TERMS OF REFERENCE (TOR) OF THE BUSINESS PLAN FOR COMMERCIALIZATION OF THE UNIVERSITY OF ELDORET DAIRY FARM
1. SNV KENYA / NETHERLANDS DEVELOPMENT ORGANISATION
SNV Netherlands Development Organisation (SNV) is an international not-for-profit development organisation that provides capacity development services to nearly 2,500 organisations in 36 countries worldwide. SNV engages with stakeholders at different levels in local economies and agricultural value chains, with the objective to help enhance competitiveness, incomes and employment by inclusion of small and medium sized farmers and SMEs. In the East & Southern African region, SNV has offices and programs in Ethiopia, Kenya, South Sudan, Uganda, Tanzania, Rwanda, Zambia, Zimbabwe and Mozambique. In Kenya, SNV focuses on horticulture, dairy and extensive livestock, water and sanitation and renewable energy (biogas). In the dairy sector SNV Kenya is implementing the Kenya Market-led Dairy Programme (KMDP).
2. KENYA MARKET-LED DAIRY PROGRAMME (KMDP)
The Kenya Market-led Dairy Programme (KMDP) is a 4.5 year programme funded by the Embassy of the Kingdom of the Netherlands. The programme started 1st July 2012 and is implemented by SNV Netherlands Development Organisation in collaboration with stakeholders in the dairy industry. The overall goal of KMDP is to contribute to the development of a vibrant and competitive dairy sector with beneficiaries across the value chain. KMDP acknowledges and appreciates that the dairy industry in Kenya is private sector driven. KMDP has two pillars or strategic levels of intervention:
I. Dairy Value Chain: Increase efficiency, effectiveness & inclusiveness of the dairy value chain.
In the smallholder dominated dairy value chain, KMDP works in a number of milk sheds with processors and dairy societies (also referred to as milk Collection and Bulking Enterprises or CBEs). Currently SNV/KMDP collaborates with two processors and eighteen dairy societies in Meru/Eastern, Central/Kinangop and North Rift and facilitates design and implementation of more inclusive business models, with an emphasis on embedded Training & Extension and input supply services for CBE members/farmers. In addition to that SNV/KMDP provides BDS services to enhance management capacity and governance of CBEs at their level.
II. Sector issues: Promote/support interventions and innovations that address systemic issues.
Under this pillar KMDP facilitates innovations and supports interventions which address systemic issues related to e.g. dairy sector policies, feed & fodder, milk quality (e.g. piloting Quality Based Milk Payment systems), access to finance, and practical dairy skills development/training. This also involves supporting the transitioning of the sector from smallholder subsistence farming and dairy production, to commercial dairy entrepreneurship and dairy as core business. In doing so KMDP is engaged in a project with medium and large scale dairy farmers and commercial fodder producers. The objective of this intervention is to fast track innovations and adoption of best practices in total farm management, which is expected to also have spin off to smallholder farmers and CBEs through promotion of business linkages, field days, demos and training.
3. DAIRY SECTOR TRANSITIONING AND VOSD
SNV/KMDP supports the transitioning of the dairy sector towards professionalization and commercialization of dairy farming as core business. The dairy sector is the largest agricultural subsector and it contributes up to 4% of GDP. Milk consumption per head is one of the highest in Sub Sahara Africa and stands at 115 liters per person. An estimated 80% of total production (estimated at 5 billion liters in 2012) comes from smallholder farmers of which about 50% is marketed. Out of this 25% enters the market as processed milk or milk products.
The sector is in a transition phase from smallholder subsistence farming with on average 3-4 crossbreed cows selling excess milk, to dairy entrepreneurs with dairy as core business.
This segment of dairy farms is of a varied composition in terms of farming systems (zero grazing and semi-zero grazing with pastures) and ownership/management. As for the latter it consists of (a) smallholder farmers – often with off farm employment or income - who have invested and have been able to grow their dairy farming business to the next level, (b) medium and large scale farmers who have “(re-)discovered” dairy farming as a profitable business undertaking, and (c) investors (telephone farmers) - usually well-off Kenyans with ample land and resources often in formal employment or on retirement – who invest in dairy farming and often employ farm managers.
Amongst all these groups, knowledge and skills level is limited and there is a great demand for training and other ways of knowledge transfer. SNV/KMDP tries to address this through its Vocational Skills Development Agenda. Under this Agenda KMDP partners with training and knowledge institutes that wish to develop a more private sector-led and commercially oriented model for – especially – practical training. This often also entails commercialization of the dairy unit of these institutes and investing in dairy infrastructure, dairy management and human resources to run this unit efficiently and profitably.
4. BACKGROUND OF THE CONSULTANCY
The University of Eldoret (UoE) and SNV Kenya/Netherlands Development Organization entered into a Memorandum of Understanding (MoU) to offer support in the transformation of the University dairy farm into an industry driven, commercially viable and environmentally sustainable business entity.
The MoU identifies and acknowledges UoE’s objective to identify strategies to attract both private and public investments to continuously improve dairy infrastructure, contribute to advancement of university curricula in terms of practical skills development, and to provide an opportunity for University-community-industry linkages through a vibrant outreach and innovation framework.
Dairy farming constitutes one among many enterprises in the University Farm that includes maize and wheat farming. While farming is a core business in the university, the core mandate of the University remains training, research and outreach. A commercially vibrant Dairy Unit at the University is expected to provide the needed support to the core university mandate, through providing additional resources, dairy researchable problems, skills-based training modules, lessons for outreach, and an opportunity for both student and farmer learning from a modern “dairy firm”.
5. DAIRY BUSINESS UNIT CUM INVESTMENT PLAN
To develop or revitalize the current Dairy Unit into a commercially viable farm/business unit, a business cum investment plan is required based on international best practice but properly contextualized within the Kenya situation and market dynamics.
The businessplan is - where relevant and opportune - expected to identify synergies within the University Farm that can be harnessed, point out areas that can be antagonistic and suggest solutions in order to develop a commercially viable Dairy Unit of the University Farm.
The business plan to be developed is expected to consider - where possible and relevant - the capacity, needs, policies and aspirations of the client (University of Eldoret) to ensure successful implementation of a commercially viable and sustainable Dairy Unit.
The businessplan to arrive at a commercially viable Dairy Unit will take as the starting point the existing herd and infrastructure. However investment needs and options in buildings, equipment, machinery and human resources, will be based on international best practice, taking into account the local market dynamics in terms of cost and price structure as regards to labor & hardware and milk and value added milk products respectively. The businessplan shall include two sections:
The businessplan(s) will be presented with two scenarios (high and low) whereby the low scenario will work with conservative milk production per cow per year, and minimum average sales prices of raw milk and value added products as witnessed over the past 2 years in Eldoret area. The high scenario will use maximum production and price levels. The low scenario will also be instrumental for risk management.
The consultants who will prepare the business plan will endeavor to look for cost efficient solutions and locally available building materials and technologies, thereby where possible and relevant balancing the investments required with the investment capacity of the client.
The consultant is expected to collect relevant data from different sources within the university and consult with stakeholders in the dairy industry, to assure coverage and due consideration of all important and relevant information to arrive at a plan that – when implemented - assures a commercially viable University Dairy Unit. UoE will guarantee on their part that it will give the necessary cooperation as regards to making available all information that the consultant(s) and the University deem important for the consultant(s) to consider, immediately and promptly upon the request of the consultant(s).
SNV will make available – as per its ability and budgetary limitations - its technical advisors and/or LCBs (Eldosirikwa) to support UoE in submitting the required/requested data to the consultant(s).
6. ACTIVITIES TO BE UNDERTAKEN BY THE CONSULTANT(S)
The consultant(s) will undertake the following activities as part of the businessplan preparation:
Section 1: Dairy Production Unit
Based on 80 lactating cows
- land, buildings, dips, farm machinery incl. machinery for feed preparation/mixing, vehicles, milking equipment, cooling tanks, milk cans, office equipment and all other assets (to be specified by age, made, condition, size, capacity);
- public utilities: water supply (piped water, boreholes: number and capacity), electricity supply (2/3 phase, stand-by generator);
- herd characteristics: numbers, breed, age, herd composition milking cows, dry cows, calves, heifers, etc.);
- milk production per animal over the past 12 months;
- fodder production plan (acreage currently under fodder crops and type of crops, acreage reserved/used for pastures);
- average production in tonnes per acre per fodder crop (dry matter or on product basis);
- cost of production per acre for the main fodder crops (maize, grass, others) specified as regards to soil preparation, seeds (plus variety), fertilizers (type, quantities), spraying, harvesting/chopping;
- fodders currently preserved and storage capacity;
- feed ingredients bought, cost price per ton and quantities per year (dairy meals);
- total veterinary costs (excluding AI) for the past 12 months;
- total costs AI services for the past 12 months;
- current feed rations per herd group (lactating cows, calves, heifers, dry cows);
- a site map or lay out with all farm structures (incl. offices) on scale and photographs of all structures and buildings;
- a boundary map/sketch map indicating the section of the University Farm and arable land and pasture available for dairy plus total acreage;
- recent soil analysis of the land area preserved for fodder crop production and pasture.
- the cow house with utility buildings, such as milking parlour, milk- and machine room, cleaning area, lab, offices, staff dressing room, sanitation room, treatment area, manure collection/ storage, others (to be submitted with technical drawings);
- support structures (cattle dip/spraying area, feed storage, fodder storage or go-down, farm machinery storage, workshop, power supply, biogas unit, water storage, others);
- milk equipment (milking machines, milk cans and milk cooler(s), milk testing equipment, milk tanker);
- utilities: electricity (transformer, generator) and water (boreholes, tanks);
- permits and licenses;
- architectural costs;
- others.
- main fodder crops to be grown and acreage;
- recommendation for pasture and acreage;
- main fodder crops to be preserved and quantities of storage required (e.g. hay, silage);
- type of storage required
- farm equipment (i.e. tractors, ploughs, harrows, seeders/planters, maize chopper, grass mower, shovel, manure spreader)
- others.
- recommendations on ration per herd group;
- recommendations on feed ingredient/raw materials to be bought from third parties and quantities per year;
- recommendations for machinery to make TMR on-farm (type, made, capacity);
- others.
- human resource/staffing plan (functional levels, job-profiles and salary scales);
- recommendations on level of autonomy of farm manager/management
- office equipment, furniture and farm recording software system;
- herd veterinary treatment plan;
- herd insemination plan;
- bio-security plan;
- risk-analysis plan.
- initial investment costs and plan;
- replacement investments;
- salaries/wages;
- operating costs;
- residual value/herd value;
- working capital;
- production and revenues (sales of milk, young stock and culling of animals);
- cash-flow and IRR.
Section 2: Dairy Processing/Value Addition Unit
Based on a commercially viable herd size, currently approx. 80 lactating cows, and on the assump-tion that the market for value added products will be mainly the student population (3,000 in-house students), outlets in Eldoret Town and other emerging markets in Western Kenya.
- buildings (production, storage, cold room, lab);
- utilities (sewage/water purification, electricity, water);
- processing and packaging/dispensing equipment for the following product lines: non-packed pasteurized milk (ATM/dispenser), yoghurt 200 and 500 ml, ice cream;
- permits and licenses;
- architectural costs.
- human resources/staffing plan (functional levels, job-profiles and salary scales);
- office equipment, furniture and farm recording software system;
- laboratory equipment;
- HACCP or ISO certification;
- marketing & sales;
- risk-analysis plan;
- initial investment costs;
- replacement investments;
- salaries/wages;
- operating costs;
- residual value;
- working capital;
- production and revenues (sales of value added milk/milk products);
- cash flow and IRR;
- recommendations on investment options.
General
Based on discussions with UoE representatives/departments, the dairy farm management/ workers, SNV and other stakeholders in the dairy sector, the consultant(s) will also give recommendations on:
7. KEY DELIVARABLES OF THE CONSULTANCY
The consultancy should result in a report or reports covering the scope of work and activities listed under article 6 above (Section 1 and Section 2). This report(s) should also include a list of organizations and officials consulted for the purpose of the study.
The structure of the businessplan(s) shall follow a clear format, which may look as follows:
Prior to commencement of the work, the consultant(s) shall present a detailed work plan to SNV and EoU’s Steering Committee. In addition he/she will send an exhaustive questionnaire prior to commencing the work, which will be filled out and addressed by UoE to give the consultant sufficient input for his work and – thus - to save time and costs.
At the end of the assignment in Kenya, the consultant shall present his/her initial findings to the SNV/UoE Steering Committee. Final report writing will be done in the Netherlands and submission of a draft and final report will be as per the timelines indicated and agreed upon.
8. PROFILE OF THE CONSULTANT(S)
A local or international expert with knowledge and experience in:
9. LEGAL AND LIABILITY ISSUES
The consultant(s) will be contracted by SNV Kenya/KMDP for this assignment. However the businessplan should be drafted in accordance to the existing legal provisions governing the operations at the University of Eldoret. The Consultant will be under direct supervision by the SNV/UoE Steering Committee, which is referred to in the MoU between SNV and UoE as follows:
“There shall be a Steering Committee (SC) that will be responsible for the implementation of this MOU comprising of the following persons:
For UOE: Prof Julius O Ochuodho (NICHE Project Manager); Phillip Chemwok (University Farm Manager); Dr Anderson Kipkoech (Dept. of Agr. Economics and Rural Development).
For SNV: Joseph Langat – KMDP Senior VOSD Advisor; Anton Jansen – KMDP Coordinator”.
The final business plan will be the joint property of SNV Kenya/KMDP and the University of Eldoret and both organizations can use it freely for sharing and learning with relevant stakeholders in their respective programs. UoE and the University Farm will arrange for the consultant to access all the relevant information required for carrying out the task. The consultant is expected to divulge any confidential information.
10. TIMELINES
Depending on the availability of the consultant(s), the starting date of this consultancy shall preferably not be later than 15 of July 2015, and the final documents - as per the scope of work and deliverables stated above - shall be submitted not later than 8 (eight) weeks after the start of the assignment.
11. CONTENT OF THE PROPOSAL
The consultant’s proposal shall contain the following information:
12. WHERE AND WHEN TO APPLY
The assignment will be contracted by SNV Kenya. Please send your proposal and the names/CVs of the proposed consultant(s) for the successful implementation of this ToR before 26thth of June 2015 with reference to “ToR Businessplan UoE Dairy Farm” as cover letter title. This should be done by clicking on the APPLY TAB on this page.
NB: The consultant who will successfully apply and be selected for this assignment will be subjected to a due diligence process which amongst others involves a no-conflict of interest assessment before signing the contract.
13. MORE INFORMATION ABOUT SNV KENYA
For more information about SNV Kenya please refer to our website: www.snvworld.org and for information on the University of Eldoret: www.uoeld.ac.ke
