Climate-Smart Dairy in Africa: From Subsistence to Entrepreneurship

Solidaridad has developed a unique value chain approach to professionalize the dairy industry in Africa and avoid rising carbon emissions as a result of increasing dairy production. The business case for dairy farmers has been calculated in a recent feasibility study in Ethiopia and is currently being implemented in Tanzania. This approach enables dairy farmers in Africa to move from subsistence farming to professional dairy businesses, while using climate-smart production methods. Dairy farmers can mitigate climate change — emissions will be halved compared to the business-as-usual scenario — as well as become an attractive partner for impact investors. Commercial dairy hubs are a key enabler in this concept, providing services and milk collection facilities to farmers.

A relatively modern and small-scale stable

Solidaridad’s approach is based on robust data collection and evidence captured in the feasibility study “From Subsistence to Professional Dairy Businesses: feasibility study for climate-smart livelihoods through improved livestock systems in Oromia, Ethiopia”  (PDF) by Solidaridad and Wageningen University & Research (WUR), funded by the World Bank BioCarbon Fund.

On 8 November, Solidaridad’s climate innovation expert Jan Maarten Dros will be presenting a climate-smart dairy approach for Africa at a congress in Brussels: Dialogue on Sustainable Food and Agriculture, Building a low-emissions future. It is organized by APEX, the Brazilian Export Promotion Agency. This dialogue is a preparatory event for the Global UNFCCC Climate Summit in Katowice, Poland, in December 2018.

A dairy farmer in Ethiopia

Enabling impact through a holistic value chain approach

The dairy sector in Africa is still largely comprised of subsistence farming. in Ethiopia, for example, 98% of milk is produced at farms with one or two cows. This is disadvantageous to the farmers who struggle to make a decent living, creates dependency on imported milk (powder) and has a negative impact on the environment as extremely high emissions are generated per litre of milk produced and consumed. Agricultural output is responsible for around a quarter of the GHG emissions worldwide and milk production for around 4%. Solidaridad’s climate-smart intervention strategy for the African dairy sector is a unique business case which addresses both these challenges.

Solidaridad’s value chain approach — illustrated in the figure below — helps to create the right conditions for farmers to become entrepreneurs, moving from subsistence farming to running a professional, climate-smart dairy business. Every step in the value chain is important for the viability of this business model, in which the farmer becomes a trusted partner for dairy companies, and the other way around.

Within this business model, dairy hubs are an important target for impact investments as these hubs provide the necessary services to smallholder farmers, e.g. hygienic milking facilities, cooling and quality control, and veterinary services. Through quality control and payments, these hubs create and facilitate a stable and trustworthy relationship between dairy farmers and companies. The dairy hubs can run commercially; they are cash flow positive from the third year onwards and able to pay a 12% interest rate for the initial loan with a six-year term.

Value chain model by Solidaridad for professionalizing the dairy sector in Africa with dairy hubs at the core. Source: “From Subsistence to Professional Dairy Businesses: feasibility study for climate-smart livelihoods through improved livestock systems in Oromia, Ethiopia” by Solidaridad & WUR.

Increasing milk production, decreasing GHG emissions

The efficiency of milk production is key for climate-smart dairy farming. Increasing milk production (i.e. more milk output per cow and more cows per farm) through more efficient use of land, water and feed is profitable for farmers in growing their business. It also reduces GHG emissions per litre of milk and thus helps to mitigate increasing GHG emissions resulting from milk production.

Across Africa, dairy farmers, processors, governments and consumers can benefit from climate-smart dairy through improved income, nutrition and trade balances. This will help lead to better quality milk, more trust between value chain partners, and thus a more sustainable dairy industry which benefits both the farmer and the environment.

A dairy farmer in Ethiopia

Pilot programme in Tanga, Tanzania

The feasibility study and resulting climate-smart dairy model have led to a pilot programme in the Tanga region of Tanzania, which started in October 2018. Achmea Foundation is the prime investor in the project. The pilot intends to show that 2,000 dairy farmers are able to double their milk production from an average of 8 to 16 litres per day, also doubling their income by the year 2021. Another goal is to ensure that 80% of the 500 farmers involved have improved their farm management practices towards a more professional farm system by 2021. Such implementations would include climate-smart production methods and good practices in the financial management of their farms.

A family of dairy farmers in Tanzania

Solidaridad’s climate-smart dairy model shows that development and climate change mitigation can go hand in hand. This approach is feasible for many value chains across the world. Currently, climate finance programmes mostly look at forestry and energy investments, but if the Paris Agreement targets are to be met, more climate funding should be invested in climate-smart farming, offering clear benefits for farmers who switch to climate-smart and professional farming.

Learn more about Solidaridad’s dairy programme.

Download the feasibility study on the publications page