Dairy Farmer Entrepreneurship Development
Effectively addressing dairy sector challenges in Kenya is the ambition of the KMDP program. This program provides skills, knowledge and other forms of support to medium-scale farmers and smallholders in the dairy value chain. It also enhances linkages between Kenyan and Dutch companies in the wake of the aid to trade agenda. This article summarizes the insights and reflections from a visit to one of the KMDP-supported farms in Limuru, Kenya. The experiences of this medium-sized farm are becoming a wider-known example for nearby Kenyan smallholder farmers.
A group of Food Security Advisors and Agricultural Counselors from 12 Dutch embassies across Africa, Asia and the Netherlands visited Kenya from June 12 to 15, 2017. This “learning journey” was meant to jointly learn and reflect on results, successes and failures from implementing the Food and Nutrition Security (FNS) policy in the context of the aid and trade agenda. They visited selected projects implemented with support from the Dutch government. This article summarizes the findings from the first field visit.
Kenya Market led Dairy Program (KMDP)
SNV Netherlands Development Organisation (SNV) is implementing the Kenya Market led Dairy Program (KMDP) with funding from EKN Kenya. Now in its second phase, KMDP started with interventions in July 2012 at the dairy value chain level (increasing efficiency, effectiveness and inclusiveness) as well as addressing sector issues (supporting interventions and innovations that address systemic issues). The second phase which began in October 2016 has an Innovation and Investment Fund that provides financial contributions to feasibility studies, pilots, demos and innovative business cases. The program includes a knowledge agenda, collaborating with technical experts from PUM and others, and with interns from Egerton University in Kenya and the AERES agricultural colleges in the Netherlands. As stated by Anton Jansen, the KMDP Team Leader, “What is key are skills development, knowledge exchange and innovation.”
KMDP program addresses the Kenyan challenges in the dairy sector (See Box 1) by providing skills, knowledge and other forms of support to medium-scale farmers and smallholders in the value chain, in addition to enhancing linkages between Kenyan and Dutch companies in the wake of the aid to trade agenda.
Box 1: Kenya dairy sector overview
- The largest agricultural sub-sector, contributing 4-6% GDP
- Mainly private sector driven with 28 active processors. Top three are Brookside (with French processor Danone 40% shareholding), New KCC and Githunguri Farmers’ Cooperative Union
- There is an increasing interest by the Dutch giant FrieslandCampina in Kenya’s dairy sector
- Provides employment to approximately 1 million people across dairy value chain
- Smallholder farmers produce 80% of Kenya’s milk with 60% of it being marketed informally in raw form
- Main challenges are seasonality affecting supply, milk quality, low investment in enhanced dairy production, low skills, and lack of inclusiveness
The learning journey participants were led to Risa Farm in Limuru by Cosmas Muchina, monitoring and evaluation advisor of KMDP, who provided an overview of the Kenya dairy sector. Once at the Risa Farm, the participants were welcomed by Andrew Murugu, a second-generation farm owner and banker by profession. He shared the history of the farm and how his experiences in South Africa, Israel and the Netherlands influenced his decisions on how to manage his farm together with his wife Wangari Murugu, as well as on introducing value addition.
In terms of production and processing, the farm has a total of 78 cows, 36 of which are milk cows that produce 800 liters/day (up from 300 liters in 2014). He uses a software package called Uniform Agri which enables him to properly manage all the operations of his farm. As a result, he has doubled the average production per cow.
After undergoing a Land ‘O Lakes training on value addition, Wangari Murugu established a yoghurt production unit. This was necessitated by the need to respond to the processors not taking milk at certain times of the week. The yoghurt unit processes and retails under the brand Mo-Lito to high end supermarkets like Chandarana and mini-supermarkets in Nairobi. During the visit to the processing unit, it was explained how quality and safety tests are being performed on the 250-300 liters of drinking yoghurt produced per day. Andrew Murugu shared that value addition for a medium-scale farmer poses challenges in marketing and distribution, and he would advise farmers to do value addition at a larger scale or focus on production.
In terms of partnerships, PUM Netherlands senior experts (PUM) and Perfometer Ltd. have supported Risa Farm since 2013 under the KMDP. In a series of missions since 2014, PUM senior experts have provided advice on total farm management and feed and fodder management, both of which directly for the farmers and through coaching of local farmer trainers. Overall, these improvements are adding to the experiences of Risa Farm as a pilot site for where innovations and technologies from the Netherlands can be tested in regards to their relevance within the Kenyan context. The experiences of this medium-sized farm is becoming a wider-known example for nearby Kenyan smallholder farmers.
In addition, Risa Farm is currently collaborating with Dutch technical experts from Fieten Ltd. to construct a new barn house. Fieten Ltd. is providing the architecture for the new barn based on a selection from a range of model barn houses (see the smallholder cow barn handbook). AgriProm, another Dutch company, is providing state of the art interiors. SNV contributed to the design and Andrew Murugu invested 12 million Kshs for materials. This new barn will house more cows, have a complete dairy management system, and will be properly ventilated with a higher roof. In the old barn, the space was wet and small so there was no comfort for the cows, the beddings and cubicles were small, logistics around milking were difficult, the milking machine was old, and the roof was low which contributed to heating the barn and making the cows uncomfortable. The new barn will meet the quality standards required by milk processors, such as Bio Foods.
According to Perfometer’s David Maina, there is a growing need for experts to support and build the capacity of farmers at the farm level as seen by PUM and other Dutch organizations. He valued the role of PUM senior experts to support the sector, while acknowledging local companies such as Perfometer take on responsibility too. Perfometer’s advisory services are covered for about 16% from payments by the local farmers themselves. The smallest farmers can’t afford the services if they aren’t being assisted through a development program.
Partnerships with farmers do not always have to be large in size. The young entrepreneur Eric de Jong, founder of Dejirine Enterprises Ltd., started importing machines and tractors after completing his university internship with SNV through AERES Dronten. He is now enrolled in a farm training with Cow Signals and Perfometer. He is also focusing on small dairy items such as inputs needed on a farm, as well as forage and supply of baling services.
With all of the recent improvements in the pilot site, Risa Farm is now considering a contract to supply milk to Bio Foods, one of the leading processors that demand European quality standards from farmers. It pays suppliers of milk with a quality-based payment system. Bio Foods Managing Director Joachim Westerveld highlighted five key components of dairy sector development, areas that Risa Farm can continue to strive for in quality and expansion: feed quality and prices; water availability; comfort for the cows; milking practices including harvesting and storage; and consistency. Westerveld concluded that “while it’s good to support small and medium-scale farmers, large-scale dairy farming can attract more investment, knowledge and expertise to the sector. By the same token, mid-sized dairy farming needs to be supported to be able to produce enough milk to meet the existing high demand for processed milk”.
Ernesto Sechene of EKN Mozambique reflected on what was learned from the visit to the dairy farm. Whereas he expected a lot more development, he said Kenya was ahead in production scale and government regulation. The Mozambican dairy sector is similar to the Kenyan context as smallholder farmers produce the most of the milk (average 12-14 liters), and two main processors are funded by private sector investments. Processors are keen on setting milk prices based on quality. The key challenges for the dairy sector include: side selling by farmers; insufficient water during dry season (Mozambique has one rainy season) hence the effect on production levels; increased mastitis during rainy seasons; and acute shortage of drugs for livestock.
Learning journey participants reflected on this visit in a session in the afternoon of the same day. They realized that for sectors such as dairy and horticulture, it is critical that approaches of value chains or farming systems are not only focused on the practical level but also on the enabling environment for farms and firms.
Inclusiveness was among the key issues they discussed. Market led value chains are assumed to be inclusive, and the program visited seems to include the basic assumption that benefits trickle down. This raised concern among the participants. There exists a thin line between building and strengthening trade and investment, and reducing poverty by supporting the poor in the aid and trade agenda.
The farm visits elicited discussions on food security, while nutrition wasn’t as much of a feature as expected. The participants argued for focusing on sustainable food systems – those that provide food security and nutrition in such a way that they create the economic, social and environmental bases to sustain future generations. It was shared that KIT is developing a set of improved nutrition indicators to be used in agricultural value chains, which could feed into future embassy programs.
Lastly, it was concluded that monitoring and evaluation of programs needs to be more robust. Currently, monitoring and evaluation makes use of proxies, such as more jobs being created, and more liters of milk produced by the farmer.
- Kenya Market led Dairy Program
- Recommended reading: Dairy Matters with inspiring stories from the KMDP
- Smallholder cow barn handbook