Kenya's dairy sector: the potential for policy change?
With more than two-thirds of the dairy cattle in eastern and southern Africa found in Kenya, and per capita production levels double those found anywhere else on the African continent, Kenyan milk consumption is amongst the highest in the world. On average, each Kenyan drinks four times the average (25kg/yr) for sub-Saharan Africa. And, despite strong marketing within the formal sector, informal milk sales account for more than three-quarters of the milk market; buying raw milk, direct from farmers or local hawkers, is convenient even for wealthier households, and the high butterfat content is particularly valued for its taste and nutritional value. But with increasing pressure for regulation of the informal sector, can Kenya lead the way in reforming its dairy policies whilst maintaining the growth in smallholder production?
More than 600,000 smallholders, with between one and three cows, currently produce 80 per cent of Kenya's milk. Most dairy consumption is as liquid milk, and the preference for raw milk is high even in urban areas; the exception is Nairobi, where consumers drink more pasteurised milk. But, although milk consumption increases with income, latest research by the DFID-funded Smallholder Dairy Project shows that an increase in raw milk prices is unlikely to dissuade poor people from buying raw milk or to reduce their consumption. However, a price increase in pasteurised milk would result in lower-income groups buying less milk and could seriously affect levels of household malnutrition, particularly amongst children, if the alternative raw milk market were not available. Consumer demand for raw milk therefore plays a significant part in the continuation of the informal sector and it is unlikely that, in the immediate future, consumption levels of raw milk will decline even as incomes increase.
Outdated policies and regulations
The growth in Kenya's dairy sector has been heralded as a great success story, and yet further gains in dairy production and marketing are constrained by a wide range of problems. These include poor quality feed, barriers to animal health services, slow development of breeding services and poor access to credit and milk markets. Many existing dairy policies pre-date independence and tend to be discriminative, with standards biased towards the formal sector. However, due to a lack of capacity and resources, implementation of legislation and regulations is generally poor. For instance, a recent survey has found that very little difference exists in milk quality (based on coliform counts) between licensed and unlicensed traders, which rather invalidates current official unwillingness to license small traders with no fixed premises. Road infrastructure also remains poor, and it is estimated that for every kilometre of poor feeder road farm-gate milk prices are reduced by three per cent. Yet, none of the cess levied on milk is currently used to improve roads.
Despite current constraints, the smallholder dairy sector in Kenya remains competitive, providing good returns. Smallholders have long characterised the Kenyan dairy industry and it is essential that the smallholder sector continues to be incorporated into economic recovery plans for Kenya. "Large commercial dairy farmers need to develop an outgrower mentality," stated Professor Anyang Nyongo, the Minister for Planning and National Development at the Dairy Policy Forum held in Nairobi in May 2004. "It has happened in the flower, sugar and vegetable oil industries in Kenya and it should be able to happen in the dairy sector." It is estimated that 12 per cent (365,000 jobs) of the national agricultural workforce is employed for on-farm dairy activities and, given the rapid growth of the sector, it is believed that investment in dairying would create more employment than in most other agricultural sectors.
A new dairy policy?
The first formulation of the Dairy Development Policy for Kenya began in 1993 after liberalisation in the dairy industry earlier the same year. The policy was later revised in 1997 and again in 2000. And yet, even after wide stakeholder consultations in 2000, the pace of policy revision has been slow and the proposed Dairy Act remains unresolved. To help guide the debate for policy reform and implementation, a consortium* of partners has been formed including the Ministry of Livestock and Fisheries Development, national and international research organisations, the Institute of Policy Analysis and Research (IPAR), the Kenya Dairy Board, and several NGOs. Latest research findings and policy recommendations from the Smallholder Dairy Project and IPAR were presented at the recent Dairy Policy Forum, and it is hoped that the NGOs in particular will use their lobbying and advocacy roles to push forward the agenda for dairy reform.
The passing of a new Dairy Industry Act by the Tanzanian Parliament in April 2004 has rather pre-empted any attempts for Kenya to lead the way in policy revision within the region. However, it is still hoped that similar reform will be achieved in Kenya, particularly as the Tanzanian bill includes provision for smallholder representation through a newly established Tanzania Dairy Industry Board. "We wish to make appropriate recommendations without compromising the informal sector," said Honorable J Munyao, the Kenyan Minister for Livestock and Fisheries Development in his opening statement at the Dairy Policy Forum. "But we have to consider the issues presented to us with an open mind."
The growth in Kenya's dairy industry has been impressive but the time of deliberation for its future should be coming to an end. The potential for further gains to be achieved is possible but only if the promise of reform can be realised.
For further information see http://www.smallholderdairy.org