impact of the industry on the national economy and set out clear government policy from all aspects (tax duties, and no changes to permit requirements), vis-à-vis: contribution to employment, gross domestic product (GDP), food security and nutrition, among others, so as to guide policy decisions. There is also need for medium-long term policy certainty to guide businesses in taking a long-term view and making more sustainable decisions

4.  Processors are also currently providing bank guarantees for farmers as they have no acceptable collateral security. However, this is only a stop-gap measure, there is need for lower interest finance (+/-4% per annum). It was suggested to have ‘conditional interest’ whereby a farmer’s interest rate can be reduced if he passes on a heifer to the next farmer (some form of ‘interest rebate’).

Input suppliers

We want to focus on the amount of feed and the use of land that exists in Zimbabwe and also thereby reduce the costs of feed. By focus on:

  1. Lobbying to the right use of the land you have. The growth and use of silage and tenure and thereby create more feed security
  2. Encourage the use of local grains
  3. If we import feed, we should encourage importing grain (raw, not processed)

Government/ministries

  1. Target the maize - to finance low cost maize and to increase the productivity of the existing maize. Focus on the productivity of maize growth. Encourage use of climate smart solutions, work more for energy saving methods
  2. Coordination framework for NGO and donors, trying to find synergies and create a template so that the their work becomes more coordinated
  3. Farmer training, focus on dairy production

The results from this study and feedback from all stakeholders will form ZADF´s Stakeholder engagement strategy and activities for the coming year and beyond. We invite all our members to take an active part in this discussion and in the work of making Zimbabwean dairy farming viable again. Our grateful thanks to all who participated in this Indaba – we look forward to seeing you at the end of 2016 to see how far we have come.