Kenya's Dairy Sector Worth $230million

KENYA - The Kenya dairy industry is making a turnover of over Ksh. 17 billion (US$230 million), following a policy change six years ago.

18 October 2010

2 minute read

Africa

A new report by the International Livestock Research Institute (ILRI) suggests that the liberalization of informal milk markets has producers, vendors and consumers reaping large from an improved value chain.

From farm to cup, Nairobi recorded the highest turnover in demand and supply for milk since the Kenya Dairy Policy was amended in September 2004, writes The East African.

For dairy farmers and traders in Nakuru, Thika and Kiambu towns however, turnover was three fold from 2004 until 2007, which was the period studied by the report.

“Allowing licensed small scale milk vendors to operate leads to increased milk supply to the retail market and continual increase in the number of small scale milk vendors acquiring licenses to run milk bars to meet the increased demand for milk,” says the document.

In a sharp contrast with other towns under the study, Nairobi milk brokers continue to hold the biggest slice of the milk supply chain, followed by milk bar operators and transporters. However, there were losers.

According to the report, market forces did not favour retailers, who continued to post a decline of an average of nine per cent in market margins in the towns surveyed. In Nairobi, retailers had to waive the price of milk by about 80 cents for every litre sold.

The revised Daily Policy paved way for the training of milk handlers on quality control, and made it easy for producers and vendors to acquire operation licences, among others.

While the improved dairy sector is expected to receive a boost from both domestic and overseas investors, competition for a slice of the market has always left the domestic scene looking murky.

But Nestle’s Regional head, Pierre Trouilhat, is hopeful that Kenya’s dairy sector has a place in the Common Market for East and Central Africa (COMESA), through the company’s established value chain.

Nestle is counting on a partnership that the equatorial regional branch entered with the East Africa Dairy Development (EADD) project in April, as a bridge through which the company will be able to purchase powdered milk from Kenya.