Animal feed production

Animal feed production
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Animal feed production
SectorMost major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Food and Beverage
Food and Agriculture
Business Model Description

Upscale the production and distribution of animal feed (powdering and blending raw materials and nutrients) adapted to the local context and needs, as well as supply the products to farmers through pay-as-you-go or harvest-based loans.

Expected Impact

Contribute to improving the productivity and nutrients of the current livestock production, which in turn enhances Rwanda's food and nutritional situation.

Indicative ReturnDescribes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
10% - 15% (in ROI)
Investment TimeframeDescribes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Medium Term (5–10 years)
Market SizeDescribes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
Livestock feed demand is forecast to reach 4,600 metric tons (MT) by 2030.(8)
Average Ticket Size (USD)Describes the USD amount for a typical investment required in the IOA.
< USD 500,000
Direct ImpactDescribes the primary SDG(s) the IOA addresses.
Zero Hunger (SDG 2) Industry, Innovation and Infrastructure (SDG 9)
Indirect ImpactDescribes the secondary SDG(s) the IOA addresses.
Good health and well-being (SDG 3) Decent Work and Economic Growth (SDG 8) Reduced Inequalities (SDG 10)
Country
Regions
  • Rwanda: Eastern Province
  • Rwanda: Southern Province
SectorMost major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Food and Beverage
FB

Development need: According to latest data, half of Rwanda's working age population (49.3%) is employed in the agriculture sector.(1) Additionally the sector provides 91% of the food supply, 70% of export revenues and contributes to 32.7% of the country's gross domestic product (GDP).(2)

Policy priority: Rwanda's Strategic Plan for Agriculture Transformation 4 (PSTA 4) 2018-2024 identifies agriculture to be the backbone for sustained economic growth and a major factor in transforming Rwanda from a low income to a knowledge‐based, middle income economy.(3)

Gender inequalities and marginalization issues: Two-thirds (67.7%) of all professionally active females and less than half (43.2%) of men work in agriculture in Rwanda. 61% of men and women working in agricultural sector are engaged in subsistence agriculture. Only 39% of this group is engaged in market-oriented agriculture; fewer women (34.5%) than men (45.1%) are involved in market-oriented agriculture.(1)

Investment opportunities introduction: According to sectoral studies, cold storage can provide a return on investment in a short period. The studies suggest the probabilities of making profits are high in first four years (50%, 75%, 90%, 97% each year respectively).(4)

Key bottlenecks introduction: Rwanda’s agricultural land expansion is limited by severe constraints, and the growing population adds pressure on agricultural incomes and increases the risk of accelerating land fragmentation and soil degradation. It is crucial to accelerate industrialization and commercialization of agriculture, as well as improve land use.(5)

SubsectorMost major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Food and Agriculture
FB.1

Policy priority: Expanding and commercializing animal feed value chains is a priority for the Rwandan agricultural sector, due to its relevance to improving the productivity and nutrients of current livestock production.

IndustriesMost major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Agricultural Products
FB-AG
Investment Opportunity Area

Animal feed production

Business Model

Upscale the production and distribution of animal feed (powdering and blending raw materials and nutrients) adapted to the local context and needs, as well as supply the products to farmers through pay-as-you-go or harvest-based loans.

Critical IOA UnitDescribes a complementary market sizing measure exemplifying the opportunities with the IOA.
Livestock feed demand is forecast to reach 4,600 metric tons (MT) by 2030.(8)

In 2018, Rwanda’s livestock population included almost 1.3 million cows, 5.4 million chickens, 1.3 million pigs, 2.7 million goats, 1.3 million rabbits, and more than 600,000 sheep.(9)

In 2019, Rwanda imported preparations used for animal feeding worth almost USD 3.5 million and with a net weight of 3,314 tons.(10) This indicates a large opportunity to substitute imports with domestic production.

Demand for animal products in Rwanda is forecast to reach 622,000 metric tons (MT) of dairy, 142,000 MT of beef, and 89,000 MT of pork by 2050. (8). This higher demand for animal products is expected to increase demand for animal feed in Rwanda.

Total meat production in Rwanda was over 94,000 tonnes in 2016-17.(11)

ROIDescribes an expected return from the IOA investment over its lifetime.
10% - 15%

Benchmark returns from investment in the animal feed sector should fluctuate around 12%.(12)

In Nigeria, maggot-based feed has an expected profit margin of 63% and a significantly higher return on equity of 40% in just 5 years.(14)

TimeframeDescribes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Medium Term (5–10 years)

Accounting for the capital expenditure required for plant construction, the investment timeframe is estimated to be above 5 years.(15)

Average Ticket Size (USD)Describes the USD amount for a typical investment required in the IOA.
< USD 500,000
Business - Supply Chain Constraints
Low availability of dedicated professionals ready to distribute a new product (16)
Business - Supply Chain Constraints
Most of the total volume of water used in livestock production systems and supply chains relates to the water footprint of feed production for animals. It is predicted that globally, by the year 2050, about 66% of the world population will be vulnerable to water shortages.(17)
Market - low awareness that could hinder uptake
Low awareness of benefits of using concentrated feed among farmers (16)
Sustainable Development Need

Rwanda has a protein gap, especially affecting the country’s most vulnerable populations: the poor, children and refugees. Their diets lack meat, dairy and fruit, being mainly starchy staple foods, pulses, oils, sugars and some vegetables.(6)

The cost of feed is considered to be the main expense of poultry farmers, absorbing approximately 60% -70% of the total cost of farming inputs.(35)

There is a need to ameliorate animal breeding in Rwanda through, among other things, animal feed production. Currently, the contribution of local cow breeds to the national milk output is only 9%, despite representing 43% of Rwanda's cattle herd.(12)

Gender & Marginalisation

Two-thirds (67.7%) of all professionally active females and less than half (43.2%) of men work in agriculture in Rwanda.(1)

Expected Development Outcome

Improved agricultural productivity and quality of animal products (meat, dairy) due to high quality feeds

Improved trade balance due to import substitution

Reduced malnutrition due to increased outputs of animal products

Gender & Marginalisation

Improved farming conditions and income level for female farmers

Primary SDGs addressed
2 - Zero Hunger
Zero Hunger (SDG 2)

2.3.1 Volume of production per labour unit by classes of farming/pastoral/forestry enterprise size

2.3.2 Average income of small-scale food producers, by sex and indigenous status

2.4.1 Proportion of agricultural area under productive and sustainable agriculture

2.c.1 Indicator of food price anomalies

Current Level

USD 556.8 (41)

USD184.82 (42)

N/A

10.5 (41)

Target Level

N/A

N/A

N/A

N/A

9 - Industry, Innovation and Infrastructure
Industry, Innovation and Infrastructure (SDG 9)

9.2.1 Manufacturing value added as a proportion of GDP and per capita

Current Level

6% (39)

Target Level

N/A

Secondary SDGs addressed
3 - Good Health and Well-Being
Good health and well-being (SDG 3)
8 - Decent Work and Economic Growth
Decent Work and Economic Growth (SDG 8)
10 - Reduced Inequalities
Reduced Inequalities (SDG 10)
Directly impacted stakeholders
People
Farmers with better inputs, poor communities and malnourished populations with access to nutritional foods
Planet
Environment due to less harmful feeding products and practices
Corporates
Food markets, wholesalers, retailers
Corporates
Government due to improved trade balance and a more productive agricultural sector
Outcome Risks

Greenhouse gas emissions from animal feed supply chains (18); water pollution, air pollution and land degradation caused directly by the increased livestock production (19)

Higher demand for crops and arable land for feed production. Crops make up a significant proportion of feed inputs.(20)

The use of feed additives affects feed efficiency, and animal and environmental performance (i.e. higher nitrogen and phosphorus flows may contribute to higher eutrophication and acidification potential).(21)

Water consumption for feed crop production reduces the amount of water available to other ecosystems.(22)

Impact Risks

Execution risk: Inappropriate pricing strategies can result in farmers still not being able to buy quality feeds due to unaffordability.(23)

Unexpected impact risk as food price anomalies may arise

What

Investments in animal feed production, which may help increase agricultural productivity and alleviate hunger as well as undernutrition problems in Rwanda.

Who

Rwandan farmers with access to suitable animal feed and citizens with increased access to nutritional food options.

Risk

Negative environmental impacts may arise without focus on sustainability. Market-related risks may arise due to low consumer awareness of the benefits and an underdeveloped distribution network.

Impact Thesis

Contribute to improving the productivity and nutrients of the current livestock production, which in turn enhances Rwanda's food and nutritional situation.

Policy Environment

National Agriculture Policy 2018: This policy identifies the need to invest in animal genetic improvement, and address animal feed and animal health challenges to increase availability of the output. Animal resources contribute to Rwanda's gross domestic product by expanding and commercializing animal feed value chains.(24)

Strategic Plan For Agriculture Transformation 2018-24 (PSTA 4): This plan promotes high potential livestock and aquaculture, while focusing on animal feed production and animal health to increase animal production.(25)

Rwanda Livestock Master Plan: This plan outlines interventions such as better genetics or feed and health services, which could help meet the national development plan targets by improving productivity in key livestock value chains.(26)

Strategic Plan for Animal Nutrition Improvement Programme for Rwanda: This plans aims at improving the quality and availability of animal feeds and fodder for enhanced productivity in the livestock sub-sector.(27)

Financial Environment

Financial incentives: The government offers grants and special capital access for investors, who promote business and development in rural areas.(34)

Fiscal incentives: Investors in the agriculture sector enjoy duty free importation of all inputs. Agriculture equipment is exempt from tax. Registered investors who export 50% of the turnover of goods produced receive a 50% reduction in corporate income tax.(35)

Other incentives: Investors demonstrating capacity to add value and invest in priority sectors, such as agriculture, are offered greater incentives than those investing in non-priority sectors.(34)

Regulatory Environment

Law N°16/2016 of 10/05/2016 on Plant Health Protection in Rwanda: This Act determines modalities for plant health protection as well as strategies for controlling and containing pests or diseases and matters related to living organisms.(28)

Ministerial Order Nº002/11.30 of 18/08/2010: This Act determines regulations about quality seeds production and control of seeds produced and marketed. It also appoints the Minister of Agriculture as the body determining the quality of seeds.(29)

Ministerial Order N°003/11.30 of 18/08/2010: This Act sets forth conditions required for marketing quality seeds. It outlines procedures that must be followed for marketing quality seeds and the conditions required, and describes the nature of quality seeds.(29)

Law N'005/2016 of 05/04/2016 - Governed Seeds and Plant Varieties in Rwanda: This Act regulates seed processing, packaging, seed establishment, certification, labelling etc.(30)

The Ministry of Agriculture and Animal Resources is responsible for all regulations and Ministerial orders and guidelines related to livestock.(31)

The Ministry of Health is responsible for all regulations and Ministerial orders and guidelines related to food production, allowed and prohibited ingredients and good manufacturing practices relating to consumables.(32)

The Rwanda Food and Drugs Authority is responsible for creating guidelines and registration and licensing procedures for food manufacturers.(33)

Private Sector

Biyinzika Rwanda Ltd, Kigali Animal Feeds Limited, Lake Kivu Aquaculture Co Ltd, Zamura Feeds Ltd, Agrotech

Government

Rwandan Ministry of Agriculture and Animal Resources (MINAGRI), Rwanda Development Board (RDB), Rwanda Agriculture and Animal Resources Development Board (RAB)

Multilaterals

OPEC Fund for International Development (OFID), World Bank (WB), European Investment Bank (EIB), African Development Bank (AfDB), KfW Development Bank, Food and Agriculture Organization of the United Nations (FAO), International Livestock Research Institute (ILRI)

Non-Profit

German Corporation for International Cooperation (GIZ)

country static map
semi-urban
Rwanda: Eastern Province
Animal feed production should target regions with the largest need for animal feeding due to lack of feed and/or the relevant amount of livestock. The majority of cattle can be found in Rwanda's Eastern and Southern provinces.(36) Apart from the largest farms, the majority of chickens in rural areas are kept without proper feeding as scavengers (37). In Nyagatare Province (Eastern region), 38% of farmers reported not having access to quality feeds as one of the biggest constraints to business. (38)
rural
Rwanda: Southern Province
Animal feed production should target regions with the largest need for animal feeding due to lack of feed and/or the relevant amount of livestock. The majority of cattle can be found in Rwanda's Eastern and Southern provinces.(36)
Sector Sources
  • 1) National Institute of Statistics of Rwanda (2020). Labour Force Survey Trends August 2020 (Q3). http://www.statistics.gov.rw/publication/labour-force-survey-trends-august-2020q3 2) International Fund for Agricultural Development (2019). Country Strategic Opportunities Programme 2019 – 2024 for the Republic of Rwanda. https://www.gtai.de/resource/blob/45938/fe1c62c39e821a638471d69ef0ee5261/pro201904175029-data.pdf 3) Ministry of Agriculture and Animal Resources (2018). Strategic Plan For Agriculture Transformation 2018-2024. Republic of Rwanda. http://extwprlegs1.fao.org/docs/pdf/rwa180543.pdf 4) Yilmaz, D.and Yilmaz, I.C. (2020). 'Comparative Cost Assessment of Cold Storage Plants and Natural Storage Structures for Potatoes', Potato Resources. https://doi.org/10.1007/s11540-020-09454-0 5) Ministry of Agriculture and Animal Resources (2018). Strategic Plan For Agriculture Transformation 2018-2024. Republic of Rwanda. http://extwprlegs1.fao.org/docs/pdf/rwa180543.pdf 6) World Food Programme (2019). Fill the Nutrient Gap. https://docs.wfp.org/api/documents/WFP-0000115861/download/ 7) Ntirenganya, E. (2019). Poultry farmers appeal for affordable animal feed. https://www.newtimes.co.rw/news/poultry-farmers-appeal-affordable-animal-feed 8) Enahoro, D., Njiru, N., Thornton, P. and Staal, S.J. (2019). A review of projections of demand and supply of livestock-derived foods and the implications for livestock sector management in LSIL focus countries. https://reliefweb.int/sites/reliefweb.int/files/resources/WP262_final.pdf
IOA Sources
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Cambridge: Cambridge University Press. https://dashboards.sdgindex.org/profiles/RWA 40) Republic of Rwanda (2019). Voluntary National Review Rwanda 2019. https://sustainabledevelopment.un.org/content/documents/23432Rwanda_VNR_Document__Final.pdf 41) SDG Tracker (2021). Measuring progress towards the Sustainable Development Goals. https://sdg-tracker.org/ 42) United Nations. Sustainable Development Goals. https://unstats.un.org/sdgs/indicators/database/ 43) Zamura. https://zamura.rw/