Bottling Hope in Africa: Land O'Lakes Providing Boost to Ugandan Dairy Industry

By Thompson, Todd | Rural Cooperatives, May-June 2006 | Go to article overview

Bottling Hope in Africa: Land O'Lakes Providing Boost to Ugandan Dairy Industry


Thompson, Todd, Rural Cooperatives


Most people know Land O'Lakes, Inc. as the producer of America's top butter brand, one of the country's leading farmer-owned cooperatives and a major player in agricultural supplies. But few are aware that the dairy cooperative giant has an International Development Division that has been helping farmers and rural businesses increase productivity in developing countries around the world for 25 years.

In the east African country of Uganda, Land O'Lakes has been implementing a private sector-based dairy development project since 1994. The project provides technical assistance at all levels of the dairy value chain--from smallholder farmers to milk-bulking cooperatives and collection centers to processors of milk and value-added products like cheese and yogurt. Land O'Lakes' presence has helped Uganda's dairy industry expand and become more efficient, increased the popularity of dairy products among consumers and raised income and profits for smallholder dairy farmers and rural enterprises.

Project staff based in Uganda and short-term consultants--many of them U.S. farmers and agribusiness experts--offer advice on a wide variety of topics. These include: cooperative development, marketing, milk bulking and handling, value-added processing, production, policy reform and industry organization. Funding for the Uganda project and other Land O'Lakes economic development initiatives overseas comes primarily from USDA and the U.S. Agency for International Development.

Much of the Uganda project's current funding came from the recent sale of 11,100 metric tons of donated American wheat on the local market under USDAs Food for Progress Program. Under this monetization process, USDA takes excess commodities raised by American farmers and converts them to cash in developing countries to provide grants to implement development projects. A study is done before the sale to assure it will not disrupt local production and markets.

Getting results

Stimulating sustainable economic growth to alleviate rural poverty is a major goal of the Uganda project. The country's economy is largely agricultural, and two-thirds of the country's poor are smallholder farmers. To date, the Uganda project has achieved results that include:

* $349 average annual increase in household income for participating farmers (average per capita income is $270 a year);

* 28 percent increase per day in milk production in participating animals;

* 45 percent increase in processing-capacity utiliztilization;

* 6.5 million-liter increase in domestic consumption of processed dairy products;

* 75,000-liter increase per day in milk entering the cold chain;

* 89 percent increase in membership in producer organizations.

A recent success story involves MADDO Dairies Ltd., a company that began operating a 1,200-liter microprocessing plant in the town of Masaka in 2003. MADDO buys milk from local farmer cooperatives and processes it into flavored milk and yogurt. Like many start-up enterprises, MADDO had good ideas but lacked the knowledge, systems and internal controls needed to effectively manage its operations.

With Land O'Lakes' help, MADDO's management turned the company around, instituting financial and other reforms that brought it from the brink of collapse to profitability by 2005. Within one year, the amount of milk purchased from area farmers increased from 74,800 to 208,580 liters, increasing their income from milk sales by more than 200 percent.

Production efficiency at MADDO was improved with a cooling tower developed by Land O'Lakes' Sam Sebadduka, supervisor of milk quality and dairy processing in Uganda. Sebadduka developed a water-cooling tower that recycles water used in cooling the pasteurization unit. Adoption of this simple technology cut water usage from 90,000 liters a month to 40,000. It also reduced the share of water as a cost of production from 4. …

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