Alvin Mbabazi Bugeiga (AMB); Director of Innovation — Batuma Holdings Limited, Founder — Dbuntu.com

The Practical Application of a Data Driven Approach to Agribusiness

Q3 2022 Newsletter | Dbuntu Africa

“Uganda is a beautiful equatorial country located in the breathtaking plains of East Africa. It is known for its incredibly diverse wildlife, exotic culture, and growing economy.

Throughout my history, Agriculture has been the people’s gem. Before colonization in the 1900’s, the lands were inhabited by two types of people; cattle keepers, and cultivators. Cattle keeping has always been a symbol of pride in us, it showed our ability to live well.

My grandfather was an entrepreneur in the early days of post-colonization. Going against conventional wisdom in the 1960s, he saw this opportunity and set out to fulfill a vision to build a commercialized dairy farm in Kabale. Named after his late wife, Beatrice Dairy Farm (BDF) is a 150 acre farm in the valleys of the Kabale Highlands.

BDF is known as one of the most progressive farms in the region, and in this new information age — with new innovations in agriculture-technology (AgTech); our continued commitment to innovation will transform this farm into the premium, data-driven, model commercial dairy farm in East Africa.”

- AMB

Investment Rationale

Market Analysis

Agriculture constitutes around 24% of Uganda’s $37 billion GDP, with an estimated 5% contribution from livestock, making it roughly a $1.48 billion industry of which, the Dairy sector is responsible for 50%; a $925 million industry that is growing at approximately 15.84% (CAGR) per year. The majority of the population are subsistence farmers and therefore do not buy milk. Our primary market in Kabale Municipality alone there are 50,000 approximately people that consume over 2 million Ltrs/Year which is equivalent to 5000 Ltrs of milk a day.

Ken Research announced latest market research report on “Uganda Dairy Products Market Outlook to 2020 — High Demand for Flavor Milk, yoghurt and Ice Cream in Uganda is Projected to Spur the Dairy Market” provides a comprehensive analysis of the dairy product market in Uganda. The report includes the market share contributed by the sales of different dairy products including processed milk, yoghurt, cheese, ice cream, butter, flavored milk and milk powder in Uganda. The study also enlists the key market indicators which include consumption per capita, total consumption and production, average per unit and price, and import and export data by value and by quantity. Trends and developments and regulatory framework are also added in the study for clear understanding about the factors responsible for present scenario of the market. The future analysis of overall Uganda dairy product market has also been discussed along with recommendations from analyst view.

Visual Illustration of Cottage Industry Products — Under development at the Department of Product Innovation | Batuma Holdings Limited

The flavored milk market and yoghurt segments have shown a significant growth during the period due to the increasing product variety offering by the manufacturers and strong retail distribution of flavored milk and yoghurt in the country. Presence of large number of small and large players in the market which majorly include Sameer Agriculture and Livestock, Charms Uganda, and Jesa Farm coupled with the diverse product portfolio of these companies offering large number of flavors is the major reason which has resulted in high growth of the segment in Uganda.

“In order to penetrate into the Uganda dairy product market, the market players are recommended to use proper hygiene and sterilized production practices in order to earn the trust of the domestic customers in Uganda. The packaging mix should be provided to customers in affordable cost to meet the demands of people of economically sensitive country.” according to Research Analyst.

The retail sale volume has doubled during the period resulting which the increased per capita consumption of flavored milk and yoghurt in the last 3 years.

Batuma Fresh Yoghurt

In recent years, yogurt has become one of the fastest growing category of Dairy Products. In addition, customer engagement in consumer brands has gradually deepened thanks to the popularity of social media. As a functional drink “fresh yogurt” has a stronger emotional connection with the more health conscious customers compared to the traditional yoghurt products on the market.

Batuma Fresh Yogurt presents a rapid growth opportunity in the wave of dairy product consumption, and quickly spreads as the reputation of this unique yoghurt brand grows in the Kabale/Kigezi area.

Batuma Fresh Yoghurt adopts online and offline promotion strategy of double wheel driven to encourage users to participate in all aspects of yoghurt production and designs a series of social activities to build a closed loop of online and offline user interaction and bring anew yoghurt consumption experience to customers, this heavily relies on social networking tools.

Dairy Farming in a Nutshell

A Case Study (2022–2025)

In 2016, Dbuntu Africa began it’s research collaboration Batuma Holdings Limited, establishing the Department of Product Innovation (Batuma Dairy Products), as well as spending a considerable amount of time in Kabale engaging with other local farmers, employees at Beatrice Dairy Farm, development organizations such as SNV, Kabale University, & government agencies such as the National Agricultural Research Organization (NARO) & the National Animal Genetic Resources Centre and Data Bank (NAGRC & DB), trying to find issues faced.

A case study in collaboration with Batuma Holdings Limited — https://batuma.co/

Problem #1 — The lack of a nutrient rich diet: The techniques & practices used to feed milk producers are very inefficient causing the production per cow to be extremely low and the use of space to be ineffective. An average American cow produces 40 liters a day while an average cow on Beatrice Dairy Farm only produced about 6.

Solution #1: To combat this, the biggest fundamental change that will occur is transitioning the cows from pasture fed, to crop fed by moving the cows into a barn for the majority of their day and using the pasture land to grow crops such as corn and alfalfa. These crops are much more energy dense allowing the cows to consume a more nutrient rich diet, increasing production.

Problem #2 — The lack of a consistent food source all year round due to seasonal drought: During the dry season food intake for the cows significantly decrease dropping milk production.

Solution #2: With the growing of crops, we would be able to store feed and supply the cows with an equal amount of nutrients year round.

The cow breed on the Beatrice Dairy farm is the same Holstein-Fresian breed used in America and the Netherlands, however poor breeding practices have caused the genetic potential of the cows to deteriorate after so many years while the same breed of cows in the other two countries have improved creating a gap for improvement (and a very lucrative business opportunity).

Problem #3 — Poor genetic potential: The nutrition problem is only part of the low production, the other part of the issue is that the genetics of the cows at Beatrice Dairy Farm are not as strong as those in countries like America and the Netherlands which is another reason the difference in milk production is so significant.

Solution #3: The next piece will be to begin improving genetics by importing foreign samples to artificially inseminate the local cows that are better equipped to handle the environment & diseases.

Problem #4 — The lack of reliable electricity and clean water: The third problem is using the land resources to reduce costs on electricity and water and increase reliability of electricity which is not very good in Kabale

Solution #4: We look to implement a series of support systems that negate the need for external water or electricity. Due to heavy rainfall in the region and through the development of water storage and a management system we should be able to reduce our water costs to zero. Then to internally generate our own electricity we would look to use anaerobic digesters and cow manure as the fuel decreasing our electricity costs and improving reliability.

— —

After copious amounts of first hand research, and assistance from experts in the field, it became apparent that the best practices in dairy farming are well known and the various government agencies & development corporations, have been consistently attempting to try & implement these best practices for many years. Non more truer as is the case with Beatrice Dairy Farm.

Question: Why hasn’t there been sustainable growth in the primary production stage of the dairy sector in Kigezi?

Answer: Implementation

Operating a dairy farm is no easy task; farmers are faced with a myriad of operational & managerial problems, all in need of immediate attention to identify practical solutions to the daily, weekly, and monthly tasks of a farmer. To top this off, reliable livestock data is very hard to come by, and in many ways this fact lies at the heart of all problems.

“Let me just start by emphasizing that you really need some Base Farm data collection for decision planning and risks mitigation. Some of the example pointers:

— How do you determine/select cows that will be mothers of future replacements versus culling the low milk producers?

— What criteria do you use to determine when to stop milking a cow that Is not economical?

— How do you determine the amount of supplement feed for each milking cow?

— When do you decide to breed cows to produce replacements?

— How long do you milk each cow?

— How do you select semen for producing young ones as replacements?

— How do you assess economic value of each cow?

ALL THIS NEEDS DATA FOR APPROPRIATE DECISIONS. ”

- Animal Genetics Consultant (USA)

Before embarking on managing a dairy farming operation, you must remember farming is a business, and maintenance costs, feeding, health management, etc. can easily become more than the environment can accommodate for economical production at the primary stage. As such, perhaps more importantly than the technical expertise to grow a dairy farm; good farm management structures & a dedicated farm management team is key in enabling farmers to commit to a transition.

Having participated in this collaboration for quite some time, Dbuntu Africa & Batuma Holdings Limited, have decided to focus their joint research efforts moving forward on the practical application of a data driven approach to agribusiness, in close collaboration with American breeding conglomerate URUS/Genex, Kabale University, SNV, NARO, NAGRC, and Kigezi Dairy Cooperative Society.

What we envision is the development of D4Ag ™ | Livestock/Cattle; a fully integrated record keeping service, as opposed to just an app…that primarily helps the farmer optimize their core operation & management. Embedded into our vision is the reviving & recapitalization of Dbuntu Data Uganda Limited, to facilitate the financing, development, and implementation of the technology, with our technology partner.

Through this joint effort, we intend to experiment with scalable strategies for business development by establishing an “agent/retail” model (similar to that used by the Mobile Money/Telcos). With direct access to various consultants & experts in the livestock/cattle value chains we look to collaborate on a series of engaging content hosted on an online skilling platform designed to skill prospective D4Ag ™ agents (beyond what the technical experts do) in the practical application of a data driven approach to agribusiness, creating with new opportunities & jobs for youth joining agribusiness, in todays digital era.

Secondly, we plan to leverage a master agent “dealer/reseller/wholesale” model (similar to that used by the Breweries) around other mid-large scale farmers with an exclusivity radius to a geographical location (I.e. Lyantonde, Mbale, Gayaza). This will enable them to get wholesale discount prices for our services, access to the agent trainings, and generate cashflow to grow and expand their business & sales efforts in the territory of exclusivity, all while creating jobs for D4Ag’s agents. We will also have a D4Ag ™ Sales Rep positioned regionally as a sales & technical support hand on ground.

In terms of content directed towards the agents & master agents/farmers (audience), it would mostly comprise of:

  1. Product Tutorials — agents business model: how to make a living as a D4Ag agent.
  2. Testimonials — Farmers success stories, leaderboards (I.e. highest milkers by region, most reliable input providers or breeders).
  3. Farm History/Vision Stories — This is more an emotional touch point / appeal with farmers as they share both the history & vision for themselves as farmers.

We are optimistic in the scalability of this business model, the price made as little as UGX 1,000 UGX (~USD 0.25 cents) per month for each cow (*subject to tier change), the D4Ag ™ | Livestock/Cattle service is made affordable for pretty much anyone. There are about 11M cattle livestock in Uganda, assuming a 5% market share of that market (550,000 cows), a basic subscription model can generate monthly recurring revenues of UGX 550,000,000 (~USD 140,000), which is what we targeting we shall achieve by 2025. In addition to this will be the creation of a network of Breeding Centre’s where farmers can get access to locally generated genetics research (NAGRC), breeding resources (URUS/Genex), and more (i.e. cattle backed loans) and this will be introduced/setup around model farms (master agents).

As a start-up, Dbuntu Data Uganda Limited will be flexible, innovative and constrained by the barriers of a large organization structure. This will allow for a unique approach not possible within the large farming organizations.

Background (History & Legacy):

Batuma Holdings Limited is located in Kabale District in South Western Uganda. Founded in the mid-1960s by the late Canon Dr. Seduraka John Batuma (Chairman | Kigezi Africa Wholesale, Founding Member | Kigezi Dairy Cooperative, Industrialist | Banapo Wine). A veterinary doctor by profession, he opted to import exotic breeding animals (10 from Kenya (Nakuru), 31 from Germany and 27 from the Netherlands in the years 1965, 1968 and 1996 respectively), as opposed to keeping the local breeds; which was the common practice in Kigezi at the time & successfully establish a pioneering commercial dairy farm.
The company has grown and evolved over the last 50 years into a family owned conglomerate and the parent company under which Beatrice Dairy Farm (BDF), Keirungi Mixed Farms (KMF), Batuma Breeding Centre (BBC), Highland Hotel (HH), Batuma Memorial Airfield (BMA), and Beatrice Garden Estate (BGE) in Kabale/Rubanda district belong.
“Our founder’s vision was to build a pioneering commercial dairy farm through the use of innovation, technology, and best farming practices. Today, we are actualizing that vision with the principles of disciplined management, community building, and evidence-based decision making.”

Mission Statement / Brand Promise (Values):

1. Inspire the next generation of dairy farmers in Africa

2. Produce for the Future #sustainability #ecofarming

3. Lead dairy farming in East Africa

The business idea was born out of a market environment which — at the time — was characterized by high local demand for dairy products against the low supply thus creating a huge gap in the market. Today, this gap widens with the opening of new markets thanks to the African Continental Free Trade Area (AfCFTA), established in 2021.

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Dbuntu Africa

Dbuntu Africa

A Global Pan-African Vision: Dbuntu LABS is your one-stop venture centre for business looking to scale up in Africa.