Soybean in Rwanda - Feasibility Study

FEASIBILITY STUDY FOR IMPLEMENTATION OF THE
PROJECT on INCREASED SOYBEAN PRODUCTION AND

PRODUCTIVITY FOR SUSTAINING MARKETS
REPORT SUBMITTED TO
Rwanda Agriculture Board (RAB)
P. O Box 5016, Kigali, Rwanda
Email: info@rab.gov.rw
Website: www.rab.gov.rw
PREPARED BY:
Dr. Phinehas Tukamuhabwa
Department of Agricultural Production,
Makerere University,
P.O. Box 7062, Kampala, Uganda
Tel: +256- 772 498 691
E-mail: p.tuka@caes.mak.ac.ug;
E-mail: tphinehas@yahoo.com
FEASIBILITY STUDY FOR IMPLEMENTATION OF THE
PROJECT on INCREASED SOYBEAN PRODUCTION AND
PRODUCTIVITY FOR SUSTAINING MARKET
TEAM LEADER
Phinehas Tukamuhabwaa
College of Agricultural and Environmental Sciences
Makerere University, Kampala Uganda
Research Team:
Norman Kwikiriza
Herbert Agaba
College of Humanities and Social Sciences
Richard . M. Ariong
© 2016
TABLE OF CONTENTS
TABLE OF CONTENTS i
LIST OF FIGURES & TABLES ii
ACRONYMS iii
EXECUTIVE SUMMARY iv
1. INTRODUCTION 1
1.1 Background 1
1.1.1 Soybean enterprise in Rwanda 2
1.2 Rationale for the study 4
2. METHODOLOGY 5
2.1 Selection of the study respondents 5
2.2 Data entry and data analysis 7
3. STUDY FINDINGS 8
3.1 Soybean value chain 8
3.1.1 Characteristics and activities of farmers in the Soybean value chain 8
3.1.2 Characteristics and activities of agro-input dealers and traders in the Soybean value chain 16
3.1.3 Characteristics and activities of processors in the Soybean value chain 16
3.1.4 Characteristics of Government and NGO activities in the soybean value chain 17
3.1.5 SWOT analysis of the Soybean value chain in Rwanda 18
3.1.6 Conclusions 18
3.2 Technical feasibility 19
3.2.1 Analysis of Soybean seed systems 19
3.2.2 Soybean production technologies 21
3.2.3 Soybean production and productivity 21
3.2.5 Conclusions on technical feasibility of soybean production at farmer level 23
3.3 Technical and Institutional Support to the Soybean Value Chain 24
3.3.1 Access to Technical Advice 24
3.3.2 Membership to a farmer group/association 26
3.3.3 Gender roles in Soybean production 27
3.3.4 Access to credit 28
3.3.5 Conclusions on technical and institutional support to the soybean value chain 29
3.4 Demand Analysis 29
3.4.1 Soybean demand by the processing companies 29
3.4.2 Demand analysis for the financial and economic feasibility of the project 31
3.5 Financial and Economic Analysis 33
3.5.1 Computation of key variables 33
3.5.2 Estimation of expenditures 36
3.5.2.1 Direct costs of production at farm level 36
3.5.2.2. Research and development 37
3.5.2.3 Support to Agribusiness and value chain development 37
3.5.2.4 Human resource 38
3.5.3 Measures of the financial position of the investment 39
3.5.4 Risk Analysis of investing in the project 39
3.6 Economic Feasibility of the project 41
3.6.1 Contribution to local vegetable oil production 41
3.6.2 Employment 42
3.6.3 Value of research 42
3.6.4 Value of human capital development 42
3.6.5 Social value 42
3.6.6 Benefit from the Maize-soybean crop rotation synergies 42
3.6.7 Environmental Benefits 43
4. RECOMMENDATIONS 44
REFERENCES 45
APPENDIX 46
i
LIST OF FIGURES
Figure 1: Suitable lands for soybean cultivation in Rwanda 2
Figure 2: Trends in soybean area harvested, productivity and production 3
Figure 3: Rwanda Soybean value chain 8
Figure 4: Farmer relative preference of food crops 10
Figure 5: Categories of soybean buyers 11
Figure 6: Severity of constraints along the soybean value chain in Rwanda 15
Figure 7: Strength, Weaknesses, Opportunities and Threats (SWOT) analysis 18
Figure 8: Soybean varieties grown by farmers 19
Figure 10: Yields of different soybean varieties 20
Figure 9: Most preferred attributes in soybean variety grown 20
Figure 11: Agricultural input use in soybean 21
Figure 12: Land commitment to soybean production 22
Figure 13: Benefits of soybean production to farmers 23
Figure 14: Uses of soybean in Rwanda 23
Figure 15: Number of times soybean is consumed by the farmer in a week 24
Figure 16: Sources of Information on soybean production 25
Figure 17: Proportion of farmers with membership of a farmer group 26
Figure 18: Roles of farmer associations 26
Figure 19: Intra-household decision making on soybean production 27
Figure 20: Allocation of labour and payment costs at household level 28
Figure 21: Sources of credit 28
Figure 22: Reasons for not seeking credit for soybean production 29
Figure 23: Trends in household soybean production and disposition 33
Figure 24: Trends in soybean prices 35
Figure 25: Estimated cost of inputs over the 5 year period 36
Figure 26: Annual trend of local soy oil production 41
Figure 27: Trend of Local soybean oil demand 41
LIST OF TABLES
Table 1: Provinces and districts where farmers were sampled 5
Table 2: Characteristics of soybean farmers 9
Table 3: Additional characteristics of Soybean farming households 9
Table 4: Production cosntraints faced by soybean farmers 11
Table 5: Challenges in soybean production 13
Table 6: Marketing and post-harvest challenges and farmer coping mechanisms 14
Table 7: Regional comparison of selected soybean farmer variables in different provinces of Rwanda 15
Table 8: Source of Seed bean seed grown by farmers 19
Table 9: Application rates and optimal rates 21
Table 10: Soybean yields at the current and targeted production levels (computation includes family labor) 22
Table 11: Training content covered by the farmers 25
Table 12: Number of trainings received by the soybean farmer in the last season (Season 2015B) 26
Table 13: Farmer need for increased soybean production 27
Table 14: Optimum performance of soybean varieties grown in Rwanda 31
Table 15: Assessment of existing resources to foster soybean research and development in Rwanda 32
Table 16: Human resource required in the soybean value chain development in Rwanda 32
Table 17: Summary of costs of training MSc and PhD students in an African University 37
Table 18: Enterprise categories based on Rwanda Ministry of Trade and Industry 38
Table 19: Human resource requirements for the soybean value chain development 38
Table 20: Exchange rate risk assessment of project variability 39
Table 21: Changes in project variability 40
Table 22: Summary of risk assessment 40
ii
ACRONYMS
AIF African Improved Foods
COCOF Le Conseil Consultatif des Femmes
GDP Gross Domestic Product
INEAC Institute National pour l‘Etude Agronomique du Congo Belge
IRR Internal Rate of Return
MINAGRI Ministry of Agriculture
MINEFIN Ministry of Finance and Economic Planning
MRR Marginal Rate of Returns
MT Metric Tonnes
NPV Net Present Value
RAB Rwanda Agricultural Board
RDB Rwanda Development Board
ROI Return on Investment
Rwf Rwandese Francs
SOYCO Mt. Meru SOYCO Ltd
USD United States Dollar
iii
EXECUTIVE SUMMARY
The soybean value chain in Rwanda is comprised of an assortment of actors including smallholder
farmers, agro-input dealers, and processors. There is strong Government willingness to support
and organize the value chain which is presently in its infancy. The soybean sector is characterized
by farmers, with an average farm size of 0.5 ha , half (0.25 ha) of which is committed to soybean.
Soybean is cultivated and managed at household level by both male and female farmers, with
substantial evidence of cooperation regarding decisions on production, marketing and utilization
of soybean. Besides supplying inputs like seed and fertilizers, agro-input dealers are also involved
in purchasing soybean from the farmers, hence are key agents in the promotion of the soybean
industry in Rwanda. Downstream the soybean value chain are six processing companies, four of
which are small while two are big processing companies. The main sources of seed are farm saved
seed, seed companies and RAB, respectively in order of importance. Due to Government subsidies
on agro-inputs, farmers pay only 40% on the cost of seed and other inputs supplied by agro-input
dealers.
The on-farm productivity of soybean is generally low (average 0.8 MT/ha), which is far below the
attainable yields of 2 MT/ha in African countries like Nigeria and Uganda. However, if farmers
follow the recommended agronomic practices they have the potential of obtaining soybean
revenue worth USD 348.3/ha cultivated. About 65% of the harvested soybean is sold, 25% for
consumption, and 10% is saved for seed. The utilization of soybean as livestock feed is very
minimal. The crop can be processed into various soybean-based foods such as soymeat, mixture
with cereals as a porridge and sauce. Smallholder soybean production is inadequate to meet the
demand for raw materials by processing companies. Hence, processors have to source for raw
maaterials from farmers within Rwanda but also import 30% of required soybean from neighboring
countries, especially Uganda and Democratic Republic of Congo. Consequently, they bulk different
varieties from different sources during product development without considering effects on the
quality of food products. Imported soybean costs 28% less than what the companies incur from
farmers in Rwanda. Moreover, farmers perceive that the price offered per kg (USD 0.56) is low.
The potential of the soybean sector is based on the fact that both soybean productivity and
processing capacity are low, yet the import bill for soybean and vegetable oil is high. Increased
investment to create a strong base for the soybean value chain is thus necessary to: (a) increase
the productivity of smallholder soybean farmers from 0.8 to 2 MT/ha in the medium term; (b)
reduce the amount of money spent on vegetable oil imports, by encouraging local production and
supporting local processors; (c) recruit more farmers to meet the supply deficit experienced by the
processing companies and reduce imported soybean for oil production; (d) increase the number
soybean research scientists from one scientist to eight; (e) create new employment opportunities
for the people of Rwanda; (f) improve on the nutrition of the Rwandan population by increasing
the per capita consumption of soybean, vegetable oil and livestock product (due to livestock feeds).
Investing in the soybean value chain will be a profitable venture for Rwanda. This is reflected by
the positive Net Present Value (NPV) and Return on investment (ROI) that is greater than one. A
high (35%) Internal Rate of Return (IRR) is capable of sufficiently buffering the investment from
negatice effects of interest rate variability. In addition, benefits accrue after a relatively short time
(about 3 years) hence impact of the project will be quick. Further, the project is well cushioned
from the exchange rate volatility, remaining viable even at exchange rates above Rwf 780 per USD.
Other social benefits that make the project relevant include i) research standards in Rwanda raised
iv
Increased Soybean Production and Productivity for Sustaining Markets in Rwanda
at parr with that of its neighboring countries; ii) high number of businesses that spring up valued
at USD 1,196,950; iii) human capacity development valued at USD 506,250; iv) employment for
115,400 farmers, 25,000 casual laborers and 2,920 new soybean businesses; iv) high synergies that
result from the maize soybean intercrop and the extra effort in extension services associated with
the soybean project.
Therefore, critical areas that require attention in order to improve the soybean value chain in
Rwanda
1) Poor input access and use of fertilizers, rhizobia and pesticides. Government should support
farmers to increase input use
2) Supply of disease resistant, early maturing and high yielding varieties
3) Supply and supervision of the use of high quality and viable seed
4) Investment in human resources specific for soybean development
5) Invest and lay plan for the long term soybean breeding program in the country
6) Support the soybean extension program, especially in ensuring timely supply of seed, early
planting, and general advice on best agronomic practices
7) Support the recruitment of new farmers to increase the supplies in the country
8) Support the initiation and development of Soybean resource centers for the Soybean value chain
development
9) Support the birth of new soybean enterprises and those already in existence
10) Fund the promotion of the local consumption of soybean products, especially the Soybean cake
v
1. INTRODUCTION
1.1 Background
The agricultural sector remains at the center of Rwanda’s development programs, and is recognized
as the engine of growth that will drive poverty reduction in Rwanda and improved living standards
for her people. The sector accounts for about 85% of employment and 80% of the foreign earnings.
It contributes around 38 % to the National Gross Domestic Product (GDP) and it stands out as one
of the most strategic sectors to Rwanda’s development (USAID. 2009).
Soybeans (Glycine max L) occupy a premier position as a world crop because of their high and
virtually unrivalled, protein content (40%) and also are a rich source of high quality edible
vegetable oil (20%). It is one crop which can considerably boost the economic and nutritional
status of individuals and or communities involved in its production and utilization. Soybean
produces the highest amount of oil and protein per unit area as compared to other grain legumes.
Soybean has the capacity to fix nitrogen in symbiosis with rhizobia strains and is on the
Rwanda priority crops. Also, it’s a key ingredient in livestock feed rations, and can thus support
development of livestock industry in Rwanda. Moreover, when included in rotations with cereals,
it breaks down the build-up of pests and diseases and improves soil structure and soil moisture
retention capacity. These aspects make soybean an ideal crop for commercialization of Agriculture
in Rwanda. Among the newest soybean uses is the soybean Bio-diesel; a high-lubricating, clean
burning fuel for diesel engines. In the Nigerian Guinea savanna, adoption of soybean has had a
clear positive impact on house hold social economic status of rural communities by enhancing
better nutritional status of children and income of both men and women (Sanginga et al. 1999).
In Rwanda, soybean is an important food crop and the most cost effective protein source compared
to other rich foods such as meat, fish, and eggs. Consumption of Soybean or Soya products
enhances animal production and human nutrition security. It is a competitive raw material for
a wide range of foods and feeds in the mushrooming processing industries in the country. The
soybean based diets and feeds complement intensive production priority initiatives in Girika
Programs where one soybean milk cup/one egg per child is applied in feeding programs to reduce
malnutrition in vulnerable groups including women, children and infants. Moreover, soybean
has been named among the 5 major crops in Rwanda. With exception of the Northern Province,
soybean is grown in all other regions of Rwanda.
Rwanda imports 30,000MT of cooking oil annually- one of the main soya product, at a cost of USD
42 million. Mount Meru SOYCO Ltd alone requires a supply of 45,000 MT of soybean annually for
edible oil and soy cake production, which is more than the annual production, estimated at 35,000
MT. African Improved Foods (AIF), which is a new investor company that mainly produce infant
fortified foodstuffs, is expecting to consume about 17,000 MT per year. This puts soybean grains
demand for the two companies at 62,000 MT/year, almost doubling the total national annual
production.
Currently the main constraints to soybean production in Rwanda include poor germplasm leading
to lack of improved varieties suitable for the country, poor soil fertility, climatic variability, pests
and diseases, poor farmers’ accessibility to quality seeds, and limited skills of best agronomic
practices. Investment into soybean value chain can transform and enhance profitability and
incomes of smallholders due to the existing competitive and insatiable local as well as regional
market demand for soybeans.
1
1.1.1 Soybean enterprise in Rwanda

There is a limited number of studies done on soybean in Rwanda, the most important being studies
by Mugabo et al., 2014; and Mujawamariya et al., 2014. Scanty literature is also obtained from
several project reports. The studies that have been reviewed and found to support the findings of
this feasibility study are indicated both in the text and in the reference sections of this document.
Soybean was first introduced in Rwanda in the 1920s by INEAC (Institute National pour l‘Etude
Agronomique du Congo Belge). Variety adaptation trials followed in the subsequent years and
farmers started showing reasonable interest in the 1960s. By 1969 there were 550 hectares under
production, rising to 1,640 ha in 1973. In 1974, the Diocese of Lumumbashi and other missions
decided to set up their own flour milling operation and to teach the local people how to cultivate
soybeans for their own consumption. By 1977 Rwanda‘s soybean acreages had jumped to 6,000
hectares, largely stimulated by the installation of a new soybean oil mill. A subsequent decision to
nationalize most of the private firms, unfortunately, led to a sharp decline in soybean cultivation
because farmers had difficulty selling their crops. However, recent government support has led to
renewed interest in soybean subsector.
Previous studies indicated that Soybean in Rwanda grows well in Lake Kivu Borders, Eastern
Savanna and Eastern Plateau agro-ecological zones (Figure 1). Soybean in Rwanda is generally
grown in the low altitude zones (1000 -1400 masl), with rainfall of 800 – 1000 mm, and partly
in the mid altitude zone (1400 – 1700 masl), with rainfall of 1000 – 1200 mm. Most parts of the
Eastern Savanna, Eastern Plateau, Birunga and Mayaga are considered only moderately suitable. In
areas where there is less rainfall, early maturing varieties are the most suitable.
Figure 1: Suitable lands for soybean cultivation in Rwanda (Source: RAB, 2013)
2
Figure 2: Trends in soybean area harvested, productivity and production (Source: FAOSTAT 2016)
Soybean remains a minor crop compared to others in the crop production systems of farmers in
Rwanda (Mujawamariya, Giller, & Franke, 2012). According to USAID (2009), area under production
in 2008 was estimated at 27,000 ha. However, the RDB (2015) indicates that as of 2010, the
estimated area under production was 42,160 ha. The same study indicates that annual soybean
production had reached about 57,089 MT. Mujawamariya, et al. (2012) and Mugabo et al. (2014)
show that soybean productivity is between 0.48-0.73 MT/ ha. Real average annual soybean output
was estimated at 43.8 kg for an average soybean plot size of 0.06 hectare (Mugabo, et al., 2014).
As such, Mugabos study concludes that farmer productivity is low and there is need for strategic
intervention. However, the most current report by RAB shows that the available varieties in
Rwanda have the potential yield between 2.1 -3.2 tons per hectare, depending on the variety (RAB,
2013).
Figure 2 shows that gains have been made in increasing production area and tonnage. However,
productivity has remained flat (at less than 1000kg/ha) for the period 2006 to 2010. Among the
several production and market constraints Rwanda farmers face, is the unavailability of certified
Soybean seed. The common soybean varieties (grown by farmers) include Peka 6, Bossier, Ogden,
Duiker, 449/16, Soprosoy, Yezumutima, Buki, 1740-2E (Mujawamariya, Giller, & Franke, 2012) and
SB 24 (Maksoy 1N), some of which are already obsolete in the countries of their origin.
Previous studies have shown that Soybean produced in Rwanda is largely consumed locally by the
producers and the Processors. Some key buyers/processors that have been documented include:
SOSOMA Industries Ltd, COCOF (a mainly women initiative), Mt. Meru Soyco Ltd (SOYCO), and
Rwanda Agricultural Board (RAB). Soybean is mostly grown for home consumption and income.
However, production objectives differ depending on farmer and location. For example, Bugesera
district mainly produced soybean for home consumption whereas in Kamonyi, most farmers
produce soybean for food and income. (Mujawamariya, et al. 2012). It is important to note that
Kamonyi district has a processing plant for soybean (COCOF), which potentially provides market for
farmers.
3
Currently, the government of Rwanda is undertaking some interventions in the soybean sub
sector, and recently initiated certified soybean seed multiplication programme through farmer
cooperatives. The certified seed multiplication is being implemented by the Rwanda Agriculture
Board (RAB), in reference to the constraints that face the soybean value chain, as studied by
Mujawamariya et al. (2012). In their study, Mujawamariya and others identify several constraints
to the soybean production in Bugesera and Kimonyi as follows:
1). Limited land
2). Lack financial means to purchase inputs (for resource poor farmers)
3). Scarcity of inputs such as chemical fertilizers and certified seeds in the localities (for resource
rich farmers);
4). Prolonged drought
5). Low market price,
6). Scarcity of labor in some areas and periods
7). Lack of knowledge on soybean
1.2 Rationale for the study

This study is a response to the efforts by the Government of Rwanda to encourage Soybean
production for the following reasons. (i) To improve nutrition and household income; (ii) To ensure
that there is enough raw material to support the food and feed industry, and thus reduce the
reliance on importation of both raw soybeans and soybean products especial the soybean oil; (iii)
support the processing industries in the country, which in turn provide revenue to the country and
create employment to the people; (iv) improve soil fertility by utilizing the natural rhizobia inherent
in soybeans that fix atmospheric nitrogen into the soil. In light of the perceived contribution of
soybean to the country, Rwanda Agricultural Board (RAB) submitted a project proposal titled
“Increased soybean production and productivity for sustainable market” to the Ministry of
Financial and Economic Planning (MINECOFIN), for funding to achieve the stated benefits from the
Soybean value chain.
According to literature, very limited studies have been done on Soybean production in Rwanda.
There is thus a knowledge gap as regards production, marketing and utilization of soybean,
including investment in research in fields of agronomy, breeding and related disciplines. The
need to fill this knowledge gap and development of the soybean sector in Rwanda is the reason
this feasibility study was done. This study provides evidence on the current status of soybean in
Rwanda; projects the contribution of Soybean production to the National agricultural exports and
assess the suitability of the project “Increased soybean production and productivity for sustainable
market” in terms of financial, human resource, infrastructural and organizational requirements.
4
2. METHODOLOGY
2.1 Selection of the study respondents
The actors in the Soybean value chain were traced from the major soybean growing regions of the
country. Ten enumerators were hired and trained to collect data. Two supervisors, and one RAB
official enabled enumerators obtain data from the eligible respondents, while two supervisors
checked and ensured that the data collected was complete and consistent. The discussions below
details the methodology followed to sample each category of respondents.
Plate 1A: Enumerator with houehold-head and spouse Plate 1B: Enumerator with female farmer weeding her soy-
in their farm in Eastern province bean field in Western province
Soybean farmers
Farmers were purposively sampled from regions, districts and sectors that are major soybean
producers. Three provinces; the Eastern, Southern and Western provinces were therefore sampled.
Previous literature (Mujawamariya et al., 2014) and personal communication with RAB staff, all
indicated that these regions produced Soybean, while production in the Northern region was
not significant. At each level of purposive sampling, the relevant Government and RAB officials
aided the sampling exercise. The number of farmers sampled in each of the administrative units
depended on the number of soybean producers (Probability proportional to size sampling). This
sampling was used because of the difficulty in establishing how many farmers were growing
soybean before the study in a particular area. Following this sampling procedure, 90 farmers
were sampled from the Eastern province while 30 farmers and 35 farmers were sampled from the
Western and Southern provinces, respectively (Table 1).
Table 1: Provinces and districts where farmers were sampled
Province District Frequency

Kayonza 19
Gatsibo 15
Eastern Ngoma 22
Kirehe 17
Nyagatare 19
Nyamasheke 22
Western
Rusizi 19
Gisagara 19
Southern
Kamanyi 10
Total sample 162
5
Focus group discussions

Soybean farmers were engaged in Focus group discussions. Focus groups discussions were held
in order to strengthen the evidence of the responses from the individual farmer interviews and
to find a wide range of responses into the production and utilization aspects at the community
level. The focus group discussions involved the smallholder farmers who had not participated
in answering the structured questionnaires. The focus group discussions involved small groups,
comprising of 8-15 farmers, in order to have a more controlled, all-inclusive and efficient
discussion. The group was as much as possible balanced between both male and female Soybean
farmers. The discussions had one moderator while another enumerator took notes of the
discussions. The moderator ensured that every person participated. In total, four focus group
discussions were held in the different regions, which involved 40 farmers in total.
Plate 2: Focused Group meeting at

Gahara in Kirehe district. Farmers
were happy with soybean and more
were willing to adopt soybean
cultivation
Traders and agro-dealers

Snowball sampling technique (one respondent providing names of the next respondent) was used
to sample agro-input dealers and other traders. This was used because the population of these
traders/ agro-dealers buyers could not be established before the actual study. Snowball sampling
was important because the traders linked the research team to other traders in the chain. Traders
were also sampled in each of the regions and districts. The traders were also obtained through
the contacts provided by the processing companies, soybean farmers and consumers. A structured
questionnaire was used to interview the agro-dealers and traders.
Plate 3: SOYCO Soybean Factory in

Kayonza district, Eastern Province
6
Soybean Processors
Data was collected from 4 soybean companies. These were SOYCO, PAFI and Africa Improved
Foods (AIF). The information obtained included the day today running of their activities, availability
of inputs, supply and demand of their products, and the Strength, Weakness, Opportunity and
Threats (SWOT) the actors face.
Government officials and RAB

Key informant interviews were used to collect information from RAB officials, district officials and
MINECOFIN. In total, 12 Key informant interviews were held. The research team also attended the
Soybean stakeholder workshop held on 16th March, 2016 in Kigali. In this stakeholder workshop,
general information about the sector was obtained. The team also interacted with the key
stakeholders, whose contribution and experience has been incorporated in this report. The results
of this report was presented in a soybean stakeholders workshop to validate the findings.
2.2 Data entry and data analysis

The data collected was entered in Statistical Package for Social Sciences (SPSS). It was analyzed
using the STATA. Content analysis was used to analyze qualitative data in order to discover
important themes in the discussions. Microsoft Excel was used to run the balance sheets which
informed the extent of the returns from investment of the project. Descriptive statistics were
used to generate means, frequencies and proportions on various indicators. Where necessary,
comparative analysis was done to compare among the variables. This analysis was important
in providing evidence in the main areas that the feasibility study focused on, i.e the value chain
description, demand and supply of soybean and the financial feasibility of the project.
7
3. STUDY FINDINGS
3.1 Soybean value chain
Figure 3 shows the organization of the soybean value chain in Rwanda. Detailed discussion of the
specific functions of each chain actor is made in the subsequent sections. Agro-input dealers also
double as farm output buyers, hence are very critical in the value chain. Farmers may produce
soybean individually or may be organized in groups. Agro-input dealers purchase soybean from
farmers and sell 60% of it to either seed or processing companies, but local traders and farmer
groups can also sell directly to these companies. After value addition, processing companies
distribute their products (livestock feed and soybean food products) through supermarkets or retail
shops. Institutional support in the production and marketing functions of soybean value chain is
largely provided by RAB, Clinton Foundation, MINAGRI and MINEFIN.
Figure 3: Rwanda Soybean value chain
3.1.1 Characteristics and activities of farmers in the soybean value chain

Farming is the most important livelihood activity through which families generate income.
About 55% of the respondents acknowledged sole dependence on farming as a main income
source. Table 2 shows that casual labour on farms is very important among the soybean farming
communities, implying that promotion of soybean provides employment by attracting casual
laborers. Apart from farming and casual labor, alternatives to boost household incomes were
limited (Table 2). Low diversification of incomes among farmers indicates the need to strengthen
other value chain functions (i.e. cottage processing industries, soybean product retail shops, input
supplies) to create jobs and diversify rural incomes. The results also show that most farmers,
on average take about 22 minutes to reach an all-weather road and about 42 minutes to reach
the nearest market center (Table 2). This implies that farmers have relatively easy access to
communication and services, which has implication to access to inputs and ease in Soybean
transactions.
On average, there were six persons in the households. The relatively big household sizes have
implications on the proposed soybean project. Particularly, it implies that soybean has to primarily
contribute to household income and food secuirty needs; and secondly, it has to compete
8
Table 2: Characteristics of soybean farmers (N = 162)
Variable Value
Male headed households (%) 87.0
Marital status of household head (%)
Married 83.3
Single 3.7
Separated 3.1
Widowed 9.9
Occupation of the household head (%)
Only farming 55.1
Retail shop 5.1
Casual laborer on-farm 25.4
Casual laborer off-farm 2.2
Handiwork 8.7
Access to markets (Walking minutes)
Distance to nearest market center 42
Distance to nearest all weather road 22
with other crops for land to sustain the big households. Average farm size is 0.5 ha, which is
relatively small to support the households without applying intensive farming practices. Small
land holdings present a physical limit for expansion of soybean production at household level.
Nevertheless, compared to other crops, farmers committed about 50% (0.25 ha) of the land owned
to soybean (Table 3). Meanwhile, education of male household-heads and their spouses was six
years, indicating that the average farmer (male and female) can read and communicate atleast
in Kinyarwanda. This is particulalry important in the dissemination of basic soybean production
information. Therefore, agricultural advisory services should tailor radio communication, posters
and written materials in Kinyarwanda, so as to be understood by the farmers. The findings also
indicate that the household annual incomes were Rwf 200,000 or USD 285 per year (less than 1
USD per day), which is low, and suggests a need to promote an enterprise that can bring more
revenue to the farmers (Table 3).
Table 3: Additional characteristics of Soybean farming households
Soybean farmer characteristics Findings
Age of household head (years) 47
Education of head (Number of years the household head spent in school) 6
Education of spouse (Number of years the spouse spent in school) 6
Size of Household (mean) 6
Land size (ha) 0.5
Land allocation to soy, 2016 0.24
Expected land Allocation to soybean, 2017 0.24
Household Income (Rwf ) 201,507
9
Beans, maize and soybean were the most important crops to the farmers, both in terms of food,
income and profitability (Figure 4). Although these crops did not significantly differ with regards
to their cash and food importance, beans had a slight edge in rank over maize and soybean as a
major food staple. Maize and soybean come second and third, respectively. In contrast, soybean
was ranked slightly better than maize and beans as the most important source of cash, but it came
after maize in terms of profitability. Other crops grown,notably cassava and bananas have very low
scores compared to soybean.
Figure 4: Farmer relative preference of food crops
The relative preference of beans and maize (Fgure 7) has important implications on farmer
participation in the soybean value chain. First, despite being relatively new, the place of soybean
among other crops indicates a high potential among the farming households in Rwanda. Second,
beans and maize are important food security crops that are unlikely to be replaced by soybean.
Therefore, farming systems should not promote soybean against maize and beans. Third, soybean
should be given similar attention as beans and maize. According to the agronomist in Kabare
sector, Kayonza district in Eastern Rwanda, soybean is grown in the second season which has less
rain, because maize is given priority in the first season given that it is a major food security crop.
Naturally, farmers give first priority to grow food crops, before they can grow crops for cash. This
finding implies that soybean should be promoted for both cash and household consumption. The
findings also indicate that soybean can carefully be included in the rotation between maize and
beans. Rotation between maize and soybeans have been recommended for maximizing profitability
for farmers growing the two crops. The system has synergies that farmers in United States of
America (USA), Brazil and Zimbabwe have taken advantage of for a long time.
Sale of Soybean
Figure 5 shows the different markets where soybean farmers can sell their produce. Members of
the community (73.96%) and agro-input dealers (15.63%) are the most important buyers. A focus
group discussion with the farmers revealed that local buyers were mainly the registered agro-input
dealers who located in these communities. This therefore implies that percentage given under
members of the community includes the agro-input dealers as well.
10
Figure 5: Categories of soybean buyers
Constraints faced by soybean farmers

At the production level, lack of enough water (extreme weather conditions) for Soybean growth
needs came as the most important constraint (Table 4). The extreme weather conditions were
expressed as drought and too much temperatures or sunshine. Farmers mentioned that weather
conditions led to no harvests, reduced harvests and drying of the crops. Most of the farmers
mentioned that there was no way to avoid the problem, since it is dictated by nature. Because
of this, some farmers were considering giving up soybean production. However other suggested
that they would manage the extreme weather conditions through early planting, waiting for rains
and digging early in the morning. One of the key informants had this to say “For the last three
years, we have had to depend on the Government for food, simply because of drought. You just
see the gardens drying out and this is a serious problem”. All the focus group discussions pointed
to planting early maturing varieties to beat off drought. Therefore, if early maturing varieties are
planted.
Table 4: Production cosntraints faced by soybean farmers
Soybean production constraint Score
Poor soil fertility 1.68
Pests 1.86
Diseases 1.63
Weed infestation 1.51
Vermin 3.46
Lack and poor access to inputs 3.08
Weather changes 2.51
Limited land 1.77
Labor shortage 1.54
Shattering of seeds 1.19
Scale 1= Not a problem 2= Mild 3=Severe 4=Very severe
11
Low soil fertility was associated with unavailability of manure, and the nature of the soil, that was
considered not to be supporting the crop. Farmers tried to cope with the challenge by renting
land elsewhere. The results also show that pests were a challenge too. These included caterpillars,
insects, rodents, and hippos in areas near the lakes. Caterpillars ate leaves and young pods while
insects made holes on leaves and pods (Plate 4). Another category of insects mentioned were ants,
which made the leaves to fall off the plants. Large pests included baboons, rodents, and birds. Of
these, rodents are most important because they destroyed the whole plants or part of the plants.
Plate 4: A caption obtained from an Agronomist in Kayonza district.

The larva in the picture can effectively clear an acre of soybeans. This Plate 5: Yellowing soybean leaves at Gakitumba,
pest is suspected to be the groundnut leaf minor which is a major Eastern province. The symptoms are suspected to be
soybean pest in Uganda (Tukamuhabwa and Obua, 2015) potassium deficiency or excess water stress
Farmers gave a number of useful coping mechanisms for specific pests. These included maintaining
good sanitation in the garden by carrying out bush clearing, weeding and pruning, and application
of pesticides incluidng rat poison. Other coping mechanisms included early planting and use of
pest resistant varieties. Control of hippos is a big challenge to farmers. In a focus group discussion
with farmers who had challenges with hippos, they had resorted to planting soybeans in plots away
from the lake although these plots were not as productive. Farmers mentioned that it was difficult
chasing hippos away from their crop.
The characteristics for diseased soybean plants were change of leaf color (yellowing), falling off
of leaves, folding of leaves, drying up of the plants before maturity, rotting of the plants and poor
harvests. From the responses on the coping strategies for the diseases, farmers did not know how
to manage the diseases and mentioned the need for help to manage this problem. A few farmers
mentioned uprooting the sick plants, changing seed and spraying with chemicals.
Weeds were associated with the damage of the crops by rats. Farmers also mentioned that weeds
competed with soybean plants for nutrients. In some instances, weeds destroyed the whole
garden. Farmers coped by uprooting the unwanted plants, weeding at least two times a season, for
those who could afford.
12
The study findings indicate that there was lack of improved varieties. Farmers mentioned that the
varieties they used were of poor quality, and that the improved varieties were not available. Some
farmers mentioned that they had nothing to do to overcome the problem of lack of improved seed.
They instead suggested abandoning the soybean enterprise altogether or wait for Governments
support. Other challenges and how farmers tried to overcome the challenges is summarized in
Table 5.
Table 5: Challenges in soybean production
Challenge Description Coping mechanism

• Get a loan
• Buy what I can afford
• Lack of fertilizers and inadequate use
• Use what is available
• Not easy to get inputs
• Try to look for some little money
• Can‘t buy inputs
• Borrow seed from those who have
• Use of inadequate fertilizers
Lack access to inputs • Buy them at high prices
• Lack of chemicals
• Grow seed from markets
• Lack of good quality seeds
• Look for cheap ones
• Lack of seeds
• Plant without fertilizers
• Late delivery of seeds
• Rearing animals to provide manure
• Just abandon growing soybean
• Lack enough land • Waiting for aid

• No land at all • Use a lot of manure
• Has led to poverty • Hire land/Borrow land
• Low yields • Grow less crops
Smallholding
• No money/No ability to expand • Use modern farming techniques
• Lent land • Sharecropping
• Small land vs. high population • Use fertilizers
• Small piece of land • Trying to save money and buy land
• Use a few of hired labor

• Labor is expensive • Cultivate little land
Lack of labor • Hiring of labor is expensive • Get loans
• Lack of laborers • Hire a tractor
• Nothing
• Delay to harvest leads to shatter

• Drought leads to shatter • Early harvesting
• Leads to little or no harvests • We hire expensive labor to prevent
Shattering of soybean
• Seeds detach from the pods • We bear the burden
• Pods shatter • We have nothing to do
• Pods shatter from the gardens
• The irrigation did not work

• Poverty and Lack of capital
Other challenges • Lack of space to dry the soybean
• Soil loses fertility quickly
• We lack capacity to grow big
Marketing and post-harvest constraints

This study examined the severity of constraints to marketing, and institutional challenges involved
in the soybean value chain as perceived by the farmer. Figure 6 shows that low prices were the
most important constraint in soybean marketing. For example, 87.7% of the farmers did not
consider roads as a problem, 3.9% said roads were mildly poor, and 5.8% reported that roads were
severely poor while 2.6% reported that the roads were very severely poor. Table 6 below shows
some of the post-harvest and marketing challenges and the coping mechanism used by the farmers
in addressing the challenges.
13
Table 6: Marketing and post-harvest challenges and farmer coping mechanisms
Challenge Farmer Description Coping mechanism

• We sell to nearby markets
• No roads while existing roads are in bad condition • We try to renovate roads
Poor roads • Roads are slippery • We carry soybean on our head
• Roads are poorly constructed • Selling at low prices or sell illegally
• We are used and do nothing
• Carry on head and walk to the market
• No cars • Use a bicycle
• Charges are high • Look for a cheaper means
High transport costs
• Limited means of transport • Sell at low prices/farm gate
• We make losses and have less money • Increasing output
• Do nothing
• Grow little soybean
• Sell at available price
• Try to bargain for a better price
• Prices are generally low, which discourage production • Diversify or abandon soybean
• Injecting a lot and earning little • Do not sell
Low prices
• Inputs are at very high prices • Wait for higher prices
• We make loses • Plant more to increase output
• Look for a better market
• Use small baskets for measurement
• Do nothing
• Sell immediately after harvest
• Wastage of produce • Eat the soybean
• No space to store • Store in the house
Poor storage • Lack of storage facilities • Keep on the verandah
• Low prices at sell • Sell at a giveaway price
• Eaten by weevils and rats • Use chemicals and traps
• Do nothing
• Sell to any buyer around locally
• Buy when prices are low
• No specific markets • We have informed government
• No market due to poor roads • Keep the harvest
Lack of market • Lack of information on market • Just eat the produce
• Low market prices • Look for market
• Market is far away from home • Sell at off season
• Auction the produce
• Nothing to do
• Sell to neighbors
• Lack access to information on soy • Look for market information
Lack of market • Especially on prices • Sell at cheap prices
information • Few markets • Stock the produce
• Lack of sensitization • Nothing to do
• Ask friend
• Taxes are high
• We must pay the tax
High local taxes • Tax is 3% of the profits
• No way out
• Machines used are expensive
• Dry well and early
• Sell fast/immediately
• Store well in the house
• Sprouting • Harvest early
• Sell at low prices • Sort the soybeans
High post-harvest
• Pests and vermin damage • Use chemicals
losses
• Lack of market for the produce • Stop growing soybean
• Spoils due to rain • Store in polythene bags
• Renting a store
• Use machines
• Do nothing
• Some farmers are not in cooperatives • Just work individually
• Most farmers grow soy on their own & individually • Mobilizing and sensitizing farmers to join cooperatives
• No cooperatives • Form cooperatives
Unorganized farmers
• Illiteracy • Wait for a cooperative
• No unity among farmers • joining a cooperative
• Seeds are bad • Do nothing
14
Figure 6: Severity of constraints along the soybean value chain in Rwanda
Comparison of the characteristics of the farmers in the different regions

Table 7 shows that farmers in the regions were not significantly different in their levels of education
and households incomes. Whereas the total land owned by the farmers was significantly higher
in the Eastern province, the land committed to soybean growing was not different between the
regions. There were also no differences between the regions with regard to the amount of land
farmers would commit soybean to in future. Findings from the focus group discussions showed
that there were major differences in the communities growing soybean. These differences ranged
from the contribution of soybean to their livelihoods, challenges faced, and agronomic knowledge
among others. For example, whereas farmers in Kirehe sector knew the varieties of the soybean
they grew, the farmers in Kabale sector did not know.
Table 7: Regional comparison of selected soybean farmer variables in different provinces of Rwanda
Characteristics Eastern Western Southern P-values Comment

No significant
Education (years) 6.2 6.5 5.2 0.1595
difference
Annual incomes 168925.6 117320.5 102450 No significant

0.1617
(Rwf) (174447.4) (197576.6) (137806.9) difference
Distance - farm to the 19.57a 12.44b 25.87a West significantly

0.034
road (mins.) (20.24) (13.08) (26.76) closer to the road
1.72a 0.79b 0.88b East significantly

Total land owned (ha) 0.013
(2.17) (1.29) (1.37) has much land
0.26 0.23 0.17 No significant

Land under soybean (ha) 0.336
(0.31) (0.27) (0.23) difference
Land under soybean (ha) 0.23 0.28 0.23 No significant

0.765
2017 (0.34) (0.34) (0.31) difference
15
3.1.2 Characteristics and activities of agro-input dealers and traders in the Soybean value chain
Trade functions in the soybean value chain are performed by agro-inputs dealers, cooperatives and
retailers. Agro-input dealers link farmers and processing companies (Figure 2). Similar functions
were also performed by the cooperatives. A large proportion of farmers obtained seed and sold
their produce through the cooperatives. Agro-input dealers had been in operation between 2-3
years. Besides selling soybean seed and purchasing the soybean produce from farmers, they also
traded in maize, fertilizers and other inputs. Most agro-input dealers have contracts with the
Government and processing companies. A few agro-input dealers are in charge of large production
areas. For example, four agro-input dealers were in charge of four sectors comprised of 47 villages.
Also, 30 agro-input dealers bought soybean from cooperatives and sold it to SOYCO. Becoming
an agro-input dealer requires lodging an application of intent to the Government, which then
scrutinizes the application before making a decision to accept or reject. One of the requirments of
an agro-input dealer is that she/he must have sufficient liquidity to independently trade in large
quantities of commodity. The agro-input dealers are trained by government at least two times in a
year to correspond with the possible two seasons in a year.
The challenges mentioned by the agro-input dealers were:

» Soybean failures to germinate. The agro-dealers reported that soybean seeds have low viability.
The second challenge was that the yields were poor yielder compared to other crops. The
foregoing response is in line with the responses from the farmers who were engaged in focus
groups, who mentioned that both maize and beans yield better and that the quality of soybean
was poor;
» Agro-dealers also mentioned that they face problems with farmers because farmers considered
their price offers as low;
» Little seed was available to supply the farmers the quantities they would wish to have;
» Delayed payment to the agro-dealers lead to losses and discontinuity in trade.
The study found limited soybean products produced from Rwanda industries in retail shops and
supermarkets. Most of the products traded were from Uganda. They included soybean porridge
floor, soybean beverage, soybean oil, soybean grains, among others. This finding indicates the need
to develop the capacity of soybean processors in the country.
3.1.3 Characteristics and activities of processors in the Soybean value chain

Processing companies are one of the critical nodes of the Soybean value chain. According to the
Government of Rwanda, the processing companies drive the value chain (Pers.comm. Director of
Research, RAB). The main processor of soybean in Rwanda is Mount Meru SOYCO ltd located in
Kayonza district, Eastern province. Mount Meru SOYCO Ltd produces edible oil and soy meal. The
other major soybean processors include the African Improved Foods (AIF) and premier animal
feeds industry (PAFI Ltd (Figure 13)). African Improved Foods is a joint venture with the government
of Rwanda and is aimed at improving human nutrition. The company processes both maize and
soybean to produce flour. Generally, processing companies play a critical role of providing market
for raw soybean, offering a sure market for the farmers.
This study found that most processing companies have not gone beyond three years of operation.
This emphasizes the fact that the sector is young. Because of limited supply of raw soybean, the
companies accept any soybean they get from the farmers. They are not particular about which
variety to process. Companies produce both livestock feeds and cooking oil for both domestic
consumption and export.
16
Processing of soybean faces a number of challenges. The most critical ones are:
1). The prices of inputs are high. According to the management of SOYCO, the company pays raw
soybeans at Rwf 420/kg. The company finds this price very high. The company thus prefer buying
from neighboring countries like Uganda and Congo where they can obtain the Soybean at Rwf
350/kg. At the time of study SOYCO imported 30% of the soybean raw materials from Uganda and
Democratic Republic of Congo.
2). There is limited supply of raw Soybean. SOYCO is under-utilized and is operating at only 20% of
its capacity. Whereas processing companies did not mention serious challenges in the quality of
farmers’ produce, they anticipate such a challenge once soybean production has become steady.
Plate 6: Interview with the PAFI feed mill manager Plate 7: Grain storage silos at PAFI Feed mill at Rwamagana
(in black) at Rwamagana
3.1.4 Characteristics of Government and NGO activities in the soybean value chain
The Government institutions that supported the soybean value chain included; Rwanda Agriculture
Board, (RAB), Ministry of Agriculture (MINAGRI) and Ministry of Finance (MINECOFIN). The NGOs
that were profiled include Seed-Co, One acre fund and Clinton Foundation, among others. These
bodies performed the function of regulating the chain and providing technical and financial
support. For example, the Clinton Foundation has over the years helped farmers with access to
seeds and has initiated training programs for soybean farmers in Rwanda aiming at improving their
yields and food security. Meanwhile, RAB carries out research, training and extension services to
farmers, and networks with other government, NGOs and other private sector initiatives aimed at
increasing yields and improving livelihoods and market access for soybean growers.
Following the interviews with various Government officials, there is a strong commitment by
the Government to promote Soybean enterprise. Presently, soybean is one of the priority crops
earmarked by the Government for improving livelihoods of farmers through incomes, creation of
jobs through employment in Soybean industries and for nutrition. The Government recognizes that
this is not an easy road, given that the sector is not well developed, the people have not embraced
the enterprise as yet and that currently, the soybean produce is insufficient for factory processing.
The less enthusiasm of some farmers also implies that there is need to increase sensitization on
17
the importance of the enterprise. In a way of boosting the farmer’s adoption and production of
soybean, the Government subsidizes the farmers by covering part of the total cost of seed.
3.1.5 SWOT analysis of the Soybean value chain in Rwanda

The analysis of Strengths, Weaknesses, Opportunities and Threats (SWOT) of the soybean value
chain in Rwanda was done, to identify aspects in the value chain that need to be i) upheld
(strengthened), ii) exploited (opportunities), iii) improved (weaknesses), and iv) avoided (threats).
Strength and weaknesses are internal to the chain while opportunities and threats are external.
Nevertheless, several factors act in a combination to influence the performance of the chain
(Figure 7).
Strength Weaknesses
» Government commitment to improve productivity and » Soybean Research and Development program is
market for soybean. critically understaffed
INTERNAL FACTORS
» Strong and well-coordinated cooperatives with sound » Poor yields due to lack of knowledge, improved seeds
leadership and agronomic practices
» Established network of agro-dealers, who in addition of » Very weak soybean breeding program
supplying inputs provide the agricultural information » Lack of synergy between the actors, especially the
» Strong agricultural extension system in place processing farms and the farmers
» Well-developed road network » Inadequate supply of improved seed to farmers
» Government subsidies on seeds » Inadequate raw soybean for processing firms
» Increased support from stakeholders like MINECOFIN, » Low consumption of Soy cake in Rwanda
MINAGRI and Clinton Foundation
Opportunities Threats
EXTERNAL FACTORS
» Huge market for soybean and soybean products locally
and internationally » Availability and supply of Soybean from the neighboring
» Private sector investment in soybean in Rwanda and in countries at a cheap price
the region. » Soybean rust disease
» Increasing value of Soybean for both human health and » Drought
livestock consumption
POSITIVE NEGATIVE
Figure 7: Strength, Weaknesses, Opportunities and Threats (SWOT) analysis of the soybean value chain in Rwanda
3.1.6 Conclusions
From the analysis of the soybean value chain in Rwanda, the following conclusions were drawn;
1) Soybean is grown in a few districts in the Eastern, Western and Southern provinces. Yet, even
in those districts, soybean is not well adopted but is rather limited to few sectors within a district.
This implies that more effort is needed to expand production in other areas.
2) Soybean is predominantly grown by smallholder farmers. The study did not find large
commercial soybean farmers. These farmers make decisions to distribute the limited land to
soybean and other crops, particularly maize and beans. Therefore location specific rotations that
allows alternating the crops in the limited land are appropriate for increasing soybean production.
This finding also implies that acreages under soybean can be expanded by rather attracting new
farmers.
3) The value chain is controlled by the Government, through support to both farmers and agro-
dealers. This is done in order to jumpstart the sector and nurture best practices.
4) Drought, pests and disease stand out as the most important soybean production constraints,
which can be addressed by establishing resistance breeding programs, which have proved
successfully in other countries like, Uganda, Brazil and Thailand. Drought can also be addressed
through changes in agronomic practices in response to erratic weather patterns There is a serious
need for research on the pests and diseases which are ravaging the soybean crop in Rwanda.
18
3.2 Technical feasibility
3.2.1 Analysis of Soybean seed systems
Soybean farming in Rwanda is not new, as farmers have grown the crop since 1974. However,
majority (73%) of the farmers have grown the crop within the last 5 years (2010-2016). From Table
8, over 27% of the farmers sourced their first seed from either a neighbor, relative or friend. The
second important source of soybean seed was the agro-dealers (25.2%) followed by those who
got seed from the government agency, RAB. The agro-dealers sold the certified seed to farmers. A
majority of the farmers grow only one variety, while only 4.7% of the farmers had more than one
variety on their farms.
Table 8: Source of Seed bean seed grown by farmers
Source Percentage of farmers

Farmer to farmer 27.7
Agro-dealer 25.2
RAB 12.6
Extension agent 10.7
Middle men/ produce buyers 10.1
Farmer cooperative/ society 5.7
NGO 4.4
Seed companies 3.1
Other sources 0.6
A number of soybean varieties were grown in Rwanda. Farmers gave the varieties various names,
including yellow variety which was the most popular (Figure 16). However, this yellow variety may
indicate farmers did not know the actual names. The yellow variety could represent any variety
that looked like yellow. Peka 6 and Sequel were also very common among the farmers. The other
varieties which were grown (not indicated in the table) were Gakondo, Kigyambere and Saga. Other
varieties were described as short, white or yellow with black eyes (Figure 8).
Figure 8: Soybean varieties grown by farmers
19
The four most preferred soybean variety attributes included: early maturity, high yield and taste.
About 37% of the farmers reported early maturity as the key variety attribute while 24% and 15%
of the farmers preferred yield and taste respectively. Early maturity is important because early
maturing varieties are tend to escape the harsh weather conditions. The other important aspect
mentioned was disease resistance (Figure 9). The preference by the buyers was mentioned by
very few farmers, indicating that the processors do not place pressure on farmers to produce a
particular variety of now.
Figure 9: Most preferred attributes in

soybean variety grown
The varieties planted were said to be of poor quality, in terms of yields obtained at farmer level,
with some farmers mentioned productivity as low as 160 kg/ha. The yield of the all common
varieties, as mentioned by farmers, shows that no variety yielded more than 1 tonne per hectare.
Among the three varieties (Figure 10) Sequel was the least high yielding, although its yield did not
differ significantly from the rest (P=0.137). Low yields were attributed to both the prevalence of
drought and poor varieties. This therefore requires investment in breeding for drought resistance,
quick maturity and high yield. The need for breeding was emphasized in one of the stakeholder
meeting with all the actors, and was identified as the precondition for the success of the Soybean
enterprise in Rwanda. Among the varieties which was mentioned to be doing well in Rwanda
during the stakeholder meeting is SB 24 (Maksoy 1N). Farmers bought between 1.5 kg to 50 kg of
soybean seed, and on average they used 11 kg of soybean seed to plant their gardens.
Figure 10: Yields of different soybean varieties Plate 8: Two soybean samples at SOYCO reflecting good
grain (Uniform cream) and poor grain (green and cream)
20
3.2.2 Soybean production technologies
The use of fertilizers and organic manure was generally low. Although 42% of the farmers used
fertilizers, the application per unit area was generally low (Figure 11; Table 9). The application rate
of fertilisers was 12.6 kg/ha compared to the required 100 kg/ha. The application rate is slightly
higher than the level FAO reported as the level of fertilizer use, which it estimated at 9.3kg/ha. The
use of insecticides and rhizobia was very dismal. About 13.6 and 16% of the farmer reported having
used insecticdes and rhizobia.However, only about 5.6% actually purchased rhizobia inoculum.
Most (63%) farmers reported using organic manure, but less than half had actually bought organic
manure. Hired labour was used by 46.9% farmers (Figure 11). Post-harvest was not mentioned
among the most pressing issues. The difference in use and actual purchase of inputs can be
explained by the farmer’s purchasing power. Table 9 also shows that farmers used less seed than
recommended, and there was almost no use of pesticides.
Table 9: Application rates and optimal rates
Input type Current Optimal

Quantity of seed (kg/ha 42.1 60
Fertilizer use (kg/ha 12.6 100
Rhizobia kg/per ha 0.001 0.2
Quantity of pesticides used 0.1 1
Figure 11: Agricultural input use in soybean
3.2.3 Soybean production and productivity

Based on focus group discussions and survey findings, average farmsize was 0.5 ha, the standard
globally used to qualify farmers as smallholders. There is virtually no land to expand soybean
production by current farmers. As a result, the amount of land to be committed to soybean in
the next year (2017) is not significantly different from that currently in use (Figure 12). Therefore,
national soybean production can be improved through three strategies: 1) recruiting more farmers
into soybean production, 2) increasing productivity to over 2 MT/ha through aggressive promotion
and adoption of productivity enhancing technologies (i.e. good seed and mineral fertilizers), and
3) enabling environment for largescale investment in the soybean sector (i.e. commercial farming
and value-addition). This study found very limited number of commercial soybean farmers. The
previous sections have demonstrated that soybean should be promoted for both income and
nutrition.
21
Figure 12: Land commitment to soybean production
Computation of the gross margins per hectare of soybean was USD 139.2. The gross margins were
significantly higher (USD 247.4) in the Western region compared to Eastern region (USD 97.8) and
Southern region (USD 140.4). Despite being relatively small, the postive gross margin value across
all regions implies that the soybean enterprise is profitable. However, gross margins are negative
(USD -51) when hired labor is included in the computation, this is because high labor costs can
not be offset by farmer yields estimated at 0.8 MT/ha. Moreover, when inputs are used at the
ideal recommended rates yields are increased to 1800 MT/ha (Table 10). This increase in yields is
equivalent USD 205.55 per hectare that is sufficient to offsets the high labor costs associated with
hired labor (Table 10).
Table 10: Soybean yields at the current and targeted production levels (computation includes family labor)
Target scenario Survey based scenario

Input Type Unit Rate Costs Costs
Quantity Quantity
(Rwf) (Rwf) (Rwf)
Labor person days 233 1,323 308,259.00 233.00 308,259.00
Seed kg 60 1780 106,800.00 42.10 74,938.00
Fertilizer (DAP) kg 100 720.00 72,000.00 12.60 9,072.00
Land hire ha - -
Rhizobia kg 0.2 6250 1250 0.01 6.25
Pesticide liters 1 7,999.94 7,999.94 0.10 799.99
Manure kg 23 30.00 690.00 23.00 690.00
Total Cost of Production 496,061.10 393,070.55
Yield kg 1,800.00 800.00
GM Rwf 759,600.00 337,600.00
Net Income Rwf 263,538.90 (55,470.55)
Net Income USD 348.28 (73.57)
Overall, the soybean enterprise has improved the smallholder livelihoods of farmers. As presented
in Figure 13, farmers were able to acquire small ruminants (i.e. goats), which demonstrates the
wealth/asset accumulation benefits that can accrue when farmers engage in soybean production.
Apparently, farmers are willing to adopt soybean cultivation, provided it competes favorably
with maize and beans. Farmer recommendations for improving the soybean value chain can
be summarized as: 1) Sensitization and training on soybean agronomy and benefits; 2) Timely
provision of provide fertilizers, seed and pesticides; 3) improved soybean prices and market
linkages; 4) development of irrigation facilities
22
Figure 13: Benefits of soybean production to farmers
3.2.4 Utilization of soybean

On average, farmers sold soybean grain at Rwf 348.15 (USD 0.46) per kg. Only 2% of the total
respondents reported using some soybean for animal feed (Figure 14). As earlier highlighted in
Figure 14, more than 74% of the farmers sold and consumed soybean. Almost half (49.4%) of
respondents saved seed. However, further analysis indicated that 75% of the soybean produced
was sold, 10% saved as seed and the rest consumed. This result imply that promotion of soybean
should be two pronged; one, to encourage sale and two, to encourage consumption.
Figure 14: Uses of soybean in Rwanda
Local processing industries should be developed and supported to increase local processing.
Farmers mentioned about seven different forms in which soybean was consumed, namely in
form of porridge, flour mixed in food/composite flour, Soup, Sauce, roasted soybean, Tofu and
flour mixed with milk. The frequency of consumption was also impressive. Figure 15 shows that
44.67% of the respondents ate soybeans seven times a week while 2.67% report not eating
soybeans in a week.
23
Figure 15: Number of times soybean is consumed by the farmer in a week
3.2.5 Conclusions on technical feasibility of soybean production at farmer level

Number of farmers needed to support the country soybean demands
The above findings show that Soybean is important for both food and for cash. An individual
farmer produces 0.15 MT of soybean per year. Of this, about 15% is consumed and 75% is sold.
Considering that the processing companies require about 62000 MT/year, it thus follows that the
soybean required for both consumption and sale to satisfy the processing and local consumption
needs is approximately 100,000 MT. At the current production level of 0.15tones per year, it would
requires recruitment of more farmers in the whole country. This increases the acreage under
soybean. However, the number of people required to produce Soybean and the acreages can be
significantly reduced if the current average yield (0.8 MT/ha) can be increased to 2 MT/ha. Increase
in yield can be achieved through;
» Investment in breeding for high yielding, drought resistant and quick maturing varieties;
» Managing the pests and diseases which ravage the crop;
» Investing in irrigation in the key producing areas
Household consumption of Soybean

Soybean is a highly nutritious food, especially needed for the growth of children. Efforts to promote
soybean consumption through mass media by the Government and NGOs should be encouraged.
Input use
There is very little use of inputs, except for organic manure. This should be promoted, especially
by targeting the use of the inputs up to the recommended quantities. Promotion of the use of
inorganic fertilizers should be continued to be promoted, since its use is relatively low, despite the
enormous benefits it can bring in soybean production.
3.3 Technical and Institutional Support to the Soybean Value Chain

3.3.1 Access to Technical Advice
Technical extension advice was limited. The study findings indicate that 83% of respondents did
not get any extension advice on soybean production. For the few farmers that got technical advice,
RAB was the most important source of the technical advice to the farmers (Figure 16). Local farmer
groups were the second important source. Contrary to the expected, the agronomic extension
staff were responsible for only 11% of the information that farmers received related to soybean
growing. Besides extension advice being relatively limited among the soybean smallholder farmers,
24
Figure 16: Sources of Information on soybean production
the content the farmers received significantly varied. This feasibility study noted 16 different
information content that was passed on to the farmers. However, the agronomic information
was the highest form of information received by the farmers. Agronomic information included
planting methods, fertilizer application, and irrigation. Post-harvest information included soybean
harvesting, soybean processing, working in groups, and value addition. Other training included
benefits of growing soybean, managing the environment well.
Table 11 shows the detail of the information that was passed on to the farmers. This finding shows
that more information concerning post-harvest handling, marketing and nutrition need to be
passed on to the farmers. Majority of farmers, about 68%, received 1 to 2 trainings on soybean
growing in the season before the study (the last season of 2015) while 32.32% received 3 to 7
trainings in the same period. This shows that training were still limited both in frequency (Table
12).
Table 11: Training content covered by the farmers
Purpose of training Farmers reporting (%)

Farmer field school 1.5
Soybean management and value addition 3.1
Soybean harvesting 1.5
Row planting and fertilizer application 7.8
Soybean planting and fertilizer application 4.6
Soybean agronomy and marketing 3.1
Good agricultural practices 3.1
Row planting and environment 1.5
Agriculture 1.5
Fertilizer application 1.5
Soybean processing 1.5
Irrigation 1.5
Row planting and harvesting 1.5
Row planting 16.9
Benefits of soy growing 7.7
Soybean agronomy 41.5
25
Table 12: Number of trainings received by the soybean farmer in the last season (Season 2015B)
Number of trainings received Number of farmers (%)

1 29.23
2 38.46
3 21.54
4 4.62
5 1.54
6 3.08
7 1.54
3.3.2 Membership to a farmer group/association

Membership to a farmer group was limited, with only 42% belonging to a farmer group (Figure
17; see Appendix 1). This is one of the critical areas that need to be improved in order to increase
the amount of soybean produced in the country. Belonging to farmer groups or cooperatives
is important in information dissemination, and pulling of resources among other benefits of
collective action which aid in increasing production and reaping from economies of size. This need
was further emphasized by the soybean stakeholders, for famers to aggregate and form a critical
mass to support the Soybean value chain. Contract farming is thus necessary. The farmers need
assurance that if they produce a given acreage, there is market for the produce.
Figure 17: Proportion of farmers with mem-

bership of a farmer group (N = 162) Figure 18: Roles of farmer associations
Figure 18 shows farmers‘ perceived roles of farmer association. Farmers identified five key roles
of a farmer group (Figure 26), namely produce marketing (38.7%), value addition (19.6%), savings
and credit (17.7%), nutrition and feeding (13.7%) and input access (10.5%). Of the 68 farmers who
reported membership of farmer group, 64 farmers ( (94%) mentioned that the produce marketing
key role of the farmer association, while 40 farmers (59%) reported the first role as value addition
and savings and credit. Under the second role, 18 farmers (27%) reported savings and credit being
the second important role of farmer groups followed by nutrition and feeding, and thirdly value
addition. The other smaller percentage reported ease of access to inputs. This finding shows that
produce marketing is important and should be upheld while promoting other values of being
in groups. This contrasts with the extension services provided by RAB whose main focus is on
agronomy.
26
From Table 13, Farmers (59%) reported the need for training on good agronomic practices as
the number one priority. Areas of agronomic training that featured prominently among farmers
included timely planting, pest and disease control, use of pesticides, and fertilizer application.
The second important need (14%) was access to agrochemicals namely fertilizers and pesticides,
and the third need being access to new varieties (4.3%). It should be also noted that under value
addition, farmers were interested in learning how to make soymilk, butter, tofu and oil extraction.
The need for the agronomy information than any other training need is probably because this
is what has been exposed to, and have not been opened up into other important information
required for the value chain development.
Table 13: Farmer need for increased soybean production
Cited Needs Farmers (%)

Benefits of soybean enterprise 0.62
Training on soybean value addition 3.70
Land for soybean cultivation 1.85
Agrochemical (fertilizers & pesticides) 13.58
New seed varieties 4.32
Irrigation facilities 1.85
Training on good soybean agronomy 58.64
No need 15.43
3.3.3 Gender roles in Soybean production

This study examined family decision making and division of roles between husband and wife. When
farmers were asked about who in the family makes decisions on production and selling activities,
most of the farmers reported that decisions are generally taken by both the husband and wife.
Figure 19 presents intra-household decision making with regards to production and produce
marketing. Apart from decisions on pesticide application which is male-dominated, both men and
women make decisions in other areas. Cooperation in farming is particulalry important for the
project since it reflects that soybean production information will be utilized by male and female
household members alike.
Figure 19: Intra-household decision making on soybean production
27
Figure 20 shows that household decision making with regard to allocation of labour and managing
farm revenue did not differ among by male and female farmers. This finding is important in
promoting the soybean growing in the country, since it involves the participation of both men and
women.
Figure 20: Allocation of labour and payment costs at household level
3.3.4 Access to credit

The study revealed that 92.6% of the farmers did not acess credit for soybean activities. Less than
1% of the 162 interviewed farmers had received credit specifically for soybean production. Amount
of credit received ranged between Rwf 3,000 and Rwf 700,000 but on average Rwf 227,100.
According to Figure 21, commercial banks (60%), farmer cooperatives (30%, and neighbors, friend
or family relative (10%) were the main sources of financial credit for farmers.
Figure 21: Sources of credit
Farmers gave various reasons for acquiring credit to invest into soybean production, namely (i)
purchase fertilizers and other inputs; (ii) payment for casual labour; (iii) soybean crop management
incluidng weeding; (iv) lack of alternative funding; (v) invest in soybean because it was profitable.
The reasons why majority of farmers did not seek credit included (i) lack of microfinance at village-
level, (ii) short repayment period, (iii) riskiness of credit, (iv) high interest rates, (v) no income
to service the loan, and (vi) no need for credit. Out of the 161 farmers who responded to the
questions on why they did not receive credit, 32% farmers acknowledged not having alternative
income source to service the loan, 22% farmers feared risks associated with credit, and 21%
farmers sighted no need for credit (Figure 22).
28
Figure 22: Reasons for not seeking credit for soybean production
3.3.5 Conclusions on technical and institutional support to the soybean value chain
» There is limited extension advice on soybean growing. For those who get the advice, it has
concentrated on agronomy, leaving other aspects such as marketing, utilization, etc. therefore,
both the frequency and content of the advice should be increased
» There is a lot of individual production of the crop. This denies the farmers the advantages of the
critical mass and economies of scale and size that result from producing in groups or cooperatives.
There are efforts to this, where some farmers are organized in cooperatives. This needs to be
strengthened
» There is impressive participation of both men and women in soybean enterprise. This is good,
since the crop is not regarded as either a male or female crop. This has advantages in promoting
the crop for both income and nutrition.
3.4 Demand Analysis

3.4.1 Soybean demand by the processing companies
This study established that there was a high demand for soybean products in Rwanda. Not only is
the demand in Rwanda big, but in the surrounding countries as well, which opens opportunities
for the export market. For example, the demand for soybean oil and other products stands at
30,000MT in Burundi and 90,000 MT in Rwanda (RDB, 2015). Other indicators of high demand of
soybean and soybean products, according to the study findings is reflected in information provided
by SOYCO, one of the leading processing company in Rwanda, that the company meets only 35%
of the local demand for raw soybeans. This study established that the consumers perceive the
soy oil produced by the Rwanda companies to be of better quality. As a result, the price of soy
oil produced in Rwanda is approximately 20% higher than the oil from Uganda, produced by the
Mukwano industries Limited. In one of the interviews with the soy oil consumer, the respondent
had this to say “I prefer the cooking oil from Rwanda. It is really very good. The problem is that it is
too expensive. Only the rich can afford it”.
Despite the effort to promote the soybean production among farmers in Rwanda, neighboring
countries were willing to offer soybean at 20% lower prices than that within Rwanda. This
discouraged the companies from investing in the locally produced soybean, when Uganda and
Democratic Republic of Congo can supply the soybean at low prices.
29
The companies accepted and bulked the several varieties from different sources during processing
(Plate 9) Whereas the processing industries were aware that the different varieties compromise
quality aspects and brand identity because of the differences in protein, fibre and oil content of the
different varieties. This study established that it was not possible to obtain enough quantities and
quality of a single variety to support the industries.
Plate 9: A sack of mixed soybean

varieties being processed at PAFI feed
mill, at Rwamagana. Processing such
seed is evidence of inadequate raw
materials
Measures put in place by the soybean companies

Soybean companies have instituted the following measures to encourage local supply:
1] Payment of higher price to local Soybean farmers than the import price. This study found that
whereas Soybean farmers in Rwanda who were organized under cooperatives were paid Rwf 420/
kg (USD 0.56), imported Soybean was bought at Rwf 350/kg (USD 0.46).
2] Farmers organized in groups or cooperatives were paid Rwf 420/ kg (USD 0.56) while those who
were not in groups were paid Rwf 350 (USD 0.46). Through price incentive, companies encouraged
farmers to organize themselves into cooperatives.
Measures put in place by the Government

1] Farmers bought soybean seed at a subsidized price. 80% of the cost of the seed was a subsidy
paid by the Government;
2] The Government of Rwanda was promoting the growing of Soybean in some regions that were
mapped to support the production of the crop
3] RAB has developed soybean populations (through crosses) from which locally adapted varieties
can be developed and released within three years, followed by their multiplication in two years to
provide sufficient foundation seed.
Measures put by other support institutions

1. Organizations such as the Clinton Foundation, supported the cooperatives in Rwanda that are
involved in Soybean. The focus group discussion in Gahara village, Kirehe district, showed that the
Clinton foundation was instrumental in supporting soybean production in the communities.
30
3.4.2 Demand analysis for the financial and economic feasibility of the project
The need for the financial and economic analysis to guide the implementation of the project-
increased soybean production and productivity for sustainable market in Rwanda is premised on
identified gaps:
« Research and development
« Human capacity
« Input supply and extension
« Agribusiness and value chain support
The following discussion highlights the need for investment in the mentioned critical areas needed
for the development of the project. It also based on the findings from the survey as discussed in
the foregoing sections.
The need for research and development

The main objective for investment in research and development is to increase yields of soybean to
a minimum of 1.5 MT per hectare (see Appendix 5). This implies an over 200% increase in yields.
About 2MT per hectare is the expected farmer yield of most varieties for soybean producing
countries in Africa. Table 14 show the performance of some varieties under optimum management.
Table 14: Optimum performance of soybean varieties grown in Rwanda
Variety Origin Yield (kg/ha)

Peka 6 India 2406
SB 24 Nigeria 2700
Sc. Saga Zimbabwe 3264
Sc. Sequel Zimbabwe 2128
Sc. Squire Zimbabwe 3278
To achieve 2 MT/ha, it requires for investment in research to:

« Control leaf soybean disease which ravage the crop;
« Breed varieties for drought resistance, early maturity, high yield and pest resistance;
« Develop improved agronomic practices that can maximize soybean productivity;
« Develop improved soil fertility management and water conservation practices;
« Advance knowledge and research in Soybean value chain.
« Enhance application of Rhizobium (BNF technology) in production
« This study established that the sector lacks scientists, laboratories and equipment. For example,
only two research papers connected to soybean value chain have been published, indicating a need
for more research in the field. Table 15 shows the status of research in the country, concerning
soybean research and development.
Investment in research will minimize the challenge of limited soybean supply to the processing
companies, which will enhance the processing capacity that currently stands at 20%. It will improve
the quality of produce and will enable soybean processing firms to expand the range of the
products produced. Research and development in soybean will also foster the emergence of micro,
small scale, medium and large scale companies, which will also engage in the processing of a wide
range of soybean products.
31
Table 15: Assessment of existing resources to foster soybean research and development in Rwanda
Item Status at present Comments
Currently, there is no research that has been done

Number of scientific publications
2 on breeding, pest and disease control, market and
from 2005 -2016
value chain and product development in Soybean
Lack of discipline specific scientists in the fields

1 Scientist like Breeding, Pathology, Agronomy, Product
Human Capacity
(Soil Scientist) development gives a crop a weak base from where
to take off
Physical facilities
Laboratories and appropriate equipment are a
- Laboratories None
necessity for research and development
- Exquipment
Demand for Agribusiness and value chain development

Investment is required to trigger value addition to the crop both by the large scale processors and
small scale processors (see Appendix 6), which calls for:
« Research and development of other Soybean products apart from soy cake, oil and animal feeds;
« Business linkages between the processors and farmers supported by contract farming;
« Collective action in marketing to enable the smallholder farmers benefit from economies of scale
and size;
« Business development skills to small and medium enterprises
« Development of household technologies of processing soybean. There were no value addition
activities observed among farmer groups. However, farmers mentioned various ways in which they
consume Soybean. Prominent among them was Egikoma, sauce and in soy porridge.
Table 16: Human resource required in the soybean value chain development in Rwanda
Position of human resource Number at present Recommended
Program leader 1 1
Soybean breeder 0 1
Plant pathologist 0 1
Seed systems expert 0 1
Agronomist 0 2
Food technologist 0 1
Socio-economist 0 1
Research assistants 0 4
Technicians 2 8
Drivers 0 2
Administration 0 2
Technical consultants 0 2
NB: The number of staff will change as the program develops in future
32
Human Resource and Capacity Building
The target of 2MT per hectare demands investment in the human capacity to handle the 300%
increase in productivity of the soybean. This study found that the human resource to propel the
project forward was found to be deficient. For example, this study established that there was one
scientist employed directly to support the soybean program. It therefore implies that there is an
urgent need for enhancement of technical human resource capacity to manage the project. Table
16 shows the number of staff recommended to support the project. Development of the human
capacity is also important in job creation and increasing the country’s competitiveness in the region
with respect to production and research.
Input Use and Extension

In order to achieve the productivity of 2MT per hectare, there is a need to step up targeted
extension. This can be through increased extension visits and provision of quality advise on;
« Optimal and guided use of inputs, especially seed and fertilizers;
« Timely planting and timely operation of other agronomic practices;
« Use of clean and recommended seed; and
« Adoption of recommended production practices especially using adequate soybean population
(300,000 plants per hectare).
3.5 Financial and Economic Analysis

In the analysis of financial and economic indicators of project viability, several assumptions were
considered in soybean production and productivity for sustaining market. The discussion that
follows elaborates the computation key parameters of analysis and the assumptions therein.
3.5.1 Computation of Key variables

Yield per hectare: The beginning yield per hectare of 0.8 MT/ha (see Appendix 2) is based on
the survey findings that indicated that yield of soybean at the time of study was 0.8MT/ha. This
productivity is slightly higher than the productivity estimates by FAO (FAOSTAT, 2016), which
estimated yield in 2013 at (0.67 MT/ha). It is assumed that due to efforts to increase yields,
through intensified input use, timely planting and extension advice, the yield per hectare will
increase in the second year to 1.2MT/ ha. The yields are expected to continue to improve up to
over 2.2 MT/ha in the fifth year (Figure 23).
Figure 23: Trends in household soybean production and disposition
33
Number of farmers: The computation of the number of farmers was estimated first from FAOSTAT
(2013) data which shows the amount of soybean produced in Rwanda stood at 25,000MT.
Following the survey results which showed that the farm sizes under soybean were 0.25ha, the
number of farmers in 2013 was estimated to be 50,000. However, the survey results showed that
there has been an increase in the number of farmers who have taken up soybean production in
the past two years (between 2013 and 2015). The survey results show that the number of farmers
increased between 2013 and 2015, and the estimate of the current number of farmers was put
at 65,000 soybean farmers in the country. The land allocation to soybean is expected to increase
by about 28% annually. Thus it is assumed that the number of farmers will progressively increase
as profitability levels increase. In the fifth year, allocation of land to soybean is estimated at 0.44
ha per farmer. The projected increase in the number of farmers is assumed to increase by 900 per
district in the second year, resulting in 115,400 farmers in the fifth year.
Acreage committed to soybean: The size of acreage dedicated to soybean each year was derived
from the product of productivity increase and the number of farmers that are annually recruited
into soybean production by the efforts of the key stakeholders such as RAB and SOYCO. About
50,459 hectares will be committed to soybean by end of the fifth year, mainly due to the increase
in the number of farmers.
Volumes of soybean produced: These were estimated as a product of the total acreages (hectares)
and the productivity per hectare. There is a projected large increase in the volume of soybean
produced in each successive year as a result of investment in the project to introduce disease
resistant, early maturing and drought resistant varieties in every successive year.
Amount of soybean sold, consumed and saved as seed by the farmers: This study proposes that
85% of the amount produced by farmers be for sale, 15% kept for food and livestock feeds and
0% of soybean kept for seed in the first half of the project life. This follows the survey findings
which showed that 65% of the soybean produced was sold, 20% consumed and 15% saved for
seed. In order to ensure use of quality seed, the farmers are expected to use clean seed from seed
companies. This implies that the amount of soybean sold will increase to 85%. We also assume that
the amount of soybean eaten in the households and that used for livestock feeds will be 15%.
Investment by the Government of Rwanda in the project: According to the information from RAB
(2016), the Government intends to invest USD 25,978,462.45 to the project. This study investigates
the value of this money in present value terms, if it is invested in the five year soybean project.
Exchange rates (Rwandan Franc Vs United States Dollar: The exchange rate used was 1USD
=754Rwf. This was arrived at after averaging commercial exchange rates over a six month period,
beginning with November, 2015 to May 2016. Over this period, the highest rate was 1 USD
=780Rwf and the lowest was 1USD =739Rwf.
Discount rates used in the Net Present Value (NPV) computation: The discount rate used was
derived by calculating the average monthly lending rate in reference to the interest rates, over a
period of 16 months, from January 2015 to April 2016, obtained from the Central Bank of Rwanda
(2016) website. Thus the average discount rate used is 17.29, and this is used in the computation of
the NPV.
34
Price of soybean sold and purchased by households: At the time of study, farmers received two
prices for the soybean sold. Cooperatives and processing companies offered Rwf 420 per kg while
local traders offered Rwf 350 per kg. This study recommends sale to processing companies through
cooperatives or through contracts, therefore the price used in the computations are Rwf 420 (USD
0.56) for the soybean sold, and Rwf 350 per kg (USD 0.46) for the soybean consumed at home or
used as feed in the households. Prices are also assumed to decrease as the yields increase. By the
fifth year, the price per kg of soybean is expected to have decreased to 0.53 from 0.56 (Figure 24).
It is also assumed that the amount of soybean marketed to local oil producer will increase in co-
movement with farmer production whereas the amount of soybean consumed will remain almost
flat given that the number of household members will remain at about six members or even drop
with economic development over the long term.
Figure 24: Trends in soybean prices
Revenues from use of Research facilities: The laboratories constructed will be used by private
companies and scientific researchers. It is assumed that at least USD 3000 will be generated after
the laboratories have been completed in the third year. The revenues will continue to increase to
at least USD 9000 by the fifth year (see Appendix 5).
Revenue as a result of value addition: This study assumes that, because of value addition, soybean
products will attract further revenue, above what the farmers will obtain. Estimation of the value
addition is based on the two products produced by SOYCO; Soy oil and soybean cake. The values
were arrived at as follows:
« About 6 kg of soybean yield approximately 1kg or 1.1 liters of soybean oil. Each liter of soy oil is
valued at the current market price of USD 1.3.
« Also 6kg of soybean gives 4.5kg of soy cake, valued at the current price of USD 0.6 per Kg.
This implies that 6kg of Soybean is valued at USD 4.0 per Kg. For every kg of soybean that is sold
to the processors or other value addition agents, it yields revenue worth USD 0.66. Basing on the
survey results, which agree with the general processing industry markups, it is estimated that
the processing cost is 80% of the revenues obtained. This implies that the value that accrues to
processing is USD 0.13 per Kilogram of Soybean as a 20% portion of USD 0.66 revenue on per kg of
processed oil.
35
3.5.2 Estimation of expenditures

3.5.2.1 Direct costs of production at farm level
Cost of seed: The cost of seed is based on the assumption that all farmers (100%) will use
certified seed from seed companies. Based on information from the Ministry of Agriculture, the
Government will provide seed through seed companies at a cost of USD 2.36, and the price will be
maintained up to the fifth year (Figure 25; see Appendix 3).
Fertilizer quantities: Di Ammonia Phosphosphate (DAP) is recommended for use in Soybean

production. This study recommends its use at a recommended rate of 100kg per hectare. Its
use will be complimented with the use of cattle manure, which the farmers were already using,
since survey results showed that 63% of the farmers used cattle manure. It is assumed that each
household will be able to acquire the manure to apply in the garden. The market price for 1kg of
DAP which is recommended for use is USD 0.95, implying that the cost of DAP per hectare is USD
95 (derived from 100*0.95). The cost of fertilizer is expected to increase progressively as more
farmers increase the use of fertilizer (Figure 25; see Appendix 3).
Cost and use of Pesticides and Rhizobia: It is recommend to use one liter per hectare per season.
This should be sufficient for a farmer to apply three to four times for a quarter of a hectare per
season. The cost per liter of the pesticide is USD 10.61. One liter of the pesticide is expected to
be used throughout the cropping season. On the otherhand, Rhizobia requirements for soybean
is 0.25 kg/ha. A kg of Rhizobia is valued at USD 8.29. At the application rate of 0.25kg/ha, the
Rhizobia used per hectare is valued at USD 2.07 (Figure 25; see Appendix 3).
Figure 25: Estimated cost of inputs over the 5 year period
Capacity building in soybean agronomy: Rwanda has an already functioning extension system, as
evidenced from the survey. However, it needs to be stepped up to achieve the yields of 2.2 MT per
hectare of soybean. Further research and development is needed in agronomy, pest and disease
control and soil fertility management to enhance soybean productivity. This study recommends 4
extension visits in a year; two on agronomy, one on post-harvest handling, and one on marketing
and value addition. The value of the extension visits is estimated at USD 2 per farmer per year.
36
3.5.2.2. Research and development
The expenditure under research development includes (see Appendix 5):
(i) Costs of constructing and maintaining the laboratories; It is assumed that the general purpose
laboratory will be constructed, from which research on soybean breeding, biotechnology,
pathology, agronomy and food and nutrition will be carried.
(ii) Costs of constructing and maintaining four greenhouses including some major repairs in the
fifth year.
(iii) Cost of construction and maintaining a running a soybean agribusiness and development
center;
(iv) Cost of capacity building, in training scientists; At least 5 MSc students and four PhD students,
trained in an African university. The tuition for each year is valued at USD 4000 per year for a
master’s student and USD 6000 for a PhD student. The stipend of the students is valued at USD 700
per month and USD 1000 per month for a PhD student. It is also estimated that the master’s course
will take two years while a PhD course will take four years. The costs of training are spread across
the 5 years of the project life (Table 17).
(v) To support the research activities and other soybean project activities at RAB, we propose that
four double cabin vehicles including the cost of their maintained are required (see Appendix 7).
Table 17: Summary of costs of training MSc and PhD students in an African University
Number Number Cost per Number Cost per

Student Item Sub-total
students years year months month
MSc Tuition 5 2 4000 - - 40,000
Stipend 5 2 - 12 700 84,000
PhD Tuition 4 4 6,000 - - 96,000
Stipend 4 4 - 12 1,000 192,000
Total 412,000
NB: It is recommended that all the students will conduct their research in the program at RAB in Rwanda. For this reason the research
funds are within the national research budget in this report
3.5.2.3 Support to Agribusiness and value chain development

The costing of the support to Agribusiness and value chain development Centre is based on the
literature review of the Small and Medium Enterprises (SME) sector (see Appendix 6 and 9).
According to the Ministry of Trade and Industry (2010), the SME sector, both the formal and informal
businesses, comprises 98% of the businesses in Rwanda and 41% of all private sector employment.
Most micro and small enterprises employ up to four people (MTI, 2010). The SME sector also has
the potential to lower Rwanda’s trade imbalance. Cooperatives are also included in the SME sector.
Table18 below shows the definition of the different entities in the SME sector. The feasibility study
estimates costs to support the agribusiness sector basing on their turn over values. Each year, it is
envisaged that new businesses will emerge, beginning with 50 microenterprises, 28 small enterprises
and 5 medium enterprises. These SMEs include those engaged in value addition, livestock farmers
that utilize soy cake and the services sector SMEs such as credit providers and vendors that come
up as a result of the soybean boom in the country. In addition to the support of the SMEs, there are
costs incurred in agribusiness trainings workshops, innovations ad exhibitions that will encourage the
SMEs to profitably manage the businesses.
37
Table
18: Enterprise categories based on Rwanda Ministry of Trade and Industry
Maximum Turnover Minimum Turnover Minimum No.

Enterprise Type
(USD) (USD) Employees
Micro enterprises 663.13 132.63 1
Small enterprises 19,893.90 397.88 4
Medium enterprises 99,469.50 15,915.12 31
Large enterprises 106,100.80 72,944.30 100
To further boost post-harvest handling of soybean and its trade, a cost of establishing bulking
centers is included. 20 bulking center has been recommended per district that shall be selected
to be in soybean project. The construction of the bulking centers should be staggered in the five
years. As such, four bulking centers shall be constructed per year at a cost of USDD 180,000 per
store (see Appendix 6). The costs for trucks for transport and costs for the management of both the
agribusiness centers and cooperatives (see Appendix 6).
3.5.2.4 Human resource

The cost of human resource proposed for the project are summarized in Table 19 and Appendix 7.
The costs provided do not include personnel already employed in the sector, such as Government
extension staff and other ministry staff, who in addition to support for soybean work also provide
services in the agricultural sector.
Table 19: Human resource requirements for the soybean value chain development
Current Proposed Monthly rate Annual Cost

Human resource position
Number Number USD USD
Program leader 1 1 750 9,000
Soybean breeder 0 1 700 24,000
Plant pathologist 0 1 700 24,000

Seed systems expert 0 1 700 24,000
Agronomist 0 2 700 48000
Food technologist 0 1 700 24,000
Socio-economist 0 1 700 24,000
Research assistants 0 4 650 72,000
Technicians 2 8 450 76,800
Drivers 0 2 300 12,000
General administration 0 2 2000 24,000
Technical backstopping 0 100,000
Total cost per year Rwf 206,143,600 USD 273,400
38
3.5.3 Measures of the financial position of the investment
Gross margins at project level: The results indicate positive margins in each year. The margins
continue to increase each successive years, from USD -5038,835 up to 47,391,095 in the fifth year
(Appendix 10). This is attributed to use of high yielding, disease resistant and drought resistant
varieties. With high yields, farmers benefit from the economies of scale, SME businesses spring up,
which all contribute to high margins as a result of the investment.
Net Present value: Analysis of the income and costs in present values yields a Net present value
of USD 18,178,710 (Appendix 10). This implies that the project is feasible. The finding also implies
that if the Government invests USD 25,978,462.45, its value will be USD 18,178,710 five years
later. This study did not go further to determine the NPV of alternative projects, for the purpose of
comparison with the other project in which the money would be invested.
Pay- back period: The results show that if the Government invested USD 25,978,462.45 USD, the
money would be recovered by the third year (Appendix 10). This is a period at which the new
varieties are giving high yields. The two results – the positive NPV and the early payback period
show that the project is viable.
Return on Investment (ROI): Further analysis also shows that the projects ROI will be USD 0.62,
implying that for every dollar invested, it returns extra USD 0.62 (Appendix 10). This means that
any unit dollar invested yields a positive dividend, albeit small. This finding implies that the project
involves heavy investment, which results are realized after a longer period of time.
Internal rate of return (IRR): The Internal Rate of Return is found to be 35% (Appendix 10). This
implies that at a discount rate of 35%, the Net Present Value (NPV) becomes zero. It also implies
that this project can only be viable if the cost of money is at an interest rate less than 35%. Based
on the Rwanda central bank average lending rate of 17.3% for the last 16 months of January 2015
through April 2016, the margin between the two rates implies the project is well cushioned from
the lending rate variability for as long as they do not exceed 35%.
Table 20: Exchange rate risk assessment of project variability
Scenario 1 Scenario 2 Scenario 3

Financial measure Stronger RwF, Strong RwF, Weak RwF,
[1USD =739Rwf] [1USD=754Rwf] [1USD = 780Rwf]
NPV (USD) 19,233,390 18,178,710 16,446,691
IRR (%) 36% 35% 33%
ROI (USD) 0.64 0.62 0.59
3.5.4 Risk Analysis of investing in the project

The project performance is tested based on fluctuations of exchange rate, farmer numbers and
farm productivity. The three variables are chosen because they are key project targets and greatly
influence project viability.
Changes in the exchange rates

Variability of the project feasibility basing on the exchange rate in Rwanda is presented in Table 20.
As one of the most important variables that can affect the project viability over time, the exchange
rate is varied to assess how the NPV, IRR and ROI fair. At the highest gains of the Rwanda Franc
vs. Dollar (1 USD =739Rwf), this study established that the NPV would be at USD 18,8178,710;
39
IRR would be at 35% and ROI at USD 0.62. Similarly, at the smaller gain of Rwandan Franc Vs. the
dollar, that is if the RwF slightly depreciates (1 USD =754 Rwf), NPV drops to USD 32,210,286, the
IRR remains at 51% while the ROI drops to 0.61. Depreciation of the Rwf from 754 to 780 leads to a
drop in NPV by 10.3%. This implies that in either case, the project remains feasible. It thus implies
that the project remains viable even at the lowest depreciation level that has been experienced in
the period of 17 months before the study.
Changes in the number of farmers

Table 21 shows that in order for the project to be well cushioned from interest rate and exchange
volatility, a high number of farmers is required. At lower farmer numbers added per year per
district, the project remains viable however, the difference between the discount rate and the IRR
becomes small and further smaller if the Rwf depreciates against the USD and thus low farmer
numbers place the project viability at stake. Also at very high numbers of farmers recruited for
soybean production, IRR improves but the marginal increase in return on investment is virtually
insignificant. The project is thus better off operating at the third scenario. Further analysis showed
that the project was not feasible when the current prices were adjusted downwards by about 25%,
otherwise the project was viable. Also, keeping other factors constant , that its prices, exchange
rate and farmer numbers, but, farmers poorly use the inputs and realize low yields 0.5 MT/ha
during the first year and 1MT/ha during the fifth year, the project becomes unviable.
Table 21: Changes in project variability based on farmers‘ number, attainable yield (2.2 MT/ha) and exchange rate fixed at 1
USD = 745 Rwf
SCENARIOS
(Annual increase of farmers per district) NPV (USD) IRR (%) ROI (USD)
2,805,973 21 0.37
1. Number of farmers increases by 30 per year
(1,610,085) (19) (0.35)
2. Number of farmers increases by 100 per year 4,042,860 22 0.39
Table 22: Summary of risk assessment
Likelihood
Scenario Impact Risk Level
Scenario occurrence
Reduction by price
Not-viable Unlikely
by 28%
Lower yields (0.5 MT first year; 1 Unlikely, but except in prolonged

Not viable
MT last year) drought periods
Low
Minimal increase in the number Project remains viable but risky. It
of farmers (30 per district per becomes even more risky at low Unlikely
year) exchange rates
Exchange rate variability (lowest Project remains viable but very

Likely
Rwf 780) risky)
40
3.6 Economic Feasibility of the project
Two approaches were used to evaluate the economic value of the project. The first one, and mostly
used was the qualitative method. In this method, the economic value is explained qualitatively. The
other method is the quantitative methods, where shadow prices have been used to estimate the
economic value of the project.
3.6.1 Contribution to local vegetable oil production

As shown in Figure 26, local vegetable oil production is expected to increase gradually as soybean
productivity increases. By the end of the 5th year, at least 22,202MT of oil will be produced,
with net revenue worth of USD 88075 based on current prices. The project will thus contribute
to increased local production of vegetable oil, cut local deficits and generally enhance the
development soybean crop sub sector in the country. Significant increase will also occur in soycake
and about 88,808MT of soycake will be produced, valued at USD 7,992,679.
Figure 26: Annual trend of local soy oil production
Figure 27 shows that convergence between local demand and local production exhibits very small
gains in terms of cutting deficits between domestic demand and local vegetable oil production.
The 5 year projected demand was derived based on the Rwanda government Ministry of
Agriculture (2015) estimate of 5 kg per capita consumption of oil by 2030. It thus follows that
annual growth in per capita consumption is fixed at 3.33% whereas based on the Rwanda statistics
Institute population growth is fixed at 2.6%, other factors are kept constant . The results show
that there are more gains in each successive years as the yields and the number of farmers are
increased (Figure 35). This study projects that both demand and supply can merge within a period
of 10 years, if yields are kept up to 2 MT/ha.
Figure 27: Trend of Local soybe-

an oil demand
and production
41
3.6.2 Employment
Direct employment will be created through:
(a) Recruiting non-farmers into farming;
(b) Self -employment, through starting of own businesses;
(c) Employing others to support the businesses started
It is envisaged that employment opportunities will arise from; the businesses that will emerge and
the extra number of workers that SOYCO and other processors will add to the current low work
force. Cumulatively, about 2920 jobs will be created (see Appendix 10). This excludes the number
of people that will be hired to provide casual labor on farms.
3.6.3 Value of research

Value of added human resource
We measure the value of research by the number of publications. We assume that the students
sponsored in the project will write research papers. The value of research was computed by
considering the stipend paid to the researchers (students) and the time put in producing a
publication, in addition to the other work. We assume for a student who has two years on the
project and writes one publication, he commits 0.25% of his time spent on the project. Likewise
a PhD student who publishes two papers commits about 25% of his time on the publication.
For simplicity, the average salary is estimated at USD 850. Therefore the cost of a publication is
computed as 0.25*850 = USD 213. The value for the 15 publications will be USD 213 *15 = 3,188
3.6.4 Value of human capital development

This is measured basing on the premium to the salaries of people employed in the project. It is
projected that 45 people will be employed in the 5 years, and their average salary estimated at USD
1500. We assume that their salary, because of their training with Soybean has increased by 5%.
This implies that each will gain USD 75. Assume their career spans 30 years, then the value of the
human capital is: 45*5*30*75 = USD506,250; Where 5 is the project life time; 45 are the number
of employees; 30 is the average number of years employees from Soybean will keep working after
gaining the expertise; USD 75 is the gain in value due to training from Soybean.
3.6.5 Social value

We estimate the social value by computing the value of the visitors that visit the agribusiness value
chain Centre and the farmers’ fields. We estimate about 5000 visitors every year, each paying
about 1USD per visit. This implies that the social value = USD5000 per year or USD 25,000 for 10
years. Other social benefits include: improvement in social welfare of soybean farmers and the
trickledown effect associated with efficiency gains from the soybean industry and reduction of
imports of soybean and vegetable oil.
3.6.6 Benefit from the Maize-soybean crop rotation synergies

Planting maize and soybean in sequence has a number of advantages. First, Soybean adds nitrogen
to the soil. This is utilized by maize to meet its nitrogen needs, thus increasing yields. Intercropping
also aids in breaking the pest and disease cycles. Further, residues of the fertilizer applied in the
maize crop production can be utilized by the subsequent soybean, hence increasing yields. Studies
have shown that there are additional benefits gained in the maize-soybean rotation. A study
by Sanginga, et al. (2003) showed that Nigeria managed to increase soybean production from
60,000Mt to 405,000 Mt between 1984 and 1999. Further the study shows that the crop rotation
system of maize-soybean increased farmer’s income by 50% to 70% compared to farmers who
did continuous maize cultivation. The study also showed that increases in legume areas of 10% in
Nigeria (about 30,000 ha in the northern Guinea savanna) and increases of 20% in yield translated
42
into additional fixed nitrogen valued annually at US$ 44 million. This reflects, at the same time, an
equivalent increase in land-use productivity, and with further spread of improved crops, there are
excellent prospects for extra economic and environmental benefits from a large recommendation
domain.
3.6.7 Environmental Benefits

The soybean production project will have both positive and negative externalities. Positive
externalities include: aesthetic values and benefits due to good agronomic practices if adopted
in the cropping system of soybean farmers. Negative externalities may include soil and water
degradation if agro-chemicals are applied inappropriately. We therefore strongly recommend an
enhanced extension to educate farmers on the proper use of fertilizers and pesticide coupled
good/ integrated soil and water conservation measures so as to insure against the long term
negative consequences.
43
4. RECOMMENDATIONS
The demand for vegetable oil is growing in Rwanda and a substantial amount of oil for domestic
consumption is imported. To reduce the gap, there is need for substantial investment in the
vegetable oil industry. One of the options is investment in the soybean sub sector. To increase
productivity and reduce the challenges in the soybean value chain, the proposed strategic
investment of USD 25,978,462.45 will address the prevailing challenges. Economic analysis of the
investment of USD 25,978,462.45 over a period of 5 years shows that the project will be viable.
Given that the viability of the project largely depends on the farmers and the associated land
allocation to soybean production, a scenario analysis shows that the investment gives a positive
NPV and IRR above 35%. As such the project is viable. The benefits of the project are even greater
given that there will be creation of over 4000 jobs, development of local capacity, reduction of
vegetable oil imports and a significant contribution to household food and income security thus
contributing to reduction of household poverty and economic development in the medium to long
term period. Based on the survey findings, the financial analysis and economic benefits that accrue
from investment in the soybean sector, the Government of Rwanda should take bold step to invest
in soybean, a crop which is well known to have improved the economies of countries that invested
in soybean like Brazil, Argentina, Nigeria and Uganda among others.
44
REFERENCES
MTI. (2010). Small and Medium Enterprises (SMEs) Development Policy. Kigali: Mnistry of Trade
and Industry.
Mugabo, J., Tollens, E., Chianu, J., Obi, A., & Vanlauwe, B. (2014). Resource Use Efficiency in
Soybean Production in Rwanda. Journal of Economics and Sustainable Development, 5(6): 116-122.
Mujawamariya, M., Giller, K. E., & Franke, L. (2012). MSc thesis Plant Production System Group:
Identification of Potential Niches for Soybean cultivation in Farming systems of Eastern and
Southern Rwanda. Wageningen: Wageningen University and Research Center.
Ndoli, A., Naramabuye, F., Diogo, R.V.C., Buerkert, A., Benson, M. and Nieder, R. (2013).
Greenhouse experiments on soybean (Glycine max) growth on Technosol substrates from tantalum
mining in Rwanda. Int. J. Agric. Sci. Res, 2(5), pp.144-152.
RAB (2013). Soybean varieties information guide 2013. Rwanda Agricultural Board, Kigali.
RDB (2015). Investment Opportunities: Soya bean Production & Processing. Kigali: Rwanda
Development Board.
REMA. (2009). Rwanda State of Environment and Outlook: Our Environment for Economic
Development. Kigali: REMA.
Sanginga, N., Dashiell, K., Diels, J., Vanlauwe, B., Lyasse, O., Carsky, R., Ortiz, R. (2003). Balanced
Nutrient Management Systems for cropping systems in the tropics: from concept to practice .
Agriculture, Ecosystems & Environment, 100(2–3): 305–314.
Seitz, T (2014). Investigating the nutrient status of “non-responsive “soils across Rwanda, using a
nutrient omission trial with soybean (Glycine max) (Doctoral dissertation, Msc. Thesis, University
of Hohenheim, Germany. Available: http://www. n2africa. org/stes/n2africa. o…/Final% 2520-%
2520Report. pd. Accessed 14 March).
USAID (2009). Rwanda Staple Foods Value Chain Analysis. United States Agency for International
Development.
45
APPENDIX
Appendix 1: List of the farmer groups cited by the farmers
1. Nkunda Soya
2. Twitezi Mbere
3. Abakunda Murimo
4. Twigire Muhinzi
5. Cofanya
6. Duhinge Neza
7. Tuzamurane
8. Duhinge Neza
9. Copamuja
10. Abishyize Hamwe
11. Tereimbere Muhinzi
12. Shishikara Ukore
13. Tugane Aheeza
14. Vahasi Ukore
15. Hinga Ukire
16. Teri Imbera Muhinzi
17. Ibishyize Hamwe
18. Turwanyinzara
19. Mbereheza
20. Kovamisi
21. Twiteze Imbere
22. Tezimbere Muhinzi
23. Ndatwa Mu Mihiga
24. Hingukire
25. Koduibi
26. Komaka
27. Imbere Heza
28. Abadacogora
29. Imbere Heza Kabale
30. Yungariraabagize Its
31. Koboku Cooperatives
32. Tuganeheza
33. Covamis
34. Terimbere Muhinzi
46
Appendix 2:
Annual Production Targets and Revenue Estimates
Estimates Year 1 Year 2 Year 3 Year 4 Year 5

Production estimates -
Productivity/Yield (MT/ha) 0.80 1.20 1.70 2.00 2.20
Districts considered 4 8 12 16 20
Number of farmers recruited 65,000 72,200 83,000 97,400 115,400
Estimate households engaged per year in the project area 15,116 16,791 19,302 22,651 26,837
Land allocation to soybean– increase by 15% (Ha/farmer) 0.25 0.29 0.33 0.38 0.44
Soybean Area/Acreage (Ha) 16,250 20,758 27,442 37,033 50,459
Quantity of Soybean produced by farmers (Mt) 13,000 24,909 46,651 74,067 111,009
Disposition of farmer produced soybean
Farmer Soybean Yield (Kg/Ha) 800 1,200 1,700 2,000 2,200
Farmer Tot. Amount of soybean sold (MT) 11,050 21,173 39,654 62,957 94,358
Value of Tot. Amount of soybean consumed (MT) 1,950 3,736 6,998 11,110 16,651
Income to Farmers
Gross Revenue to farmers 7,081,897 13,569,459 25,413,760 38,978,390 57,309,868
Cost of farmers production for area under soybean 2,904,005 3,709,531 4,904,083 6,618,148 9,017,397
Net Revenue to farmers (USD) 4,177,892 9,859,927 20,509,678 32,360,242 48,292,471
Revenue due to Value added oil (USD) 104,000 199,272 373,210 592,533 888,075
Value of Soy cake (USD) less cost 936000 1793448 3358885.5 5332796.1 7992678.722
Other Gross Revenues
Use of research Labs (Companies & research fellows) (USD) - - 3,000 6,000 9,000
Residual Value of Assets
Total Revenue (USD) 5,217,892 11,852,647 24,244,773 38,291,571 57,182,226
47
48
Appendix 3:
Costs of input and capacity building in soybean production
Item/Input Year1 Year 2 Year 3 Year 4 Year 5

Direct inputs:
Cost of seed 2,301,724 2,556,684 2,939,125 3,449,045 4,086,446
Fertilizer quantity (kg) 487,500 573,975.0 765,858.8 1,034,413.3 1,410,323.6
Fertilizer cost (USD) 465,517 575,497 806,285 1,143,466 1,636,956
Cost of pesticides 172,413 231,249 321,002 454,858 650,743

Cost of Rhizobia 26,940 34,412 45,494 61,395 83,652
Total direct cost of Inputs 2,966,594 3,397,843 4,111,905 5,108,763 6,457,797
Capacity building in Soybean (Breeding, extension and marketing) 520,000 577,600 664,000 779,200 923,200
Estimated Output quantities

Quantity of Soybean produced (Kg) 13,000,000 24,909,000 46,651,188 74,066,613 111,009,427
Soy oil (kgs) 2,600,000 4,981,800 9,330,238 14,813,323 22,201,885
Soy oil (Liters) 2,860,000 5,479,980 10,263,261 16,294,655 24,422,074
Value of Soy oil (USD) 104,000 199,272 373,210 592,533 888,075
Soy cake (kgs) 10,400,000 19,927,200 37,320,950 59,253,290 88,807,541
Value of Soy cake (USD) less cost 936,000 1,793,448 3,358,886 5,332,796 7,992,679
Net value of value added soybean/oil+cake (USD) 1,040,000 1,992,720 3,732,095 5,925,329 8,880,754
Appendix 4:
Input and output price considerations
2016 Benchmark Prices

Year1 Year 2 Year 3 Year 4 Year 5
USD = 754 Rwf
Price for sold soybean (USD/Kg) 422.00 0.56 0.56 0.56 0.54 0.53
Price of consumed soybean (USD/Kg) 347.00 0.46 0.46 0.46 0.45 0.44
Markup on valued added oil sold (USD/Kg) 121.00 0.16 0.16 0.16 0.16 0.16
Cost of Inputs
Cost of seed (USD/Kg) 1780 2.36 2.36 2.36 2.36 2.36
Cost of fertilizer (USD/Kg) 720.00 0.95 1.00 1.05 1.11 1.16
Cost of Pesticide (USD/L) 7,999.94 10.61 11.14 11.70 2.28 12.90
Cost of Rhizobia (USD/0.2Kg) 1,250.00 1.66 1.66 1.66 1.66 1.66
Extension cost (2USD/3 visits in a yr) 1,508.00 2.00 2.00 2.00 2.00 2.00
Retail MARKUP on soybean oil (USD/L) 30.16 0.04 0.04 0.04 0.04 0.04
Per unit MARKUP value of soy cake (USD/Kg) 67.86 0.09 0.09 0.09 0.09 0.09
Total markup 0.13 0.13 0.13 0.13 0.13
Salvage value of infrastructure and equipment after

610,740,000
10 years
Note: Price of Rhizobia is taken at RWf 6250 per kg
49
Appendix 5:
Research and Development Goals
Item Year 1 Year 2 Year 3 Year 4 Year 5

Soybean laboratory facility
Construction & maintenance of generic lab 1,500,000 10,000 5,000 5,000 5,000
Equipment 200,000 100,00 30,000 30,000 30,000
Screen houses (4) 100,000 5,000 5,000 5,000 5,000
Soybean Agribusiness and Innovation center
Construction & maintenance 2,280,000 20,000 20,000 20,000 20,000
Furnishing and equipment 10,000 200,000 100,000 50,000 50,000
Research and Training
Masters and PhD training 41,200 41,200 41,200 41,200 41,200
On-farm and off-farm trials 20,000 20,000 20,000 20,000 20,000
Seed systems development 100,000 25,000 25,000 25,000 25,000
Total (USD) 4,251,200 321,200 246,200 196,200 196,200
Appendix 6:
Support to Agribusiness & Value Chain Development
Particulars Year1 Year 2 Year 3 Year 4 Year 5

Financial support to Agribusinesses 1,087,533 1,087,533 1,087,533 1,087,533 1,087,533
Agribusiness Training Workshops 30,000 30,000 30,000 30,000 30,000
Establishment of Bulking Centers 720,000 720,000 720,000 720,000 720,000
Maintenance of Bulking centers 5,000 5,000 5,000 5,000 5,000
Innovation & Exhibitions Costs 23,000 23,000 23,000 23,000 23,000
Produce Bulking Trucks 300,000
Maintenance of vehicles for Bulking centers 50,000 50,000 50,000 50,000 50,000
Management of Agribusiness centers 20,000 20,000 20,000 20,000 20,000
Management of Cooperatives 10,000 10,000 10,000 5,000 5,000
Annual Total costs (USD) 2,245,533 1,945,533 1,945,533 1,940,533 1,940,533
Appendix 7:
RAB Vehicle Fleet
Item Year1 Year 2 Year 3 Year 4 Year 5

Double Cabins (4) & Motor cycles (6) 250,000
Operations and Maintenance 50,000 50,000 50,000 50,000 50,000
Totals (USD) 300,000 50,000 50,000 50,000 50,000
50
Appendix 8:
Project Income & Costs
Appendix 9:
Agribusiness support and Expected Economic and Social Externalities from Investment
Enterprise Targets Year 1 Year 2 Year 3 Year 4 Year 5

No. of Micro enterprises 50 100 150 200 250
No. of small scale business 28 53 75 100 125
No. of medium scale businesses 5 10 25 50 70
Agribusiness Enterprise Support Funds (USD)
Micro enterprises 33,156 66,313 99,469 132,626 165,782
Small enterprises 557,029 1,054,377 1,492,042 1,989,390 2,486,737
Medium enterprises 497,347 994,695 2,486,737 4,973,475 6,962,865
Totals Agri-Financial Support 1,087,533 2,115,385 4,078,249 7,095,491 9,615,385
Estimated turnover (USD)
Micro enterprises 6,631 13,263 19,894 26,525 33,156
Small enterprises 11,141 21,088 29,841 39,788 49,735
Medium enterprises 79,576 159,151 397,878 795,756 1,114,058
Large (Growth in SOYCO, USD) - - - - -
Total Turnover 97,347 193,501 447,613 862,069 1,196,950
Employment Benefit
Micro enterprises 50 100 150 200 250
Small enterprises 112 212 300 400 500
Medium enterprises 155 310 775 1,550 2,170
Large enterprises - - - - -
Totals 317 622 1,225 2,150 2,920
Other Benefits
Gains from Human Capital
No. and Value of publications
Value of human capital developed
Gains from synergies
Soybean-Maize Rotation
Gains from Agribusiness and training transferred to
other sectors
51
52
Appendix : 10
Profit and Loss Statement
ITEM Year 1 Year 2 Year 3 Year 4 Year 5

INFLOWS
Net Revenue to farmers (USD) 4,177,892 9,859,927 20,509,678 32,360,242 48,292,471
Revenue due to Value added oil (USD) 104,000 199,272 373,210 592,533 888,075
Value of soy cake 936,000 1,793,448 3,358,886 5,332,796 7,992,679
Use of research Labs (Companies & research fellows) (USD) - - 3,000 6,000 9,000
Residual Value of Assets - - - - -

Total Inflows 5,217,892 11,852,647 24,244,773 38,291,571 57,182,226
OUTFLOWS
Direct Farm Inputs 2,966,594 3,397,843 4,111,905 5,108,763 6,457,797
Capacity building in Soybean (Breeding, extension and marketing/value chain Dvt) 520,000 577,600 664,000 779,200 923,200
Human Resource & Admin 273,400 273,400 273,400 273,400 273,400
Lab, Training & Agribusiness facilities 4,251,200 321,200 246,200 196,200 196,200
Agribusiness Support 2,245,533 1,945,533 1,945,533 1,940,533 1,940,533
Program Fleet 300,000 50,000 50,000 50,000 50,000
Total Outflows 10,256,727 6,515,576 7,241,038 8,298,097 9,791,130
Net Balances (5,038,835) 5,337,071 17,003,734 29,993,474 47,391,095
NPV 18,178,710
IRR 35%
ROI 0.62
Check on Payback period 10,256,727 16,772,303 24,013,341 32,311,438 42,102,568
1 2 3 4 5
Appendix 11:
WORK PLAN
Estimated Estimated Estimated Estimated Estimated

Activity Sub-activity
budget/1st Year budget/2nd Year budget/3rd Year budget/4th Year budget/5th Year
Plant breeding Importing germplasm 2,653 - - 0 0
On-farm and on-station field trials 54,721 55,000 50,000 50,000 50,000
Crossing and screening 14,721 14,000 14,000 14,000 14,000
Conducting release trials 14,500 14,500 14,500 14,500 14,500
Seed production
Production of breeder, pre-basic and basic seed 150,000 150,000 150,000 150,000 150,000
Seed processing and conditioning 150,000 150,000 150,000 150,000 150,000
Agricultural extension
Establishing demonstration plots in soybean agro-
15,000 15,000 15,000 15,000 15,000
ecological zones
Organizing field day -at the agribusiness and value
5,000 5,000 5,000 5,000 5,000
chain Centre
Training farmer in their farmer groups 10,000 13,263 10,000 10,000 10,000
Land use Consolidation for soybean 1,000 1,500 1,000 1,000 1,000
Training of IDPs and technicians of service providers 39,000 39,000 39,000 38,000 38,000
Documentary produced on soybean pest and disea-
3,000 - - 3,000 -
ses control
Input supply
Fertilizer distribution 477,454 575,497 806,285 1,143,466 1,636,956
Seed distribution 2,300,000 2,600,000 2,900,000 3,400,000 4,100,000
Rhizobium inoculant production 39,000 40,000 39,000 39,000 39,000
Rhizobia distribution 26,940 34,412 45,494 61,395 83,652
Pesticide 172,414 231,249 321,002 454,858 650,743
Agribusiness development
Management of cooperatives and bulking centers 15,000 13,263 10,000 10,000 10,000
Agribusiness support 30,000 33,156 39,788 39,788 39,788
Dissemination of information through media,

26,525 26,525 33,156 26,525 26,525
literature ad open days
53
54
Support to cooperatives and Bulking centers 19,894 19,894 13,263 13,263 13,263
Financial support to agribusiness 1,087,533 1,087,533 1,087,533 1,087,533 1,087,533
Innovation and exhibition costs 23,000 23,000 23,000 23,000 23,000
Research and development
Training for 4 PHD and 5 msc students 206,000 - - -
study 1: Participatory evaluation of the contributions
of improved soybean varieties to best-fit agronomic - 4,907 - - 4,907
practices and system productivity
Conducting economic benefit on use of Rhizobium
- 13,263 - - 13,263
inoculant
Study 2: Socio-economic assessment of soybean
- 4,775 - - 4,775
production at farmer sector
Study 3: Estimating the economic returns to
- 3,183 - - 3,183
promising crop technologies

Study 4: Value chain analysis of soybean - 3,183 - - 3,183
Human resource and
capacity building
Training technicians 20,000 20,000 20,000 13,263 13,263
Salaries for contract staff and technical back
54,680 54,680 54,680 54,680 54,680
stopping
Vehicles
Purchasing transport facilities 250,000 - - - -
Produce Bulking Trucks 300,000
Vehicle maintenance and Fuel 50,000 50,000 50,000 50,000 50,000
Infrastructure
Construction of a multipurpose laboratory 1,500,000 10,000 5,000 5,000 5,000
Laboratory equipment 200,000 10000 30,000 30,000 30,000
Screen houses 100,000 5,000 5,000 5,000 5,000
Construction of the agribusiness and value chain
2,280,000 20,000 20,000 20,000 20,000
development Centre
Construction of bulking centers 720,000 720,000 720,000 720,000 720,000
Furnishing and equipment of the agribusiness Centre 10,000 200,000 100,000 50,000 50,000
TOTAL 10,368,034 6,260,782 6,771,701 7,697,270 9,135,212
Note: The work plan is subject to adjustments as deemed necessary by the implementing body
Appendix 12:
Names of Key Informants
Name Position Organization Telephone Email

Dr. Louis Butare Director General RAB +250 732523075 Butare.lewis@gmail.com
Dr Dafrosa Gahakwa Deputy Director General (Research) RAB +250788308304 Daphrose.gahakwa@gmail.com
Dr Patrick Karangwa Head of Research Department RAB +250783942550 Patrick.karangwa1@gmail.com
Head of Crop Production & Food +250788442105

Telesphore Ndabamenye RAB telesphore.ndabamenye@rab.gov.rw
Security Department +250728442105
Ms Mathilda Head Soybean Program RAB +250732800538 Uwiz99@yahoo.com
Mr Eugine Gashugi Production Manager SOYCO +250784103499 eugashugi@yahoo.fr
Mr Sheema Keneth In-charge Soybean Project Ministry of Trade +250786913473 kshema@minicom.go.rw
Premier Animal Feed Industry
Mr Antoine Murego Production +250788646462 murantoine01@yahoo.fr
(PAFI Ltd)
Usanase Vestine Agricultural Program Coordinator Clinton Health Access Initiative +250788306948
+250788389516
Kabalisa Esperance Purchasing Manager Africa Improved Foods kabalisae@gmail.com
+250783682091
+250788316699
Fred B. Munyampeta Financial Analyst Nutrition Program Clinton Health Access Initiative mbashir@clintonhealthaccess.org
+250252580141
+250255120533
Jean Paul Ndagijimana Country Director Clinton Health Access Initiative jndagijimana@clintonfoundation.org
+250788313938
Senior Program Manager Nutrition +250788382762
Injoge Karangwa Clinton Health Access Initiative ikarangwa@clintonhealthaccess.org
Program +250252580141
Nshimyimana Samuel Senior Financial Management Expert Rwanda Agricultural Board +250788442579 Musamo125@yahoo.fr
Kasaija. P. Banage Country representative Seed Co Rwanda +250 787 318 kasaija.banage@gmail.com

Soybean in Rwanda - Feasibility Study

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Soybean in Rwanda - Feasibility Study

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FEASIBILITY STUDY FOR IMPLEMENTATION OF THE

PROJECT on INCREASED SOYBEAN PRODUCTION AND

COCOF Le Conseil Consultatif des Femmes

GDP Gross Domestic Product

INEAC Institute National pour l‘Etude Agronomique du Congo Belge

IRR Internal Rate of Return

MINAGRI Ministry of Agriculture

MINEFIN Ministry of Finance and Economic Planning

MRR Marginal Rate of Returns

NPV Net Present Value

RAB Rwanda Agricultural Board

RDB Rwanda Development Board

ROI Return on Investment

Rwf Rwandese Francs

SOYCO Mt. Meru SOYCO Ltd

USD United States Dollar

1.1.1 Soybean enterprise in Rwanda

1.2 Rationale for the study

Province District Frequency

Focus group discussions

Plate 2: Focused Group meeting at

Traders and agro-dealers

Plate 3: SOYCO Soybean Factory in

Government officials and RAB

2.2 Data entry and data analysis

Figure 3: Rwanda Soybean value chain

3.1.1 Characteristics and activities of farmers in the soybean value chain

Table 3: Additional characteristics of Soybean farming households

Soybean farmer characteristics Findings

Age of household head (years) 47

Education of head (Number of years the household head spent in school) 6

Education of spouse (Number of years the spouse spent in school) 6

Size of Household (mean) 6

Land size (ha) 0.5

Land allocation to soy, 2016 0.24

Expected land Allocation to soybean, 2017 0.24

Household Income (Rwf ) 201,507

Figure 4: Farmer relative preference of food crops

Constraints faced by soybean farmers

Table 4: Production cosntraints faced by soybean farmers

Soybean production constraint Score

Poor soil fertility 1.68

Weed infestation 1.51

Lack and poor access to inputs 3.08

Weather changes 2.51

Limited land 1.77

Labor shortage 1.54

Shattering of seeds 1.19

Scale 1= Not a problem 2= Mild 3=Severe 4=Very severe

Plate 4: A caption obtained from an Agronomist in Kayonza district.

Challenge Description Coping mechanism

• Lack enough land • Waiting for aid

• Use a few of hired labor

• Delay to harvest leads to shatter

• The irrigation did not work

Marketing and post-harvest constraints

Table 6: Marketing and post-harvest challenges and farmer coping mechanisms

Challenge Farmer Description Coping mechanism

Comparison of the characteristics of the farmers in the different regions

Characteristics Eastern Western Southern P-values Comment

Annual incomes 168925.6 117320.5 102450 No significant

Distance - farm to the 19.57a 12.44b 25.87a West significantly

1.72a 0.79b 0.88b East significantly