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The United Nations International Fund for Agricultural Development (IFAD) and the government of Rwanda have signed an agreement to develop the dairy sector in the East African country. The agreement, signed today in Rome, is for a new initiative called Rwanda Dairy Development project.

The new project will improve milk quantity and quality, farmers’ processing capacity through promotion of climate smart technologies and practices, and support the development of dairy cooperatives so that they can benefit from market-driven production, processing and trading of dairy products.

“In Rwanda, the dairy subsector is crucial for rural development, poverty reduction, and food and nutrition security,” said Kanayo F. Nwanze, President of IFAD. “It offers a pathway out of poverty for the large number small dairy producers and service providers throughout the supply chain.”

In a statement released today, IFAD said the agreement was signed by Jacques Kabale Nyangezi, Rwanda’s Ambassador and Permanent Representative to IFAD, and the President of IFAD. Of the total investment of $65.1 million, IFAD will provide a loan of $43.6 million and a grant of $1.1 million; Heifer International will provide a $4 million grant; while the Rwandan government, the private sector and project beneficiaries will contribute the balance.

Over the past decade, Rwandan government has made significant investments in the dairy industry. The sector has been the largest and fastest-growing segment of the livestock sector in the country, accounting for 10.5 per cent of agricultural GDP. Current annual milk production in Rwanda is valued at approximately $162.4 million.

Despite the progress made in developing the dairy sector, IFAD said there are still significant challenges such as limited support services (such as artificial insemination, veterinary services, extension and inputs), inadequate farmers’ knowledge of dairy cattle management, their limited ability to organise and market milk collectively, low milk productivity, and limited access to finance.

The Rwanda Dairy Development project will cover 12 districts and help improve the livelihoods of over 100,000 smallholder farmers and generate opportunities for other actors in the country’s dairy sector. It will also help strengthen an inclusive policy and institutional framework for the sector.

The UN agency said it has financed 16 rural development programmes and projects in Rwanda Since 1981, for a total amount of $283.8 million, directly benefiting about 634,300 rural households.