Kenya Dairy Boar: Facilitating a Value-Driven and Sustainable Dairy Industry

Fronted as an important socio-economic enterprise in Kenya, the dairy industry is a source of reliable nutritious food, employment, income and wealth, contributing an estimated 4% of the national GDP, 12% of the overall Agricultural sector GDP and 44% of the Livestock GDP.

In an exclusive interview with the Corporate Watch Magazine, Kenya Dairy Board Managing Director’s Ms Margaret Kibogy noted that, annual milk production currently stands at above 5.5 billion liters from a population of 4.5 million heads of dairy cattle.

The sector provides employment to over 750,000 persons directly locally ranging from dairy farm managers, feeders, milkers, field representatives, equipment technicians, lab technicians, nutritionists and dieticians, quality assurance personnel as well as plant production supervisors.

Further, more jobs are created during transportation, bulking, cooling, processing and marketing, and indirectly with the support service industry generating an additional 500,000 jobs for Kenyans.

“With our focus and commitment on ensuring our consumers get the best quality milk, we have constructed a state of the art laboratory at Kabete to improve our milk testing capacity. Further, we have expanded our branch network. Currently, we have twenty-seven branches spread all over the country equipped with vehicles and sufficient staff to ensure quality,” added Ms Kibogy.

The Dairy Laboratory at Kabete is set to boost KDB’s capacity to conduct quality surveillance and safety compliance. The laboratory is further expected to enhance food quality, nutritional security, increased manufacturing through processing, value addition, traceability, product diversification and market penetration while putting-on notice dairy dealers adulterating milk.

“We have made great strides as a Board and continue to even do better. Even though at the moment, formally marketed milk stands at above 700 million litres, we aim to increase this to over 1 billion litres mark and we are confident we shall reach that milestone soon, especially with the coming in of the dairy industry regulations effected last year,” she said.

According to a dairy development report in Kenya by CGwSpace, the dairy industry is mainly driven by liquid raw milk but there is growing demand for processed dairy products such as yoghurt, Long-life milk- UHT, cheese and butter especially among the middle and upper income within the urban areas. Out of the processed milk, the report notes, 62.4 per cent is UHT, 25.5 per cent pasteurized, 6.14 per cent yoghurt, 3.16 per cent mala and 0.29 per cent Whole Milk Powder.

Within the value addition chain, milk is usually processed into powder milk when milk production is high and converted back to raw milk when low production is experienced in the country.

Regulations…

The dairy industry regulations 2021 went through the requisite legal and constitutional requirements and were exposed to various stakeholders whose input, feedback, and comments were incorporated at every stage of the development process.

“The regulations in place provide for requirements for dairy farms, collection centers, milk bars, dispensers, and milk processing establishments including cottages, mini dairies, and processors to meet minimum hygienic conditions for the production of safe and quality milk.

Further, they provide for the safety of dairy products through labeling, examination, calibration, records, storage, and distribution for the value chain actors including dairy farms, collection centers, milk bars, milk dispensers, and processing establishments,” noted the KDB Managing Director.

The regulations were developed in conjunction with the county governments who have since led in the implementation of the same as agriculture is a devolved function. Despite the fact that the dairy sector continues to be faced with several challenges including seasonality of production, low productivity per cow, poor quality breeds, costly and inaccessible animal feeds, and lack of adequate regulatory framework among others, these new strides bring fresh hope to the industry.

‘These regulations are necessary and it is our mandate to ensure the dairy industry is regulated and we guarantee order. The industry is growing at nearly 5 percent per annum in production and 7 percent in processing and value addition. As we grow, we want to ensure quality and safety of milk and milk products along the dairy value chain aiming at consumer protection and facilitation of trade,’ the KDB Managing Director said. The regulations are as below:

Registration and Licensing

According to the new regulations, farmer registration will be conducted by the counties and will be free and a one-off exercise. A dairy cooperative society, a producer group, or an aggregator shall maintain an updated register of its members for use in registration.

Through this registration, counties will maintain an updated database on the number of farmers, dairy herd data, and milk production. The consolidated information from the counties will inform planning and decision-making at the national level.

Through the separation of powers between national and county government, this regulation provides for counties to issue a license, and for the Board to issue a regulatory permit to a dairy business operator.

“Registration and licensing of these sources of milk facilitates for regular inspection of such premises to ensure compliance to milk quality and safety requirements. The various categories of licenses, which are designed for different processes along the value chain, are applied for and follow ups on continued compliance is done by qualified officials from the Board,” notes Ms Kibogy.

Returns, Reports and Estimates

Operators in the dairy business are required to submit monthly returns on processed milk and the quantities produced to the County Government or the Board for policy and investment decisions. Relevant data and information collected through monthly returns is thus readily available to the counties and the national government for planning purposes.

Produce Traceability, Recall

These regulations aim to enhance consumer protection and safety of dairy produce, improving access to information on marketed dairy produce, and providing a mechanism for tracing and recall of dairy produce.

The regulations apply to the production, collection, transportation, processing, distribution, and retail of dairy produce. The regulation will further link to existing dairy infrastructure including coolers, testing facilities, and promote trade internally and externally.

Milk Sale Contract

The milk sale contract regulations will give minimum requirements for contracts and further ensure that the terms of contracts entered between the parties are strictly adhered to, to enable proper planning.

Key elements to the contract will be agreed on between the parties. Only the minimum contents for a milk sale contract are provided for in the regulation.

Pricing of Dairy Produce

Concerns over low and fluctuating producer prices have in the past made investments in the sector to be unprofitable, unstable, and uncompetitive.

However, the regulations in place ensure a guaranteed minimum price on milk sales which will ensure that investment in dairy farming gives favorable returns throughout the year. On 27th February 2020, the Government gave a directive on a minimum farm gate price.

The ministry fixed the minimum price of unchilled raw milk at Sh33 per litre. Buyers will pay a farm gate price of Sh35 per litre of chilled milk and Sh37 for a litre of pasteurized milk. Going forward the Ministry through the Board will conduct frequent studies and consultations on the cost of milk production to inform biannual milk pricing reviews. Producer groups and entities shall further disclose monthly payout prices and deductions made to determine farm gate prices.

‘We want milk producers to take milk production seriously as a source of income, this is why we are capacity building them through trainings on good dairy practices and good agricultural practices because they are in business and would want a good return on investment. We want to assure dairy farmers market for their products and a good price for their products to enable them earn from their produce,’ noted Ms Kibogy

Imports and Exports

The regulations passed on imports and exports are aimed at protecting Kenya’s dairy industry against unfair trade practices, or competition and dumping, and further support government efforts to guarantee food security and self-sufficiency. The regulations provide the procedure for importing or exporting dairy products and ensure that they meet the relevant standards.

They underscore the conditions for granting of permits that include the prevention of dumping, whether there is a deficit or surplus, and require regular risk analysis as part of the factors that shall be considered when importing, to support the local dairy sector for growth and sustainability.

It further takes into consideration the existence of treaties and cross-border trade agreements across nations. This regulation provides for stiff penalties that include forfeiture to the Board or the destruction of the illegally imported dairy produce material, equipment, additives, or equipment.

Dairy Produce Safety

The regulation aims at enhancing compliance to safety standards, promoting self-regulation through the adoption of global best practices, and a mechanism for the Kenya Dairy Board to oversight the dairy industry. These regulations will provide mechanisms for the sale of milk to our immediate neighbors. However, the milk must meet the relevant standard for raw milk. This milk should not be resold as this will be regarded as hawking.

Compliance Officer

This regulations provides that the board may request the County to nominate qualified staff of the County government for Gazettement by the Board as a compliance officer. This regulation ensures that marketed dairy produce meets the required standards while providing for offenses and complaints against a compliance officer.

Looking into the future…

Even with these regulations in place, the Kenya Dairy Board still has to play watchdog to ensure the regulations are effected. This, the Board does through consumer education to create awareness of the regulations and by holding capacity-building forums to train stakeholders on what is required of them. Where these have failed, the Board has employed enforcement in partnership with security agencies to ensure players in the industry comply.

With the board’s five-year strategic plan coming to an end in 2022, its focus has been on sustainability of the industry to ensure the sector remains stable amidst the various challenges such as the Covid 19 pandemic and weather changes. However due to excellent management and implementation of regulations and strategic plan, the sector has seen significant growth

“The pandemic affected many sectors and continues to affect others, however, we were able to be fairly resilient. With that, we must now focus on how we are going to grow, what measures and interventions we can put in place such that we are able to recover and grow our presence countrywide,” added Ms. Kibogy.

The local Dairy products markets will continue to be dominated by liquid milk in the next decade. Consumption is also expected to grow with the rise in population and urbanization. Despite the dominance of liquid milk there has been increased growth in consumption of high value products for example Yoghurts, cheese and Ice cream; which is a major catalyst for the growth of the sector.

Ms Kibogy noted that for the dairy industry to grow, more young people must embrace the sector and revolutionize the industry with the use of modern dairy farming methods. This she says will ensure continuity and a sustainable industry. The Kenya Vision 2030 recognized dairy industry as one of the fundamental avenues for employment creation particularly for the youth.

A well-structured dairy industry, therefore, has the potential to play a pivotal role in job creation for the youth, thus propelling Kenya to achieve its development goals.

In segmenting jobs created within the informal sector, the dairy value chain generates about 20 full-time jobs (17 direct, 3 indirect) for every 1,000 litres of milk traded. The jobs, which are majorly self-employment opportunities, include mobile milk traders, milk bars, shops and kiosks.

From a policy perspective, involving the youth in dairy farming is crucial as it provides a platform to tap into the potential of a young educated population that can be trained and skilled to meet input and services delivery gaps necessary to develop sustainable agrivalue chains and food systems.

However, despite the growth and high job creation potential in the dairy industry, many youths are not engaged in the sector. Seemingly, youth inclusivity is low with the older generation dominating the dairy industry.

With the youth unemployment persisting in the economy due to the inability of the private sector to absorb all the unemployed youth, the dairy value chain has huge untapped potential for the youth.