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Milk processing plant takes urban dwellers back to farms

On a cold, early morning in this small community, women and girls are already working on farms. Bent over and holding short hoes, they tease the hard, unyielding earth, submitting it into production.

The women, dressed in thick sweaters to shield them from the cold air coming down the hills and mountains of Western Kenya, walk ahead between the long, narrow ridges in the fields. They lean over intermittently to drop seeds of maize into small holes in the ground. Behind them, their daughters follow, covering the seeds with soil. Like their mothers, they too are dressed in warm clothes to protect them from the cold air, which is sweet from the smell of cypress and eucalyptus trees that line the narrow, muddy road leading to the village.

On break from school, children are taking part in important farm activities, investing time that will hopefully result in food to feed the family and income to pay for their school fees. Not far from the farms, cattle graze in fenced pasture, precariously built from scraps of wood and thin lines of barbed wire to keep the wild animals out.

From a distance, the landscape of the countryside is beautiful, but up close it reveals the realities of small farmers trying to make a life by navigating the delicate balance of the productive earth. “If you don’t have a cow, you plant,” said Augustine Cheruiyot, the country program manager for Heifer International’s East Africa Dairy Development (EADD) project. “If you don’t have land, you work for others,” he continued.

Within this community, most of the people rely on agriculture for their livelihoods. Those who own land inherited from their ancestors are considered lucky. Those who own livestock are considered luckier. Together, farmers have come together to form a group that has a shared vision of participating in the booming dairy industry that is developing around the milk chilling plant which Heifer International installed in the community as part of the East Africa Dairy Development project, funded by the Bill & Melinda Gates Foundation in 2008.

They started small by collecting their milk in a small makeshift shed in a field several years ago. Then, as they increased their ability to aggregate larger volumes of milk, they obtained a loan to build a cooling tank with the capacity to hold more than 1,300 gallons of milk. Almost 900 farmers now supply milk to this facility, where all the suppliers are also shareholders. Because Heifer promotes equal participation, each farmer is given his or her own supplier number, even within the same family.

Behind the small chilling facility, a financial service association—or village bank—is under construction. In many ways it resembles a retail bank anywhere in the world. There are two counters for the tellers, an office for the manager and a vault in the back for the money.

Jasper Lagat, a young man in a dark suit becoming of a banker, runs the operations. Under his shrewd but careful leadership, the community is navigating the creation of a business in the same manner as one would broker the launch of an Initial Public Offering in a sophisticated multimillion-dollar corporation on Wall Street.

“Shareholders buy shares on a check-off system,” Lagat explained. They pay a small amount with each milk delivery. He said that within the first two to three months, no shares are deducted from the revenue of farmers, but as the site begins to turn a profit, farmers begin to receive dividends on their investments as well as better prices for their milk.

The benefits of membership extend well beyond shareholding. Members have their milk transported to the chilling plant for free, while non-members have to pay. Members also get cheaper access to healthcare within the health insurance network that has sprung up along with the myriad of services and other businesses that are developing around the chilling plant.
“I want to work for the community,” Lagat said. “This is the community that educated me. I get satisfaction from serving the farmers. I am a member of the community. I am also a farmer.”

The chilling plant in Nyigon is only one of several that have been installed in the area since the project began. The East Africa Dairy Development project heralds a return in rural community development that far exceeded the expectations of the project’s design. Farm families that once produced milk at a subsistence level—just enough for home consumption—are now able to not only produce surplus but also become involved in larger formal economies. This is a manifestation of what Heifer International envisions for the families it assists, what the organization calls a movement of people from A to B to C; from subsistence, to surplus to market.

Within the communities that surround the city of Eldoret, around which the chilling plants have been installed, a large dairy industry is now thriving. Tanykina Dairies Limited is a large dairy collecting plant that has grown from the vision of a small group of farmers in 2002 to a sophisticated collection and bulking center for thousands of dairy farmers in the area.

At Tanykina, farmers bring milk twice a day. It is measured, graded, tested for bacterial count, lactose, protein, water content and several other parameters. The farmer is then issued a milk delivery statement on a piece of paper which resembles a grocery store receipt. Every month, their sales are collated into one larger statement that shows how much milk they delivered, how it was transported, their name, the date, the quality, and the price. Farmers also receive a statement of how many shares they hold in the company, what services they have received and the value of them, their gross pay, any relevant deductions and how much money is owed to them.

For farmers, this information is the equivalent of a credit card. They can use it to show their creditors what is due them at the end of the month, and therefore they can leverage it to access healthcare services or farm inputs and services on credit. It is even a ticket to keep their children from being kicked out of school for lack of funds. For each and all farmers, this information is kept in a database that is linked to all satellite chilling plants that serve the Tanykina plant. Data is captured and analyzed in real time. Every day the accountant at the plant can see exactly how much milk was collected and sold.

With growth came new challenges. When it came time for the Tanykina plant to pay farmers every month, they realized their systems were ill-equipped to accommodate this. More than 1,000 farmers would line up outside the plant at a time, while plant management disbursed large amounts of cash. Tanykina Dairies has now teamed up with local banks to create a special VISA electronic card for farmers. With this card, financial transactions are conducted electronically, eliminating or reducing the need for farmers to carry cash.

It is something that Jasper Lagat, Augustine Cheruiyot and other leaders of the project have spent many months working on. Lagat explained the limitation of working with paper and manual systems. “We are moving away from passbooks. In order to get their money in the past farmers would need to be here between the hours of 9 a.m. and 4 p.m. Now, with VISA electronic cards, they will be able to access their money anywhere in the world.”

The system is based on an electronic platform that links milk supply information at the chilling plants to shareholding information at the financial institutions so that farmers have a singular, networked, financial profile. This kind of development is unprecedented in rural farming communities in Kenya. Today, there are three village banks around Tanykina. The same is soon expected in other chilling plants in nearby communities. Lagat said agents of the World Bank recently visited this community to learn how they were able to achieve this level of development.

As chilling plants grew, shops and service providers sprung up to sell agro-veterinary supplies and offer veterinary services and artificial insemination for cattle. Savings and loans agencies moved into the communities. Young people earn income transporting the milk.

Development is not something that we begin. It is a process that we step into. It begins long before we get there and if we do it right, it continues long after we are gone. “We want every household to be able to reach a cooler at the least cost and in the most efficient manner, selling milk of great quality,” Cheruiyot said. This vision is one that farmers themselves share as they begin to understand the value of their product in the market. On average, the Kenyan consumer pays the equivalent of $1.80 per quart of milk, whereas farmers receive only 30 cents per quart.

“Farmers want to know who is earning in that middle bracket, what value is being added and how that income can come back to them,” said Jeremian Too, director of Tanykina Dairy. His sentiments are echoed by another member of the plant: “Farmers have high expectations. They are asking why we can’t start processing our own milk. At the end of the day we are consumers, too. So it is now a part of our plan. Maybe we’ll have a processing plant in our future. We can produce yogurt, maybe cheese.”

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