Milk bulking emerges as farmers’ new cash cow

A group of farmers who traditionally sold their milk to milk hawkers are now tripling their income and yields by collecting the milk together and selling it to registered cooperatives with a litre now going for  upto Sh45 up from Sh15 they sold to hawkers.

In a project that ensures good cattle feeding mechanism to the right marketing channels and supported by  USAID/Kenya Dairy Development Program, farmers are managing to bulk upto 1,000 litres daily a venture that has seen majority of rural dwellers switch careers to dairy farming.

Mary Rono a retired government social worker in Bomet area of Rift Valley is one such farmer. From her eight cows she would sell her milk to hawkers at Sh18 a litre. This combined with the fresh produce in her shamba provided her source of income. But still it wasn’t enough. Her light bulb moment came when she heard about the milk bulking idea.

Having been introduced to simple, yet affordable techniques to increase her milk yield, such as milking her cows several times a day and growing her own fodder to feed the cows instead of letting them graze by a local cooperative she set out on educating fellow farmers. She was instrumental in forming a cooperative that would help her and other farmers bulk milk therefore enjoying economies of scale. Today, she is the chairperson of the 365-member Koitogos Dynamic Cooperative Society.

“We are now bulking more than 1,000 liters of milk per day, and receiving double and even triple the price per liter. We have been able to do a lot with the pro?ts we get from the dairy. We are able to contribute to the school fees of our children. We are able to pay our loans with ease,” said Rono. Since it began in mid-2008, the dairy program, implemented with agribusiness cooperative giant Land O’Lakes, has assisted more than 319,000 smallholder milk producers, as well as hundreds of processors, retailers and exporters up and down Kenya’s dairy value chain.

According to Mary Munene, a business development services specialist at USAID/Kenya Dairy Sector Competitiveness Program, as Kenya’s dairy farmers become more entrepreneurial, they create a demand for new and better services. “Thousands of private-sector service providers have emerged as the Kenya dairy sector grows,” said Munene.

After running his petrol station on the main road in Kangema, in Muranga County, for 30 years, 52-year-old Joseph Githahu understands the limitations of the informal milk traders, Rono’s former milk hawkers. Many any of them operate on motorbikes, stringing the plastic liter jugs of the milk they buy across the saddle and handlebars. The largest amount of milk some hawkers can collect, transport and sell in a day is around 20 liters. After that point, spoilage diminishes returns, and creates unhappy customers. With a profit margin of Sh10 per liter, many hawkers found it difficult to pay expenses and feed their families, and, too often, Githahu reported, would fail to pay the farmers for the milk.

In 2009, Githahu decided to invest in professionalizing the milk-collection process that so many families in his rural community depend on for cash. He turned to the competitiveness program for information on the proper handling of fresh milk. He took out a bank loan to buy his first truck. “In three years, I’ve worked up to having seven pick-up trucks, two 3 tonnes trucks and a 5tonnes truck. My staff is trained on how to test the milk for bacteria and to ensure that no water has been added by farmers desperate for a few extra shillings,” says Githahu.

Githahu’s Kirere Dairy Services buys 8,000 liters of milk per day from smallholder farmers and sells it to large processors such as Brookside Dairy or New KCC. Every morning at 6 a.m., the Kirere fleet fans out to collect the milk along the routes that radiate from the dairy. Farmers wait at designated points with one, two or more liters of milk to sell. By 8:30 a.m., fresh milk arrives at the dairy to be transferred, can by can, to the cooler. Githahu began by investing in one, and then two, agitation coolers, at a cost of Sh1.5 million each. But he has upgraded to a more high-tech, and, at Sh5million, considerably more expensive, cooling system that cools the milk to the required 4 degrees Celsius rapidly.

As he travels the different collection routes, he educates local farmers in the proper handling of the fresh milk and encourages them to buy nutritious feed to supplement the farm fodder they feed the cows. “I keep investing my profits into the dairy,” Githahu explains. “This is a long-term investment in my community.”

Now, in addition to his milk collection, Githahu also offers the farmers feeds and artificial insemination services. “Purchasing and maintaining a high-quality bull is beyond the means of these farmers. But artificial insemination offers an affordable alternative,” he says.

Artificial insemination had previously been the sole domain of the Kenyan Government. Currently over 951 entrepreneurs are registered with the government as private providers of artificial insemination. According to the Kenya Dairy Board, the volume of milk going to the processing plants has increased nearly three-fold, from 144 million liters in 2002 to 549 million liters in 2011. Although there are 35 commercial processors, the three largest, New KCC, Brookside Dairy and Githunguri Dairy, control about 75 percent of the market.

“About 92 percent of Kenya’s dairy production is consumed locally and 8 percent is exported in the form of powdered milk and other long-lasting products,” said Machira Gichohi, managing director of the Kenya Dairy Board. “To continue to achieve the 7-percent growth rate envisioned in the government’s agricultural strategy, the dairy sub-sector is going to need to move towards exporting fresh dairy products and that’s going to require a greater investment in quality controls and cold storage facilities.”

Since 1990, the number of smallholder farmers producing milk has increased by 260 percent. Today, dairy is responsible for 14 percent of Kenya’s agricultural GDP and 4 percent of the country’s total wealth, and supports 1.5 million smallholder farmers. Over 12 years, the sector has spawned more than 1.25 million private-sector jobs in milk transportation, processing, distribution and other industry support services.

Mary Rono says the cooperative model helped stave off hunger in Bomet. During 2010 and 2011, some of the worst droughts in decades hit the Horn of Africa, resulting in famine in parts of Kibomet. However, Rono’s cooperative society was able to weather the dry period without losing income. “During that drought, most of the farmers did not have enough feed for their cows, so the cows could not produce enough milk to be sold and the farmers’ incomes dropped tremendously. A few families starved,” Rono remembers.

Said Rosaline Niega, a cooperative member: “Being in a cooperative, our milk had a higher price, and that helped us to earn money to feed our families.”