Some small-scale processors now cite low installed capacity, costly and unreliable electricity and lack of access to finance expansion.
Small-scale milk processors in Rwanda are facing capacity constraints after the five-year Rwanda Dairy Competitiveness Programme boosted the quantities of milk coming to processing plants that were designed with lower expectations in mind.
Some small-scale processors now cite low installed capacity, costly and unreliable electricity and lack of access to finance for expansion as key hindrances to the sector’s growth.
The $15 million (Rwf12 billion) USAid-funded programme that was designed to improve the milk value chain through modernisation of production closed last week.
While the second phase of the project that started in 2012, supported various areas of the milk value chain, small-scale processors now say they need a new cash infusion to expand capacity.
“We need more investment, because this business requires huge infrastructure and equipment that is very expensive,” said Milton Ngirente, owner of Blessed Diaries Ltd.
The factory, based in the Northern Province says, it aspires to satisfy the national demand, but the production capacity is still low.
Mr Ngirente said his maximum production capacity is 5000 litres per day, yet the daily quantity of milk available from farmers has grown from 400 litres in 2005 to 40,000 litres per day.
According to the Rwanda Dairy Competitiveness Programme 2 impact report, the country now produces 600,000 metric tonnes of milk annually, an increase of more than 300 per cent in about decade.
Noel Nsengumukiza, production manager at Zirakamwa Dairy, in Nyanza district, said the quantity of milk processed has increased in recent years from 2,500 litres to 4,000 litres.
But he has cited insufficient power as key challenge to their dairy’s operation.
The cost of machines and other equipment is also high, according to players in the sector.
Kinazi Dairy Co-operative, a dairy that collects and makes fermented milk also mentions the cost and insufficient electricity as a challenge.
“We were given a machine that boils 1,000 litres, but the power in our area could not support it,” said Jean Damascene Bigirimana, director of the co-operative.
The power constraints coupled with difficult access to loans and other obstacles such as the cost of transport and packaging materials could hinder efforts to make dairies competitive.
According to the programme report the value of dairy products export has grown from $85,000(Rwf69 billion) in 2012 to $11.5 million (Rwf10 billion) in 2016.
However, the supply is still below demand on local and international market.
For instance, Blessed Dairies Ltd couldn’t supply a client from Ghana who wanted butter and mozzarella cheese due to the low processing capacity.
The industry report says the future of dairy will depend on continued private sectors investment to scale up and incentive on entrepreneurs will stimulate innovation and value addition.
In the past five years farmers and co-operatives have invested $32.6 million (Rwf26 billion) on farm inputs to improve dairy production and marketing.