The Inclusive Dairy Enterprise(TIDE Phase 2) The dairy sector in Uganda is experiencing a trans-formative process. From a self-contained market (with hardly any export and limited imports)  Uganda has suddenly emerged as a leading dairy exporter in Africa. The pull of the exports have spurred a commercialization process in two areas. In southwest Uganda (where the exporters are based)  farmers are responding to increased milk prices by shifting from a lsquo;low input ndash; low outputrsquo; farming system to a semi-intensive grazing regime. With most of the milk from Southwest Uganda now destined for export  the gap in the domestic market (mainly Kampala)  is filled with commercial dairy farmers in peri-urban Kampala.   TIDE phase 1 supported farmers to transition to semi-intensive production through the creation of a commercial input market in knowledge (training  extension)  products and technical services and finance (credit). A market was created by supporting the development of products (e.g. training modules  on-farm infrastructure  mechanization)  hand holding the emergence of contractors and service providers and developing the market linkages (through an intricate mix of technical advice  strategic subsidies and matching grants). Similarly  TIDE attracted local financial institutions (SACCOs) to provide loan products to enable dairy farmers to make the investments necessary for improving production. Building on the results of TIDE 1  phase 2 will have two components  i.e. deepening and up-scaling. Under the deepening component  TIDE 2 will focus on the current TIDE project area (7 districts) in order to increase impact (supporting farmers to reap benefits from the investments made). From market creation the focus will shift to market development: ensuring that the market delivers products and services to dairy farmers that are accessible  relevant  affordable and of high quality. TIDE 2 will also support interventions further up the value chain: cooperatives  value chain linkages and domestic market diversification (including school milk). Up-scaling will be pursued by following the market in the products and services developed under TIDE 1 that are relevant for commercial farmers throughout Uganda (mostly peri-urban Kampala and Rwenzori Region). Private sector companies will be actively supported to market their products and services in those areas (mainly through mobilizing technical expertise and networking).   The TIDE 2 impact ambition is: Direct impact: to double income for 5 000 farmers (already counted in TIDE 1)  to create 1 000 new jobs and to improve nutrition for 500 000 additional children within the TIDE project area. Outreach: to reach 2 000 farmers (both directly and indirectly) with improved income outside the project area. System change: to contribute to dairy sector transformation. This is to be realized by working on four components:  1) Productivity: deepening the market in knowledge  inputs and finance (through quality and diversification); up-scaling to other commercial farming areas by following the private sector; 2) Milk quality: up-scaling QBMPS (Quality Based Milk Payment System) throughout the country  using a processor-led model;  3) Value Chain: deepening Value Chain linkages through support to cooperatives and inclusive business models; up scaling by supporting diversification of the domestic market. 4) Nutrition: deepening the school milk and yogurt project in SW Uganda by increasing nutritional effects and up-scaling the approach outside project area through social campaigns. In phase 1  financial incentives (subsidies and matching grants) helped to unlock the private sector and create the market. In this proposal for phase 2  the role of subsidies is limited to quality improvements  gender interventions and innovations. To provide dairy farmers with access to soft finance on a more sustainable basis  a contract will be pursued with a financial intermediary (still to be determined)  both for leverage and implementation. Direct impact: to double income for 5 000 farmers (already counted in TIDE 1)  to create 1 000 new jobs and to improve nutrition for 500 000 additional children within the TIDE project area.Outreach: to reach 2 000 farmers (both directly and indirectly) with improved income outside the project area.System change: to contribute to dairy sector transformation The following themes guiding Dutch government policy seem particularly apt for the dairy sector in Uganda: 1. Innovation: it is not just Dutch products that can be exported  but also knowledge and skills. The more Ugandan dairy farmers commercialize and intensify production  the more Dutch expertise is relevant for the sector. An interesting example of that is silage making. Also the Dutch experience in applying the ‘diamond approach’ (bringing research  private sector  civil society and government together) is of direct relevance for Uganda. 2. Climate adaptation: this is a reality  directly affecting Ugandan dairy farmers in the form of a more erratic weather pattern  higher temperatures and longer dry seasons. To prepare for future climatological circumstances  farmers are supported to build resilience by reducing the reliance on temperate breeds  increase capacities for conserving feed and to protect cows from heat (trees in pastures). In addition  intensification of production results in a reduction of methane emissions per litre of milk produced. 3. Reduction post-harvest losses: globally  one third of all produced food is wasted. Within the Ugandan dairy chain  waste is mainly concentrated in the link between farmers and market (processors or traders). Milk is not optimally utilised in calf rearing and due to hygiene and quality issues  may not reach or get rejected in the market. Increasing knowledge and supporting effective farmer market integration (shortening and increasing the efficiency of the chain) can address some of these issues. The introduction of the Quality Based Milk Payment System in TIDE 1 is a good example of this approach. 4. Improved soil and water management: In the current extensive grazing regime  land is rarely seen as a limiting factor (average farm size of farmers reached by the project in Kiruhura District is some 300 acres). In the recent past  farmers have invested considerably in water harvesting  mainly in the form of dams and pans on their land (often with government assistance). TIDE interventions lead to improved soil management  by focusing on pasture and manure management  and improved water management (assisting farmers to distribute water within the farm (thus reducing gully formation  as cows do not longer have to treck to the dam for water).   Multi-Annual Country Strategy Uganda In the Multi-Annual Country Strategy 2019 – 2022 (MACS) of EKN in Uganda  Food and Nutrition Security is selected as one of the key thematic priorities  based on the achievements realised within the current programme. The TIDE project interventions respond to the formulated approach for the theme: “From the four dimensions of Food Security  i.e. availability  accessibility  stability and utilisation of food  the focus of the Netherlands bilateral support will be on availability and stability and to a lesser extent on accessibility and utilisation. Engagement will continue to be guided by a marked-led orientation on agricultural development. Private sector involvement is promoted  including collaboration with Dutch agro companies following the Aid and Trade and Investment policy.” From the selected outcome areas within the Food and Nutrition Security programme  the following are of relevance to TIDE 2: People’s nutrition has been improved: The school milk activity in TIDE 1  which creates access to milk for 300 000 children will continue in TIDE 2. In addition to this direct access  TIDE 2 interventions will also aim to broaden access to ‘healthy foods’  through supporting marketing in the urban (Kampala) market. The dilemma is  that currently most consumers buy raw milk (at UGX 1 500 per litre)  which is cheaper than processed milk (at up to UGX 2 600 per litre). Encouraging consumers to switch to processed milk and milk products (yoghurt) might affect access  but will ultimately lead to safer consumption  as it is easier to monitor the quality at processing level. The indicator (# of people with improved food intake) will be included in the Results Framework  capturing school milk drinking children. Economic performance and resilience of farming systems increased: The TIDE project fits neatly into the planned activities under this outcome area: - TIDE aims to increase “productivity and incomes of emergent farmers” in dairy through “on-farm improvements  organisational strengthening of producers’ organisations and market development.”  - TIDE also exploits the “comparative advantage of the Netherlands” in dairy: in TIDE 1 by mobilising Dutch expertise (Agriterra  WUR  Bles Dairies  PUM  Yoba)  which in TIDE 2 is likely to be broadened to include a more diverse private sector involvement.  - “Resilience to both long-term climate change effects and short-term shocks” is also part of the TIDE approach  by supporting farmers to increase availability of feed during the dry season through improved forage management. Also the water management interventions support that purpose.Activities planned in 2020- Strategic Plan development/reviews  12 cooperatives- Capacitybuilding through coacing and mentoring  57 cooperatives. Done by the Business Advisors from Agriterra.- Sthrenthening milk marketing for cooperatives  20 cooperatives. Form 5 new clusters  10 new cooperatives supplying schools and 10 new coops QBMPS- Service provisin to farmer for increased production  6 SACCOS  10 input suppliers  45 coops with extension- Gender mainstreaming: development of busines cases for youth groups within cooperatives  women participation and leadership  learning through exchange  20 existing yought groups and consider 10 youth groups outside the TIDE area.