Dairy Development Projects in Kenya

Dairy Development Projects in Kenya

Dairy in Kenya

"The combined efforts of government and development partners over the last 30 years have resulted in the improved or cross-bred dairy herd expanding from fewer than 1 million head of improved cattle in the 1980s to about 4.5 million head by 2005, with Kenya alone accounting for more than 3.5 million. Improved animals produce about 25 percent of the estimated total 5 million tonnes of milk produced per year in the three EAC [Kenya, Uganda, Tanzania] countries. The remaining 75 percent is produced by approximately 33 million head of indigenous cattle, more than 18 million of which are raised in Tanzania. Annual per capita consumption in both Tanzania and Uganda is about 40 litres, compared to 100 litres in Kenya. East Africa thus has enormous potential for dairy industry growth."

"Milk production is estimated to be five million tonnes per year, 60 percent of which is produced in Kenya. More than 80 percent of the milk is traded informally as raw milk. Within sub-Saharan Africa, Eastern Africa has the highest concentration of traditional cattle and improved dairy cattle."

Dairy consumption in Kenya was 100 liters per capita. The dairy industry contributes 3% of Kenya's GDP. "The grade herd is mainly composed of purebred Friesian/Holstein, Ayrshire, Guernsey, Jersey and their crosses. Crosses constitute over 50 percent of the total herd, with Friesian/Holstein and Ayrshire the dominant breeds. Of the total cattle population, the Zebu herd makes up over 70 percent but contributes less than 20 percent of total milk production from cattle and about 15 percent of the total annual milk production from all the species." In Kenya, the estimated dairy herd in 2005 included 3,498,000 grade cattle, 9,522,000 Zebu cattle, 931,000 camels, 143,000 dairy goats, and 13,739,000 goats.

Following Kenya's independence in 1963:

"the population of dairy cattle in large-scale farms (dominated by settlers) rapidly declined from an estimated 400 000 head as the dairy animal population in smallholdings increased. In a deliberate move to increase participation and develop the indigenous (mostly smallholder) dairy subsector, the government introduced highly subsidized production and marketing services such as artificial insemination, dipping and other veterinary disease-control services. Contract and quota systems of milk delivery to KCC, which were not favourable to smallholder dairying, were abolished.

"The government developed smallholder dairying in Kenya by deliberate efforts and strategic intervention, including the provision of highly subsidized production and marketing services. The price of an artificial insemination service was reduced from Ksh40 to Ksh1 in the early 1970s. In addition, KCC was obliged to receive all good milk delivered to its factory gate, and dipping, clinical and other veterinary services were provided at very low cost. Another initiative aimed at overcoming the disadvantages of small-scale dairying was the promotion of collective action among smallholders through membership in cooperative societies. The development of the smallholder dairy in Kenya therefore owes much of its success to the deliberate interventions (albeit through different strategies) of the colonial and post-independence governments to promote dairy development. In post-independence Kenya, the government used KCC, cooperative societies and its own veterinary and livestock production departments to facilitate the growth of the smallholder dairy subsector."

In the 1980s and 1990s, the Kenyan government implemented Structural Adjustment Programs that affected the dairy industry. These included "cost sharing" (charging farmers at least part of the price) for veterinary drugs in 1988; "price liberalization for animal feeds and transferring management of cattle dips to community groups (1989); privatization of artificial insemination services (1991); deregulation of milk prices and liberalization of the dairy sector (1992); and privatization of veterinary clinical services (1994)." As a result, "New market participants, including processors and informal milk traders, rapidly entered the dairy market." In 1993, the government defined its objectives as:

• "phasing out government interventions;
• "maintaining self-sufficiency in milk and dairy products;
• "allowing for smooth transition from government interventionism to a free market; and
• "creating a conducive environment for milk production and marketing."

"Liberalization brought about changes in procurement, handling and marketing of milk and dairy products, including the admittance of new players into a dairy market previously controlled by KCC [Kenya Cooperative Creameries], a quasi-governmental milk processor. Although not expressly approved, the number of traders – better known as hawkers – of raw (unprocessed) milk increased dramatically. In addition, more than 40 new milk processors entered into the formal milk market... KCC collapsed in the late 1990s and was later revived. By 2007, it had become a parastatal entity pending its transfer to dairy producers... Following the liberalization of the Kenyan dairy industry that ended the monopoly of KCC, a number of private processors established new processing plants. In order to have a common voice, they established the Kenyan Dairy Processors Association (KDPA), and by 1998 the KDPA was represented on the board of the [Kenya Dairy Board] KDB."

"In contrast to Tanzania and Uganda, the total volume of milk processed in Kenya has increased faster than the rate of increase in national production – from 145 million litres in 2002 to 360 million litres in 2006 (Figure 7). Meanwhile, total production has only grown from 3.1 billion litres to 3.6 billion litres. It is therefore possible that the proportion of milk marketed through processors has increased to over 20 percent.

"Although the evidence from Kenya (where processing performance continues to increase in the face of the prevailing informal sector) suggests otherwise, the informal milk market in Tanzania and Uganda has been blamed for presenting unfair competition and therefore being responsible for the collapse some small- and medium-scale milk-processing enterprises that entered the liberalized industry. Calls for tighter regulation of the informal milk trade have been made by formal milk processors in all three East African countries – including Kenya where, during 2004, accusations and counter-accusations reached ‘press- war’ proportions (ILRI-SDP Policy Briefs 2006). Only after various NGOs joined the debate, which culminated in a policy forum, KDB finally embraced the informal sector. The pro-poor stance taken by protagonists of the informal sector, together with increasing demand and the preference for raw milk by low- and middle-income consumers, ultimately convinced the KDB."

USAID Projects

1998 – 2001 Project to assist privatization of the dairy industry in Kenya

"Funded by USAID and implemented in partnership with Heifer International, the project built on the successes of the previous dairy project targeting Kadongo, Kilifi and Bomet districts and focused on helping smallholders and self help groups to set up and operate profitable dairy programs; Creating agribusiness entrepreneurs to deliver private sector extension services; Establishing a self-supportive, non-profit “Dairy Entrepreneurs Support Trust” to provide loans and advance training to farmers and entrepreneurs after support from aid has ended; Empowering and served farmers by establishing an independent commercial feed analysis laboratory to service Kenya and the entire Horn of Africa and a liquid nitrogen plant facility to service farmers in western Kenya; Strengthening the management capacity of dairy farmers, self help groups and associations of dairy entrepreneur to operate distribution, breeding, milk collection, milk cooling and marketing services; Opening the market for US genetics, veterinary products, feed additives, dairy equipment, breeding products, processing equipment and related dairy products."

2001-2002 Smallholder Dairy Development, Market Linkages and Nutrition Awareness

"Funded by USAID and implemented in partnership with Land O’ Lakes, Inc. and Heifer International, the project bridged the work between year 2001 to 2002 when the Kenya Dairy Development program started. This scaled up work done in Kadongo, Bomet and Malindi replicating to Ol kalou and Kiplleion regions of Nyandarua and Kericho districts respectively."

2002 to 2006 Kenya Dairy Development Program

"USAID funded and implemented in partnership with Land O’ Lakes, Inc., Kenya Dairy Development Program (KDDP) aimed to increase household income of smallholder dairy farmers by improving milk productivity and trade. The key objectives were: 1. Consumer promotion and marketing activities, 2. dairy product quality, safety and affordability activities; 3. enhancing dairy productivity activities; 4. dairy industry capacity building activities. Activities of ABS contributed directly to the following intermediate results of USAID’s Strategic Objective 7: 7.1.2 – Increased Use of Technology; 7.1.4 - Increased Participation of Private Sector in Delivery of Services; 7.2.2 – Performance of Market Systems Improved.

"Specific activities facilitated by ABS were to improve milk productivity by promoting use of technologies such as improved genetics, best management practices and availability of dairy input services. Increased milk trade achieved through development of market information database and availing information to smallholder farmers. This was achieved through project deliverables such as catalogue, newsletters, among key private and associated sector players within the dairy industry. The program targeted medium and high potential areas of Kenya.

"In line with the market facilitation approach of USAID’s Business Development Services program, ABS achievements in the key areas of service provided included:

"Strengthened delivery of dairy input services to >87,000 smallholder farmers; strengthened capacity of breeding management service providers to deliver best management services and improved genetics to the farmers by training 387 A.I. service providers who inseminated over 120,000 units of proven genetics; transferred seven (7) A.I. equipment technologies; more than 250 service providers business skills were strengthened; developed five (5) market information systems to increase over 100,000 smallholder dairy farmers’ access to market information as follows: interactive voice response platform, web portal www.eadairy.com, radio program “Kilimo Shambani”, information centers and dairy newsletter. Participated in Pesticide Evaluation Report and Safe Use Action Plan (PERSUAP) and trained BSP’s on integrated pest management (IPM) practices, facilitated biogas installations and use.

"Overall, this project strengthened delivery of dairy inputs and services to small-holder farmers, built capacity of breeding management service providers to deliver best management practices and improved genetics to the farmers. It also introduced udder care and management service to minimize loses due to sub-clinical mastitis and transferred technologies for on-farm milk quality assessment to promote milk quality. In addition, this project developed dairy market information systems to increase smallholder dairy farmers’ access to market information and facilitated biogas installations for natural resource management."

2006 to 2008 Kenya Dairy Development Program

"USAID funded and implemented in partnership with Land O’ Lake s, Inc., International Livestock Research Institute (ILRI), and World Wide Sires. This was an extension of the project that started in 2002 but built on completing establishment of a feed analysis laboratory capable of sample turn around time of 24 hours, establishment of sustainable milk quality service and dairy nutrition and feeding course for business service providers."

2009 to 2010 Kenya Dairy Sector Competitiveness Program

"USAID funded and implemented in partnership with Land O’ Lakes, Inc. As a facilitator for the Nakuru Milk Shed, ABS TCM worked towards the KDSCP goal of increasing smallholder household income from sale of quality milk. The three main objectives contributing to this overall goal were:

• "Increased competitiveness of the Kenyan dairy sector resulting from collaboration among sector stakeholders and increased capacity of public sector agencies to serve the needs of the sector.
• "Increased marketing of milk meeting quality standards by producer-owned milk bulking/cooling businesses.
• "Greater access to market-linked business development services and technologies by male and female dairy farmers and farmers producing dairy-related inputs.

"To achieve a significant impact on Kenya’s predominantly poor rural agricultural population, the activity aimed at expanding its outreach to at least 15,000 smallholder farmers (30% of whom are women) and avail productivity enhancing technologies and credit services to over 2,000 of them. This was achieved by bringing key dairy value chain stakeholders (processors, transporters, regulators, researchers, etc) together and enhancing their inter-firm relationships to be able to cooperate towards addressing competitiveness constraints. It also involved working with and developing capacity of at least 50 business service providers, 20 of which were new service providers and supporting a number of bulking and cooling centers to attain set milk quality standards. Dairy cattle productivity in the target milk shed was expected to increase to 11 liters per cow per day and total volume of milk purchased from smallholder dairy farmers increased by 2,000 metric tons."

For more information, see the article on the Kenya Dairy Sector Competitiveness Program

DFID Projects

These are projects funded by the British development agency, DFID.

2004 to 2005 DFID-Business Service Market Development Project for Dairy

"Business Development Service Project implemented in partnership with Technoserve Inc., the project adopted and applied best practice BDS principles to facilitate provision of support services to four major dairy business hubs (Wakulima, Nyala, Afrodane and Muki dairies), thereby supporting the livelihood of over 8,000 rural dairy producers. The business hubs were producer businesses or dairy processors primarily established by farmers and investors to market milk. The Consortium developed a model that converges access and delivery of BDS via these enterprises hence their use as business hubs. These farmer-owned business hubs realized joint annual revenues of over $3 million, employed more than 70 people and have developed linkages with several BDS providers.

"The project provided technical support for farm level business service provision and linked smallholder farmers to the bulk milk chilling centers. Identified business service providers were capacity built on breeding and A.I. management, herd management, feed conservation, personal and milk hygiene, dairy production and assisted to access to credit. Achievements were:

"Participation of over 10,300 smallholder farmers; 90% reduction in milk rejected at the bulk chilling hubs; capacity built 120 private service providers of which the majority (>52%) are experiencing business growth; Increased purchase of business service including A.I. and animal health services while herd management and fodder conservation largely remained an embedded service.

"Lessons learnt were that capacity building of service provider’s should focus on training on multifaceted business service skills so that they are sustainable. Also, the hub model – milk check off system for providing services via the bulk chilling hub represents a good business model that enhances farmer access to service."

2006 to 2008 Business Service Market Development Project

"Dairy Development in Western Kenya implemented in partnership with Technoserve, Inc., based on lessons learnt from the pilot BSMDP-Project No. D-SP-02 that developed the business hub model, this replication project introduced and improved on a sustainable basis the efficiency and profitability of milk production and marketing via a market-led BDS project in Western (Bungoma district) and Rift-Valley (Vihiga, Butere and Nandi districts) provinces of Kenya. The consortium is worked with existing private sector players, community based organizations, NGOs and relevant government entities to improve dairy management and milk marketing introducing the 3-Ton Club concept for farmers to form a dairy business club to improve management through better access to inputs, finance, breeding, animal health and extension services. The project provided technical support for farm level business service provision and linked smallholder farmers to the bulk milk chilling centers. Identified business service providers were capacity built on breeding and A.I. management, herd management, feed conservation, personal and milk hygiene, dairy production and assisted to access to credit.

"Achievements were:

"Participation of over 10,300 smallholder farmers; 90% reduction in milk rejected at the bulk chilling hubs; capacity built 120 private service providers of which the majority (>52%) are experiencing business growth; Increased purchase of business service including A.I. and animal health services while herd management and fodder conservation largely remained an embedded service.

"Lessons learnt were that capacity building of service provider’s should focus on training on multifaceted business service skills so that they are sustainable. Also, the hub model – milk check off system for providing services via the bulk chilling hub represents a good business model that enhances farmer access to service."

Other Projects

East Africa Dairy Development Project

The East Africa Dairy Development Project (EADD) is "a regional industry development program implemented by Heifer International and a consortium of partners" including TechnoServe, ILRI, World Agroforestry Centre (ICRAF) and African Breeders Services Total Cattle Management Limited (ABS TCM LTD). "The project is funded by the Bill & Melinda Gates Foundation as part of an agricultural development grant designed to boost the yields and incomes of millions of small farmers in Africa and other parts of the developing world so they can lift themselves and their families out of hunger and poverty." The project operates in Kenya, Uganda, and Rwanda. Project sites are centered around Lake Victoria in the three countries of operation. The project seeks to integrate peasant and smallholder dairy producers into the market.

2009 to 2010 Increasing competitiveness of small holder dairy farmers under the Timau Dairy Project

"Funded by DANIDA through Micro Enterprises Support Programme Trust (MESPT) The Timau dairy development project aims to improve rural household income of the smallholder dairy farmers by improving both production efficiency and increasing the volume of marketed milk. ABS TCM, Ltd will provide facilitation oversight for the smallholder dairy farmers in Timau through provision of strategic technical support and oversight for sustained improvement of efficiency and profitability of milk production; and marketing to increase smallholder producer income from sale of quality milk. The project key objective is to strengthen both the production base as well as the milk distribution systems in Timau/Buuri area targeting 5,000 smallholder producers thereby increasing house hold income by at least 30% and establishing a sustainable milk procurement, bulking and marketing enterprise owned by farmers at two clusters in the Timau Region of Meru."

2006-2012: Smallholder Dairy Commercialization Programme

Funded by IFAD, the Smallholder Dairy Commercialization Programme is implemented by Kenya's Ministry of Livestock Development This is a $19.8 million program from 2006-2012. "It fosters market-driven development of the informal dairy industry. It will work with smallholder dairy producers and traders to strengthen their capacity to respond to market opportunities. The program will build their understanding of the market and their technical knowledge of production processes." It covers Nakuru, Trans Nzoia, Uasin Gishu, Bomet, and Nandi North Districts in Rift Valley province; Bungoma, and Lugari Districts in Western Province; and Nyamira and Kisii Central Districts in Nyanza Province. The project aims to target "‘Resource-poor’ dairy farmers; ‘Part-time’ dairy farmers; Small-scale intensive dairy farmers; Crop-oriented farmers with dairy cows; Small-scale milk bars and shop operators; and Mobile milk traders."

The project identifies "Dairy Commercialization Areas (DCAs)" using the criteria of:

• "1. Milk density thresholds of >90 000 litres/km2/year for ‘high density’ areas and 60,000 to 90,000 litres/km2/year for ‘medium density’ areas.
• "2. Poverty threshold of at least 46%.
• "3. For districts with similar milk density and poverty threshold, those with greater road density and geographically contiguous were selected, in order to ease logistical arrangements for programme management."

As of 2008, SDCP had identified 27 DCAs in all the 9 districts... The DCAs cover only a small portion of the district sometimes only one location.

Heifer Project International

Heifer Project International is supports dairy projects 31 districts in Kenya, including Kiambu, Nyandarua and Kirinyaga in Central Kenya; Nakuru, Narok, Bomet, Kericho, Nandi, Baringo and Samburu in Rift Valley province.

Kenya Dairy Project

Kenya Dairy Project is funded by private donors and implemented by Technoserve Inc. in Nyala Dairy Farmers in Nyandarua North, Sabatia Dairy Farmers Cooperative in Eldama Ravine, Ndumberi Dairy Farmers in Kiambu and Muki Dairy in North Kinangop.

SITE

"Supporting dairy traders association to build its capacity to be an effective self-regulating their members as well as improving the delivery of services to their members including branding business premises."

CEEDCo

"CEEDCo - is a community empowerment and enterprise development project working through co-operatives and co-operative like organizations, by providing unequalled interventions in order to increase productivity and profitability of the local community members in Kenya, thereby increasing their standard of living. This is one of the Swedish Co-operative Centre (SCC) projects in Eastern Africa In pursuit of this Mission, CEEDCo proactively seeks to acquire and contribute knowledge and creative solutions that are participatory and client oriented; holistic and system oriented; gender sensitive and affordable to its stakeholders."

Smaller Programs

In addition, there are several smaller initiatives supported by the MOLD, Cooperative Bank and Equity Bank.

Articles and resources

Related SourceWatch articles

• Gates Foundation
• Heifer International
• TechnoServe
• International Livestock Research Institute (ILRI)
• The World Agroforestry Center (ICRAF)
• African Breeders Services Total Cattle Management Limited
• East Africa Dairy Development Project
• Kenya Dairy Sector Competitiveness Program
• Land O' Lakes

External articles

• Paul Karaimu, "‘Unlocking the value of the cow’: New project to identify the best breeds for East Africa’s small-scale dairy producers," International Livestock Research Institute, March 7, 2011.