Research proposal sample

CHAPTER TWO

LITERATURE REVIEW

2.0 Introduction

Cattle in Uganda is raised under different production systems, namely: pastoral (semi-nomadic) production, agro-pastoral (communal grazing) systems, beef ranching, dairy ranching, crop livestock mixed farming, semi-intensive dairying and intensive dairying, with various specialized features (Kasirye, 2003). Between the extensive and intensive management systems, there are a number of discrete systems that vary in objective, management strategies, attitude, feed and capital investment and level of productivity. Higher levels of investment in dairying are generally located near major urban or consumption centers that are associated with higher milk prices and stable demand for dairy products, (Mubiru et al, 2007).

In Uganda most of the cattle are found in the cattle corridor and milk is produced from cattle and goats (Matthewman, 1993). Dairy production systems in Uganda have been classified into three groups; pastoral, small-scale crop and livestock farms and specialized dairy farms (Okwenye, 1994). This classification is based on number of stock, feeding and grazing management and breeds reared. The Ministry of Agriculture, Animal Industry and Fisheries (MAAIF) jointly with the International Livestock Research Institute (ILRI) (MAAIF/ILRI, 1996) indicated that cattle production systems in Uganda form a continuum with semi-nomadic pastoralism at one end and zero grazing on the other. It also further categorizes dairying in the country into intensive, semi-intensive and extensive systems.

Small-scale crop and livestock farms may also occur and are located near urban centers using mixed dairy cow breeds (less than ten) (Okwenye, 1994). Milk produced under this system is handled in both plastic and metallic containers, and it is for sale to generate income and home consumption. Milk hygiene is considered vital since the production system is economically viable (Balikowa, 2004). Semi-intensive dairying systems predominate in mid-western, western, Central and parts of eastern Uganda. Farms are small, averaging about 1-2 ha in areas of high human population density and about 4-15 ha in relatively low-density locations. Large semi-intensive farms range from 20 ha to 40 ha of land. It is common to find animals herded, tethered or grazed on hillsides, valley bottoms, and roadsides and on inter-seasonal fallows (Matthewman, 1993).

2.1 The distribution of milk

A 2010 estimate of Ugandan milk production showed that around 1.2 billion liters had been produced by approximately 1.2 million smallholders and 8000 large farms with more than 100 cows. The demand is rising and the total market capacity has seen a remarkable increase over the last 15 years. New dairies with large capacities have been established; this has affected a significant increase in the amount of processed dairy in Uganda. Uganda is an open market where governmental companies are not present. On the other hand, the government does not provide beneficial subsidiary schemes. One of the actors on the dairy market is Uganda Crane Creameries Cooperative Union (UCCCU). It is based in Mbarara in the south western region and is a registered cooperative that is principally owned by 10 District cooperative unions. UCCCU has about 18,000 individual farmers as members, organized in 140 primary cooperative societies. Its major objective is to promote the mutual economic interests of its members in accordance with cooperative principles. Their vision is to be the leading farmer owned provider of dairy products and services in the entire East African region. Through the UCCCU affiliated unions, dairy farmers currently have the capacity to bulk and sale an average of 200,000 liters of fresh milk per day.

The current market, which is predominantly local, has an annual turnover of US$ 5 million. The current main purchaser of UCCCU Raw Milk is Sameer Agriculture and Livestock Limited (SALL), which is Uganda’s main processor. Sameer Agriculture & Livestock(SALL) is Uganda’s leading and the most diversified dairy company, producing extended shelf life and UHT liquid milk, yoghurt, butter, cream, milk powder while also distributing ice cream products from its Kenyan sister company. The dairy leased the former Dairy Corporation of Uganda plant in Kampala, following the liberalization of the sector in 1996 and has invested further in the milk powder and juice plants plus other facilities including cooling centers around the country.

In an effort to bring milk quality to accepted national and international standards, the specific needs farmers have that have been mentioned above require addressing the following: Milking system The milking methods at almost all the member farms are labour intensive and there is a danger that the milk gets contaminated. No milking machines are used due to the fact that the milking is done in various locations and the lack of electricity in the rural areas. Milk has to be transported to collection centres by means of a bicycle. They carry a maximum of 50 litres using a milk can, whereas most farm production is more than that amount.

Collecting centres to access the market, dairy farmers are part of a cold chain from the primary milk collection centres to the bulking centres, numbering 60 coolers and generators owned by SALL. Cooling requires energy, and farmers can only safely deliver quality milk if it is not degraded between the point of milking to the delivery at the collection centre. The equipment used for cooling is under a lease arrangement with unfavorable business terms for the individual farmer. All the collected and chilled milk in the network is currently sold to SALL at UGX 300 (about US$ 0.12). The same litre processed is sold by SALL at UGX 2000, which equals about USD 0.80. In situations when SALL cannot take all the milk, farmers are not supposed to use the collecting equipment to sell to other buyers, and farmers have to pay rent on the machinery and cost of maintenance determined by SALL. The equipment binds the farmer to sell to SALL even when there are other buyers offering better terms of trade. Thus, there is a demand for a better solution for the farmer in terms of new technologies as well as more favourable business models. Some Milk Collecting centres are not on the electric grid and those that are; suffer from an unstable electricity supply.

Driven largely by dairy, the livestock sector has maintained positive growth rates averaging 3% per annum compared to the declining growth rates registered in the food and cash crop sub-sectors.

Development of the value chain in the dairy sector has led to employment creation and income generation not only for about 700,000 dairy farming households, but also for farm input dealers and dairy equipment dealers. Other sections include dairy ingredients dealers, raw milk traders, milk transporters, mini-dairies, large-scale milk processors and distributors. As a result of value addition, there has been an increase in the milk farm-gate prices from an average of sh450 to sh800 per litre.

In 2013, the value and quantity of milk and dairy exports is expected to be $12.1m, a rise from $11.5m in 2012, and $3.4m in 2011.While milk production has improved, and the biggest percentage goes unprocessed. Only 20% of the country’s milk output is processed. Local farmers, however, are getting together in their groups to process the milk. With the increase of small and medium-size dairy farming, and the long-standing ban on importation of dairy animals, the demand for good quality dairy stock has greatly increased over the last decade.

Currently, the demand for high grade in-calf heifers is more than the supply and hence prices of quality breeding animals are high. Of the milk produced, 70% is marketed and 30% is consumed at the farm level. The country is among the few low-cost producers of milk in the world. Uganda’s dairy sector has registered commendable growth averaging eight to 10% since 1991.

According to state minister for animal husbandry, Bright Rwamirama, the country’s daily milk processing capacity has raised from 869,800 litres, to 1,329, 180 litres per day. There are 38 milk processing plants in the country, including the newest Pearl Dairy Farm located in Mbarara. Rwamirama says there are four other milk processing factories that are set to open up in the country with a total milk processing capacity of 855,000 litres.

Extensive systems include pastoralism in drier districts or regions of the country; milk is produced from cattle which are herded around the village on communal land. Pastoralism is an important way of life in dry areas, where cattle owners are often transhumant. Milk contributes to subsistence food supplies in this system (Matthewman, 1993). Pastoral farms have large numbers of indigenous stock (greater than 50), grazing in coarse pasture throughout the year and milked twice a day. No supplementary feeding is provided (Okwenye, 1994).

Pastoral farms are managed with large numbers of indigenous stock (greater than 50), grazing in coarse pasture throughout the year and milked twice a day also exist and have no supplementary feeding, (Matthewman, 1993). Pastoralism is an important way of life in dry areas, where cattle owners are often transhumant. This system is dying out in the cattle corridor of Uganda and milk contributes to subsistence food supplies, (Matthewman, 1993). The majority of the cattle population (65.4%) in this area is confined to a narrow area stretching from northeast (e.g., Kotido District), through central (e.g., Nakasongola District) to southwest Uganda (e.g., Rakai and Ntungamo Districts) (MAAIF, 2010). This area is semi-arid, experiences a low incidence of tsetse fly infestation and has suitable climatic conditions that make it conducive to cattle rearing. Milk under extensive (pastoral) systems in Uganda is produced under questionable hygienic conditions and is handled in plastic, metallic and wooden containers that compromise its quality (FAO, 1990). Also under these systems calves are allowed to suckle before milking to induce milk flow and calm down the animal (Kurwijila, 1989).

Milk production and the dairy industry

Dairy production is a major contributor towards national economies and household food security and incomes in SSA, in spite of contributing a mere 2% toward the global milk production (FAO, 1998). Milk production in the region is estimated at 1.27 million metric tons/year. However, this level of milk production is inadequate for the existing human population who would require 103 million metric tons/year (Mubiru et al, 2007). Milk production in the tropics is changing from subsistence level to market oriented supply in order to produce additional income for the household (Chamberlain, 1989).

Milk production in the country takes place in regions referred to as milk shades (regions with high concentration of dairy animals) and these areas extend from just below 1° latitude in the north to Kabale in the south and from Mbale in the east to Kabarole in the west (FAO, 1992; Okwenye, 1994). Uganda is divided into five milk regions/sheds; southwestern, central, western, northern, and eastern. There are differences in the milk sheds in terms of the economic importance of the dairy industry to the region, herd population and production levels, farm size, grazing systems, practices, and cattle breeds used for milk production (Vikas et al, 2011). Karamoja zone is sometimes referred to as a separate milk shade (UBOS, 2009; DDA (2011).

Uganda‟s annual milk production was estimated at 1.5billion litres in 2010 representing an increment of 3% from 2009, of the 1.5 billion litres produced annually 30% is retained at the farms and only 1.05bn litres is commercially traded and of which 90% is marketed unprocessed as raw milk (Kahuta, G. (2013). Yearly milk consumption has improved in Uganda up to 50lt per person, providing the 1.5 billion liter milk industry with new market heights (DDA, 2011). However, the milk produced only meets approximately 20% of the population’s nutritional requirements and as such, methods need to be sought to increase milk production in the region (DDA, 2011).

In Uganda there are a total of 11 unions and 378 dairy cooperatives in the five milk sheds increasing market access for smallholder and commercial dairy farmers (DDA, 2011). Milk coolers (628) with a total capacity of about 1,183,761 litres per day have been installed for milk bulking and milk retailing across the country (DDA, 2011). Raw milk is transported by insulated milk road tankers from the bulking centers to processing plants and other urban milk retailing outlets to ensure that the cold chain is maintained (DDA, 2009). There are 7 large scale milk processing plants with installed capacity above 5,000 litres per day and many small-scale milk processing plants. Uganda is producing and marketing a range of dairy products such as pasteurized milk, UHT milk, yoghurt, ice cream, sour butter, sweet cream, ghee and cheese (DDA, 2011). Only 10-20% of the milk produced in Uganda is processed; the rest is handled through the informal markets which deal in raw milk and this is prone to spoilage (DDA, 2009).

In Uganda, the raw milk market is organized into two steps; the first step traders get the milk from farms and sell it to second traders, processors or directly to consumers and in the second step, traders then sell it to big processors or cool it and sell to consumers directly (Mbabazi, 2005).

FAO (1996) indicates that in Uganda 27% of the milk produced is wasted or lost; with 10% lost to spoilage during transportation, 11% during handling and marketing, while 6% is lost at farm level which translates into significant loss to the industry. Ninety (90) percent of the milk produced in Uganda is marketed in its raw form, and this milk is handled by middlemen at different levels of the value chain (Twinamatsiko, 2001); it is, however, important that the consumer should eventually end up with a qualitative wholesome product.

Driven largely by dairy, the livestock sector has maintained positive growth rates averaging 3% per annum compared to the declining growth rates registered in the food and cash crop sub-sectors.

Uganda’s dairy production is largely dominated by small-scale farmers, who own over 90% of the national cattle population. These small-scale farmers are In rural areas, where 96% of the poor Ugandan live, about 60% of households keep mostly indigenous cattle, as seen in the ‘cattle corridor’ zone. National milk production stood at 1.8 billion in July 2012, according to the Dairy Development Authority (DDA).