Kenya’s dairy sector is estimated at 14% of Kenya’s agricultural GDP. Milk is mainly produced by small dairy producers who represent 56% of total production. The sector is estimated to have 1.8 million smallholder farmers (about 80% of producers). The remaining 44% of milk production comes from large commercial farmers.
Kenya has three main production systems. Intensive production where animals are fully housed (zero grazing); open pastures where animals roam the fields; and semi-intensive systems where animals are partly ungrazed and taken to fields.
Dairy cattle in Kenya consist of indigenous and exotic breeds; as well as crosses between the two varieties. There are over five million dairy cattle producing about four billion liters of milk per year. Milk production is expected to increase by around 150% by 2050.
Kenya has the highest per capita milk consumption in sub-Saharan Africa, at 110 litres. Demand, currently at 8 billion litres, is also expected to grow with the increase in population.
The government has therefore prioritized the industry in national strategy and plans, such as the Agriculture Sector Transformation and Growth Strategy (2019-2029) and the President’s Big Four Agenda. There is also a dairy master plan to guide the development of the industry until 2030.
But the sector faces significant challenges that affect the realization of its full potential. As a result, Kenya has to import from neighboring countries to meet demand.
One of the reasons is the low average annual milk productivity which varies between six and eight liters per cow per day. It is important to emphasize that productivity varies according to production systems. The highest productivity is achieved in intensive production systems. A low level of productivity increases the cost of production and affects the competitiveness of the industry.
Choice of breeds
According to our studies at the Tegemeo Institute of Egerton University, the dairy industry in Kenya has not yet reached its potential. To make it competitive, all players must work together to improve on-farm productivity and improve the efficiency of dairy markets.
First, the milk yield of a dairy animal is determined by its genetic composition. Exotic cows produce much higher volumes than native breeds. But the native breeds are hardier and are able to withstand harsh conditions.
Breed choice is informed by the production system, the farmer’s ability, experience or expertise, and environmental factors such as climate. Artificial insemination is the preferred method for improving animal breeds. Artificial insemination was previously offered by the government, but the service was privatized in the late 1980s as part of Kenya’s structural adjustment programs. This was aimed at improving the reach of farmers by private service providers.
The government supports AI service providers by subsidizing prices. The number of service providers has improved significantly, the cost of service has come down, and the access distance has been reduced. However, the quality of services still varies from region to region.
Improving the regulation and supervision of insemination and improving the provision of supporting infrastructure such as semen storage will improve the genetic composition of dairy animals.
Food quality and cost
Second, feed is essential to dairy productivity. Dairy farmers struggle with low-quality, high-priced feed. Studies show that improving forage quality significantly improves milk productivity.
Forage varies in quality depending on the nutrients. High quality fodder is grown. Forage yield depends on seed quality and on-farm agronomic practices. Additionally, a breeder must have expertise in mixing different types of forage to achieve the nutritional level required by the animal. Therefore, improving farmers’ knowledge is essential.
The cost of feed and fodder varies according to the production system. In intensive production systems, feed and fodder represent 55% of the cost of producing a liter of milk, while they represent 44% in open grazing systems and 37% in semi-intensive systems . For producers under intensive systems, high costs erode profitability despite higher productivity.
Rising commercial feed costs are driving up production costs. Feed prices continued to rise even after the government removed duties on imported raw materials.
There are also policies such as the ban on genetically modified products that prevent feed manufacturers from accessing cheaper raw materials.
Livestock plays an essential role in improving productivity. This is directly affected by farmers’ access to extension services. Farmers in high-potential dairy production areas have come together in cooperatives. These provide extension services in some areas following the collapse of government services.
However, this strategy mainly benefits farmers in areas with high milk production, mainly in extensive systems and partly in semi-extensive systems. Development partners and civil society organizations have further strengthened the role of cooperatives in providing knowledge and technology to farmers.
The cooperatives have suffered from governance problems, causing members to leave. The Ministry of Agriculture in December 2021 revised the Cooperatives Law with the aim of tightening the policy framework. But stricter oversight and punishment for those who abuse their position of trust can improve the attractiveness of societies.
Animal health affects both milking head productivity and milk quality. Responsibility for animal health is shared between the national government and the county governments. Both have worked to improve disease monitoring and surveillance by launching vaccination campaigns, especially in open grazing areas. Regulation of veterinary service providers remains essential, particularly with regard to safety.
Problems such as microbial resistance in humans and animals have been linked to the misuse of drugs. The government has a policy to address this. However, rigorous implementation of animal health and food safety measures is necessary.
The marketing of milk and dairy products remains a key discussion topic for the industry. The informal market dominates the raw milk segment. Indeed, there are a large number of small producers who are not organized into groups or cooperatives.
The informal market, however, offers a higher return to producers. A key criticism is that the milk is unsafe due to mishandling or adulteration. Setting and enforcing food safety standards for the milk value chain can improve safety.
Standards should define how milk is handled, transported and packaged. Raising awareness among actors and consumers in the informal market could have better results in ensuring milk safety for consumers.
Government policy encourages value addition and processing by cooperatives, but progress has been slow due to market concentration at the processing level. The largest processor controls more than one third of the market and two processors control two thirds of the market. The regulator should regularly monitor changes in market structure to ensure that farmers receive competitive prices.
To support cooperatives in creating added value, national and county governments have distributed milk coolers to cooperatives. However, most of them remain collection centers for processors, and few have engaged in processing. In addition, imports of milk and dairy products from neighboring countries such as Uganda are favored by consumers due to lower prices.
Other major challenges affecting the sector include access to capital for farmers and value chain actors. This prevents critical investments in the industry. In addition, the provision of public goods such as improved rural roads negatively affects milk collection and delivery, especially during the rainy season.
To revitalize the dairy industry, improving coordination between government and industry stakeholders is a first step. Next, the government must address the policy inconsistency in the industry.