Cooling milk on cow manure: Increasing the value of milk and biogas along the dairy value chain in East Africa

Biogas-powered milk chilling enables off-grid dairy farmers to store, deliver and sell the highest possible quantity of milk.

Photo of Dorine Poelhekke
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Written by

I confirm that I am fully aware of the eligibility criteria, and based on its description, I am eligible to apply to the CSV Prize 2017.

  • Yes, I'm eligible

Preferred language

  • English

Organization name

SimGas Kenya Ltd

Year founded

2013

Initiative stage

  • Start-Up (a pilot that has just started operating)

Annual budget in 2017 (USD)

  • $500k - $1m

Number of beneficiaries impacted so far

  • 10 - 50

Organization type

  • Social enterprise

Secondary Focus Area

  • Rural development
  • Nutrition

Headquarters location: Country

  • Kenya

Headquarters location: City

Nairobi

Location(s) of impact

Kenya: Eldoret, Karatina Tanzania: Tanga

Website

http://simgas.org/projects/biogas-milk-chilling/

Facebook URL

https://www.facebook.com/SimGas.org/

Twitter URL

https://twitter.com/SimGas_NL

Problem: What problem is this initiative trying to address?

With our biogas digesters SimGas currently serves 2,500 East African dairy farmers, who now cook on clean biogas instead of wood. Biogas can also be used for chilling. This solves another problem dairy farmers face every day: uncooled evening milk does not survive the heat overnight and cannot be sold the next day. Post-harvest milk losses are estimated at 30-50% (FAO 2003), and only 15% of milk in Africa reaches the formal sector (IFC, 2014). This creates a lost income opportunity for >2M East African dairy farmers.

Solution Summary: What is the proposed solution? What do you see as its most promising aspects for creating shared value?

The milk chiller provides off-grid, biogas-powered milk cooling on-farm, enabling smallholder dairy farmers without access to electricity to store, deliver and sell the highest possible quantity and quality of raw milk. It is the missing piece in the cold chain and benefits stakeholders throughout the chain. Here’s how: Every day, dairy farmers put cow manure in their biogas digesters to generate biogas. Every evening, dairy farmers put their churn with fresh milk into the chiller, which cools it down fast. It is kept cool until the next morning when it is delivered and sold to the dairy cooperative. Dairy cooperatives collect more milk, attract more members, and can meet supply targets set by processors. Processors receive more milk at more consistent volumes, enabling them to meet consumers’ increasing demand. Dairy farmers pay for the chiller with milk: monthly payments are deducted from monthly milk income, using the existing financial infrastructure of dairy cooperatives.

Impact: What is the impact of the work to date? Specify both the social and the environmental impact of your work

To date, 21 dairy farmers in Kenya and Tanzania have benefited from using our milk chiller models throughout 3-month test periods (see attached qualitative impact results). One of the dairy farmers, Paul Macharia (featured in video), said: “With the milk chiller they [dairy cooperative] say my milk is better than the rest!” Paul’s cooperative is associated to Kenya’s largest dairy processor, which is now testing our chillers to analyse its impact on milk quality. FAO/GIZ’s cost benefit analysis on our chiller (2017*) shows an EIRR of 112% and NPV of 8.9k USD, taking impact on food loss reduction, household income, GHG emissions, energy access, employment and time saving into account. In 2018 we will do a pilot with 200 dairy farmers. Each user is expected to: 1) gain 700-900 USD additional milk income per year; 2) pay back the chiller within a year; 3) gain a better social position as ‘model dairy farmer’ within the dairy community as well as the biogas community. *unpublished

Financial sustainability plan: How is this initiative financially supported? How will you ensure its financial sustainability long-term?

The project is financially supported by a consortium of SimGas, SNV, Mueller and BoPInc (corporate contributions: 36%), by donors EEP, USAID, OFID (grants: 58%), and IDEO.org (prize: 6%). SimGas Kenya has built up a very local organisation with 90+ Kenyan FTE working in our 35 sales & service hubs (83 hubs by 2022) throughout rural Kenya. Our core business is selling and installing biogas digesters, now profitably at 200 per month. The milk chiller targets the same customer; once in the commercialisation phase, SimGas will sell the milk chiller through our existing network of 60+ partnered primary dairy cooperatives and associated dairy processors in Kenya, followed by Tanzania and Rwanda. At break-even, revenue from sales is invested in new sales for a growing number of customers.

Unique value proposition: What makes your initiative innovative? How does your project differ from other organizations working in the same field?

1) No alternative solutions are available at this scale that cool milk fast enough to keep its quality (FAO/GIZ, 2018*). Refrigerators cool 21x slower, electric chillers require reliable electricity, which is not there in rural East Africa (UNDP, 2016). 2) We cater to farmers with <10 cows. With only 2 cows, our milk chiller is already viable. 3) We use biogas. We proved that daily cooling & cooking on biogas is feasible. 4) By partnering dairy coops, we enable farmers to pay with milk money.

Founding story: Share a story about the "Aha!" moment that sparked the beginning of this initiative.

SimGas was approached by Mueller (global market leader in milk cooling equipment) as they were looking for a partner to realise cost-effective off-grid milk cooling at micro-scale. Mueller had already evaluated milk cooling on solar power: it would not be cost-effective. Maybe biogas could? SNV (>50y experience in the emerging dairy and biogas sectors) soon joined the table and confirmed the untapped potential of cooling milk on-farm. We locked ourselves up in a room for a week to share ideas. Our “Aha!” moment was the thought of a wine chiller: 1. Make ice (to store the cold) with an absorption chiller on biogas; 2. Release it fast (like a wine cooler) through conduction in water to cool the milk super fast. Since then, we assessed East African dairy markets, developed our own cooling technology, proved the concept in the field, and started a range of pilots in Kenya and Tanzania.

Where did you hear about the Nestlé Creating Shared Value Prize?

  • Upon recommendation from others

Program Design Clarity: We are hungry to know more about what exactly your model consists of. Succinctly list a) what main activities are you doing with your beneficiaries, b) where you carry out the activities? c) how often? d) for how many hours? e) who delivers the services? and f) any other brief details

The model: Dairy farmers who own a biogas digester (to date 56k in East Africa, 265k in S-E Asia, 4.7M in India, 43M in China) are notified by their dairy cooperatives about biogas-powered milk chillers. Farmers are invited to demos to ‘see and believe’ the product. Vetted farmers sign a contract with SimGas and the dairy cooperative to pay off the milk chiller in monthly milk instalments (just like they did for their biogas digesters), using the cooperative’s existing financial infrastructure. SimGas’ technicians install the chiller at the farmer’s house, train the user for optimal performance, and connect a monitoring device. This collects performance data remotely and wirelessly, providing insight into how the chillers are used, and notifying technicians in case a technical problem arises. Impact data is visible on a live dashboard (SimGas is the only one in the biogas sector that can do this). Project status: a) We have tested 21 milk chiller prototypes at SimGas customers, at Brookside’s farmers, involving dairy cooperatives and experts. Through interviews, co-design and value chain mapping, we learned more about its value to each stakeholder; b+c) 3 key testing periods: Dec ’16 - now 14 prototypes in Eldoret and Tanga; May ’17 - Sept ’17 3 prototypes in Karatina; Sep ’17 - Mar ’18: 4 final prototypes in Karatina; d+e) One of our best hub managers, George Mwangi (in video), spends 8-12h/week on providing trainings, customer support and gathering feedback from the field.

Focus area

  • Rural Development

We are interested in learning more about your initiative's broad impact on sustainable development. Please reply ONLY to the question(s) related to your above focus area.

Access to market: Cooling milk on-farm can provide 1.3M farmers (in Kenya alone) access to formal markets (FAO/GIZ 2018*), with up to twice as much milk, adding value down the value chain. Economic dev't: More milk supply down the value chain results in more milk income up the chain. More milk collected by cooperatives results in more milk transported to milk processors who increase the utilisation of their installed processing capacity (FAO/GIZ, 2018*). Gender equality: >70% of East African smallholder dairy farmers are women (Makoni, 2014); more women have sole control of the income from their milk sales or make joint decisions with males about how to spend money. At scale, increased household income from milk has the potential to economically empower a large proportion of poor rural women and improve their standing in society (FAO/GIZ, 2018*). Water management: The water fed daily into a biogas digester exits the digester daily in the form of organic fertilizer, used directly on the farmer’s land. This leads to 25-200% of crop/fodder yield increase (FAO/GIZ, 2017*). Nutrition: Aside sales, more milk is available for home consumption and feeding calves. The increased crop/fodder yield provides nutrition for the household (and for cows, producing more milk). Health & wellness: Next to cooling, biogas is used for cooking, replacing wood and charcoal. No indoor smoke prevents lower respiratory infections: the 2nd main cause of death in Kenya (WHO, 2015). * unpublished

Creating shared value: How does your initiative create value for different stakeholders?

The milk chiller is a new-to-the-world product with which SimGas creates commercial value by creating social value: preventing milk spoilage, providing access to formal markets, and empowering women. The dairy farmer gains potentially twice as much milk income, experiences increased benefit from having a biogas digester, and has his/her creditworthiness assessed while paying off the chiller, providing access to more investment opportunities. The dairy cooperative collects up to twice as much milk (of higher quality) from farmers with a milk chiller, can meet supply targets set by dairy processors and can reduce their energy costs of cooling tanks (as the collected milk is already cool). Offering milk chillers and biogas digesters leads to more members, and subsequently to more milk supply. The dairy processor receives more milk of higher quality, and are better equipped to meet the consumer’s increasing demand for more and higher quality milk products (IFCN, 2015).

How is your initiative funded, now and over the next 5 years?

Our own investment and grants from donors covered the development phase. Further grant investment is sought to cover the next pilot. Over the next 5 years, we plan to include the milk chiller in our product portfolio, next to our biogas digester, stove and rice cooker - all sold without subsidies. The target customer is the same, which enables us to use our existing sales and marketing channels in East Africa. This model is EBITDA positive in Q2 2021 at 3,500 milk chiller sales per quarter, assuming no grants. Greater impact and an earlier break-even point can be reached by partnering with dairy processors (Brookside), milk cooling equipment distributors (Mueller), and for example Nestlé’s Dairy Development & Biogas Project in Indonesia.

How do you plan to influence your field of work if you are a winner of this edition of the CSV Prize?

Winning the CSV prize would enable us to do a pilot with 200 milk chillers running on biogas from 200 biogas digesters currently owned by 200 Kenyan dairy farmers, providing the necessary quantitative impact data to convince emerging dairy sectors that 1) on-farm milk cooling can bring milk losses down to a bare minimum, potentially double milk supply and milk income throughout the dairy chain, while using the most sensible clean energy source for dairy farmers: biogas; 2) this solution, specifically catered to the >80% of dairy farmers with up to 10 cows, limited budgets and without access to reliable electricity, is feasible, desirable and viable; 3) introducing a premium price for cooled milk would induce mass adoption of this solution.

How will you leverage an investment from Nestle to expand the impact of your work?

Upon proving the milk chiller’s impact in our home markets in East Africa, we aim to offer this solution though a wholesale model to emerging dairy sectors worldwide (see next question). With Nestlé being a market leader in dairy sectors worldwide, their expertise, experience and network will be of tremendous value in 1) creating worldwide awareness about the value of cooled milk, 2) evaluating product-market fit for different regions, 3) helping us find suitable distribution partners, and 4) helping us find further investment for growth. We believe that specifically with Nestlé, the chances of expanding the impact of on-farm milk cooling on millions of dairy farmers, their cooperatives and processors, could not be greater.

Spread Strategies: Moving forward, what are the main strategies for scaling impact? What’s the projected impact for the coming years? Are you planning to expand your programme into new locations? On what assumptions do you build your scale-up plans?

Market potential for the plug-and-play, mass-produced milk chillers is assumed the same as domestic biogas digesters: 5.4M in East Africa, 3.8M in Central Africa, 10M in Nepal, Bangladesh, Pakistan, 2.7M in S-E Asia, 85M in India, 100M in China. Strategies for scaling impact are: 1. 2018: Within Kenya we partner with >60 dairy cooperatives, each with access to thousands of dairy farmers. Brookside is interested in doing a pilot with us. 2. 2019+: Beyond Kenya, SimGas Tanzania and SimGas Rwanda can replicate the retail model of SimGas Kenya. SNV aims to promote the chiller in their Africa Biogas Programme. 2019-Q1: 200 units/Q 3. 2019+: Beyond East Africa, Mueller has interest in selling the milk chiller to their distribution network in Uganda, Rwanda and Vietnam. Royal FrieslandCampina has interest to include the milk chiller in their Dairy Development Programs in Nigeria. Nestlé’s Dairy Development and Biogas Project in Indonesia would be an ideal partner. 2020-Q1:1000 units/Q

Team: What is the current composition of your team (types of roles, number of full-time vs. part-time staff, board members, etc.)? How will this team evolve as your initiative grows?

SimGas Kenya Ltd. has 95 (100% full-time) FTE including CEO Mirik Castro, Country Manager Moses Ogeto, COO Oliver Kynaston, Finance Manager Carlos Johnson, Head of Business Development Dorine Poelhekke, Head of Sales Josphat Musenze, Head of HR Pauline Tanui (combined experience: 30y entrepreneur/BD, 60y finance, 30y operations), 2 BDers, 5 hub managers, 26 sales agents, 48 technicians, 4 customer support, 3 accountants and 1 quality officer. SimGas Kenya is 100% owned by SimGas Holding BV: founders Mirik and Sanne Castro, Engie-RDE, private shareholders. Allocated to the pilot are: 1 project manager, 1 M&E officer, 3 sales agents and 6 technicians. In the first year of commercialisation, we will allocate 1 BDer, 8 sales agents and 30 technicians fully dedicated to the milk chillers.

Awards: What awards or honors has the initiative received?

Winner of IDEO.org Amplify Challenge 2016: "How might we improve the livelihoods of small-scale farmers by reducing food waste and spoilage?" The prize included 10 weeks of human-centered design support in the field from a team of four IDEO.org (business) designers; Winner of Lettinga Award 2015 for innovation in anaerobic digestion technology.

Organizational leadership: How are you influencing your field of work in the present?

SimGas thinks of biogas as much more than a clean cooking fuel, continuously trying to increase the value of biogas for our customers. We therefore invest heavily in research and development, with an in-house R&D department of 5 full-time FTE. It is to no surprise that our product, service, and customer financing innovations are carefully being watched by competitors and stakeholders in the sector. We show the world what we do and how we do it as grantee of renowned donors, by being active partners of the Africa Biogas Partnership Program and Global Alliance for Clean Cookstoves, by speaking at international impact forums, universities and startup incubators, through open-source platforms, and by participating in challenges like this. :)

Should you be successful, please confirm your availability to attend the Ashoka Impact Boot camp and Creating Shared Value Prize Live Pitch Event at the World Water Forum 13-16 March 2018

  • Yes, I am available to attend the events on 13-16 March 2018

Evaluation results

5 evaluations so far

1. Overall evaluation

5 - This idea rocked my world. It’s awesome! - 80%

4 - This idea seems really exciting. With a little more polishing, it’d be among my favorites. - 20%

3 - I think the idea is great, but it needs some work before it moves onto the next round. - 0%

2 - I liked it fine but preferred others. - 0%

1 - It didn’t make my heart beat faster. Needs significant revisions. - 0%

2. Innovation

5 - Absolutely, 100%! - 100%

4 - I feel really good about this - very promising - 0%

3 - This has some good elements and some areas for development - 0%

2 - This doesn’t inspire me so much - 0%

1 - This entry is weak here - 0%

3. Social and/or Environmental Impact

5 - Absolutely, 100%! - 40%

4 - I feel really good about this - very promising - 60%

3 - This has some good elements and some areas for development - 0%

2 - This doesn’t inspire me so much - 0%

1 - This entry is weak here - 0%

4. Financial sustainability

5 - Absolutely, 100%! - 100%

4 - I feel really good about this - very promising - 100%

3 - This has some good elements and some areas for development - 50%

2 - This doesn’t inspire me so much - 0%

1 - This entry is weak here - 0%

Nothing stands out! I thought it was great. - 0%

5. Potential to Scale / Replicability

5 - Absolutely, 100%! - 40%

4 - I feel really good about this - very promising - 40%

3 - This has some good elements and some areas for development - 20%

2 - This doesn’t inspire me so much - 0%

1 - This entry is weak here - 0%

6. Organizational Leadership

5 - Absolutely, 100%! - 60%

4 - I feel really good about this - very promising - 20%

3 - This has some good elements and some areas for development - 20%

2 - This doesn’t inspire me so much - 0%

1 - This entry is weak here - 0%

7. Potential for Creating Shared Value

5 - Absolutely, 100%! - 100%

4 - I feel really good about this - very promising - 0%

3 - This has some good elements and some areas for development - 0%

2 - This doesn’t inspire me so much - 0%

1 - This entry is weak here - 0%

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Attachments (3)

SimGas Company Brief_Nov2015_rgb.pdf

SimGas Company folder: our biogas business in a nutshell

SimGas_Update Biogas Milk Chiller.pdf

The Biogas Milk Chiller explained: Why, what, how, and what did farmers, dairy cooperatives, processors and experts say?

References Nestlé CSV Challenge 2017.pdf

References to the sources mentioned in this application. Specifically elaborates on the references regarding FAO/GIZ 2017 and 2018, unpublished studies in which SimGas' biogas-powered domestic milk chiller features as case study. The studies are expected to be published before end 2017 and Q1 2018 respectively.

29 comments

Join the conversation:

Comment
Photo of Marco Piñatelli

Excellent project without a doubt one of the highest shared value, I will share your project with friends who work in the rural dairy area of Peru who will undoubtedly be interested in contacting you, congratulations

Photo of Dorine Poelhekke

Thank you so much for your very kind message Marco! We're happy to hear more about your friends in the dairy sector of Peru. They can contact me for sure.

Photo of Benjamin Cok

Based on my past experience in East Africa, I have no doubt that this product will fulfil an important demand of smallholder farmers: a demand to increase value for milk and an aspiration to become a modern farmer, equipped with affordable modern technology!

Photo of Zoé Froget

A interesting project using a modern technology: Biogas...a solution to fight against environmental and health issues. The milk industry is growing very fast and need to be sustainable.

Photo of Henk van Duijn (BoP Innovation Center)

The Biogas Milk Chiller (BMC) is an example of frugal innovation in the dairy chain which will help the BoP producers to chill milk in a cost effective way, generating more income and providing better quality milk products for BoP consumers and local dairy processors. Benefiting all! Whith the support of large local and multinational dairy processors there will be soon thousands of BMCs in different African countries accelerating the profitability of dairy production for small holder dairy farmers. Reason why we as BoP Innovation Center are supporting this frugal innovation is relevant. More support is needed to make this innovation a game changer!

Photo of Felix ter Heegde

This chiller has the potential to become a game changer for rural Africa. Not only an important link in the dairy value chain, but also adding value to domestic bio-digesters

Photo of Peter Fopma

To bring milk cooling to the farmer helps not only the farmer who is able to sell more milk, but is good for the whole milk chain. Cooled milk means better products means higher prices means better income in the dairy chain. In the end there will be more dairy products available in the market so everybody benefits.

Photo of Mark Studer

Awesome I really like this project, very inspiring. Good luck!!

Photo of Jonathan Litscher

Congratulations, this is really inspiring! Great to see that you are focusing on micro scale with your technology - from two cows onwards. These are the producers that are usually excluded from these kinds of innovations. Wishing you all the best!

Photo of Lia Bardoel

It is so great to see how the product improves the livelihood of farmers!

Photo of Pauline Tanui

It will help create extra income from farmers especially from afternoon milk which would go to waste .

Photo of Yvonne Ngari

It will help dairy farmers at a great level for they will be able to earn extra money from their dairy cow for they will be selling milk both in the morning and evening being at the same state it was milked because the milk chiller will keep it fresh for selling .

Photo of Pim Warmerdam

We need someone how seize this opportunity and that is what SimGas does. This makes me very enthusiastic and happy.

Photo of Sanne Castro

I am very proud that we are working on this product. We need more solutions to increase the productivity of small scale farmers in East Africa and the Biogas Powered Milk Chiller does exactly that.
Production of milk is far from free, you need to invest in fodder (growing and/or buying), veterinary services, transport of milk and the purchase and the cows themselves. we need to ensure that all value from this hard work is captured. Since most farmers in East Africa live relatively far from the bulk milk chillers of the cooperative, we need on-farm solutions to chill the milk immediately after milking and preserve the quality. This product works on the same manure that the cows produce themselves, no electric grid needed.
Winning this prize would immensely boost the adoption of this technology, because we can use it to prove the effectiveness at scale and start mass production of this product. Your support is much appreciated!

Photo of George Muthoni

The product will greatly improve the livelihood of many small scale farmers in rural areas.It will help to convert what is actually considered as waste(dung) into a valuable energy in an eco friendlyc manner.The health of many people will grealyy improve due to proper milk and other perishable food storage in this product.Their income will increase significantly due to reduced spoilage.Environment will also benefit from this product due to reduced carbon emission from law dung,reduced cutting of trees as firewood and improved soil fertility due to byproducts(bio slurry) from biogas digester

Photo of Jeroen Thoolen

While the biogas milk chiller is being developed and tested in close collaboration with it's users and dairy stakeholders, this innovation can become a true game changer in rural Africa. It's the missing link in the dairy cold chain! Nice to see that the cow is the key player in the total value chain: feed her well and she will be partly responsible for 1) the farmer's health (clean cooking on biogas), 2) her own health (better fodder due to the fertilizer she produced), 3) the quantity and quality of her milk (milk cooling on biogas).

Photo of Isministar Ismini

As an energy analyst I encourage the innovative product that SimGas offers since it benefits the environment and while it provides support to developing countries.

Photo of Rutger .

Hi Isministar,

Thank you for your reply. It's nice to hear these words from energy professionals.

Rutger

Photo of Liza Hendriks

Great project!

Photo of Old Friend

One of the biggest challenges small holder farmers in East AFrica have is access to funding. This concept neatly provides small scale dairy farmers with an important tool for processing their milk and access to market. Great idea, Ms Poelhekke.

Photo of Oliver Kynaston

After seeing these chillers operational at rural homes in Tanzania and Kenya I'm convinced that they can provide a genuine alternative to grid-tied electrical cooling. Managed correctly manure from a small family farm can provide enough biogas for cooking meals and cooling milk.

Photo of Mouhamadou Moustapha Seck

Very interesting work that I loved to go through. I would like to contribute to this article.
http://www.proamb.com.br/downloads/pu2moh.pdf

Photo of Dorine Poelhekke

Thank you Mouhamadou! Is this article also available in English?

Photo of Rutger .

Hi Mouhamadou, I've read the summary and it's interesting. There has been a lot of research on the anaerobic digestion. Have you contributed to that study? What is the main goal? It should be able to power applications like the milk chiller as described here :)

Photo of Geert Koemans

Its both in english and spanish

Photo of Mouhamadou Moustapha Seck

Dommage, i have it available only in portuguese, but if necessary i can translate for you.

Photo of Oshan Kothadia

It is these kind of products that actually work towards reducing carbon footprint. I admire the vision and determination of the company to focus on people who are in need of sustainable solutions.
Wish the simgas team congratulations for their achievements.

Photo of Anuja Naiknavare

I think this product is very innovative and will be a true game changer in the dairy value chain. I am proud to be part of this organization that makes an economic and social impact to the rural farmers in East Africa.

Photo of Winnie Versol

This product can really make a difference in the dairy value chain, on which millions of rural families are depending! I'm happy and proud to be part of it :-)