Freer milk market drives network built of entrepreneurs

A strong milk marketing network requires many thousands of people collecting from far flung farms and distributing to urban centres, but it does not always require central organisation, as Kenya's blossoming milk network is now demonstrating, driven by individual agripreneurs moving into milk collection and on-selling as a lucrative line of self-employment.

With nearly 800,000 Kenyan smallholders depending on dairy for their livelihoods, and the dairy sector providing employment to over 350,000 people in milk collection, transportation, processing and sales; the dairy industry plays an important role in meeting the livelihood needs of poor Kenya households, as well as in contributing to Kenya’s economic development.

Jane Wanjiku is typical of the sector's now burgeoning informal network, as a hawker who buys a litre of milk from farmers at Sh15 and sells to New Kenya Co-operative Creameries (KCC) at Sh25.

“While hawked milk takes care of my expenses, the earnings from milk sold to KCC add up in my bank account boosting my savings. It is a win-win situation,” said Wanjiku, who is based in Murang’a and buys the commodity from farmers that she then retails in the populated residential estates in Nairobi like Dandora and Kayole.

“We cannot just hawk milk to shops only. We also take some of the milk to New KCC so that we re paid like farmers at the end of the month. It is a matter of not putting all the eggs in the same basket,” said Wanjiku.

This grass roots strategy is now having a national impact, according to recent findings by the Ministry of Agriculture, which found that that the liberalisation of the sector had led to a straight-line increase in the amount of milk marketed, and increased licensing of milk vendors.
Financial organisations have also boosted the sector's output and returns, with farmers picking up loans for expansion where their milk revenues are regular and channeled through the banks.

“Farmers need to be members of an organised marketing channel such as Sacco or a company like KCC, Brookside or Buzeka in Western Kenya. The milk must be delivered through the agent and money channeled through our bank account,” said David Odongo, Agri-business Manager with Family Bank, Kenyatta Avenue Branch in Nakuru Town.

Family Bank is one of the many institutions now offering farmers loans to increase their herds, build zero grazing units and increase productivity in other ways.

According to Odongo, a dairy farmer can now borrow from Sh5,000 to Sh5m over a negotiable repayment period, but the norm is 24 months for Sh250,000 and below.

For Sh250,000 to Sh500,000, repayment is usually over 48 months, while loans above half a million shillings tend to be very short term, typically for six months.

Increasingly, service providers such as those offering Artificial Insemination (AI), farm inputs and veterinary services are requiring that farmers deal with financial institutions if they want to obtain these services on credit.

The East Africa Dairy Development (EADD) project has also sought to fuel the sector's expansion with improved knowhow, launching a dairy feeding manual for both farmers and extension officers.

The manual covers information on the basic nutrients a dairy cow requires, the available feed resources that provide these nutrients and practical aspects of feeding the animals. It also has information on live-stock production systems and pasture production and management.

Issues of pasture utilization and the use of feed supplements, as well as the different feeding for calves, heifers and dairy cattle, are also discussed in language rural farmers and extension officers can easily assimilate.

The EADD is a regional programme led by the Heifer International in partnership with International Livestock Research Institute, Techno Serve, the World Agro forestry Centre and the African Breeder Service Total Cattle Management. It is based in Kenya, Rwanda and Uganda. Funded by the Bill & Melinda Gates Foundation, the project works with 179,000 farmers living in 1-5 acre plots and keeping a few dairy cows.

Such earnings are key to the fortunes of very many Kenyan families. “Clearly, our economic prospects would have been worse if milk sales had been low in recent years. We have sustained our families, educated children and invested some of the milk returns in real estate and shares at the Nairobi Stock Exchange,” said John Kamau, a dairy farmer in Ol Joro orok West, Nyandarua County.

Another new report by the International Livestock Research Institute (ILRI) suggests the liberalization of the dairy sector six years ago has led to growth to a now Sh17 billion industry along the full value chain.

“Allowing licensed small-scale milk vendors to operate leads to increased milk supply to the retail market and continual increase in the number of small-scale milk vendors acquiring licenses to run milk bars to meet the increased demand for milk,” said the report.

This has seen multinationals start positioning themselves to tap in to the growth. Nestle’s Regional head, Pierre Trouilhat, is hopeful that Kenya’s dairy sector will move to more substantial exporting across the Common Market for East and Central Africa (COMESA), through the Nestle value chain.

Through the equatorial regional branch, Nestle entered a partnership with the East Africa Dairy Development (EADD) project in April, as a bridge to purchasing powdered milk from Kenya.

“The ultimate aim will be to produce cream milk powder, enabling Nestle to export milk products to other COMESA countries and thus boost both availability and affordability in equatorial Africa,” said Mr. Trouilhat in an earlier conference.

Written by Bob Koigi for African Laughter

• < Prev
• Next >