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Cutting Edge Technologies to Help Kenyan Farmers Break into Export Markets, as Global Milk Prices Soar

09.11.2007
As global milk prices continue to rise, Kenyan small-scale farmers are poised to become major players in the market for milk, according to researchers at the International Livestock Research Institute (ILRI) in Nairobi.

In the past, high-quality standards of global producers have prevented countries like Kenya from competing with major exporters. But the steep rise in milk prices worldwide could give smallholder producers an edge in the global market, which is estimated at USD48 billion a year.

New livestock breeding strategies are likely to be vital in meeting increased demand for Kenyan milk without risking the loss of hardy local breeds, according to scientists speaking at a conference in Nairobi.

“The big new market incentives are presenting opportunities and challenges alike for developing countries,” said ILRI’s Director General, Carlos Seré. “Rising prices are driving more indiscriminate cross-breeding, which is leading to the extinction of tropical breeds, as well as to poorly performing second- and third-generation cross-bred animals.”

In the last 12 months, the world market price for milk has more than doubled from some USD28 per 100kg to over USD60. In the past, distorted markets and high standards in the international milk market have stopped Kenya from competing with powdered-milk-exporting countries. Today’s high dairy prices are forcing some manufacturers to find alternative, less expensive, milk, which is allowing Kenya to enter the export markets at significant levels for the first time.

Small-scale milk producers are big milk producers

Kenya has about 1.8 million rural households keeping some 6.7 million dairy cows. These small-scale farmers and traders handle more than 80 per cent of all the milk marketed in the country. Despite their size, they are prepared to compete with the industrialized world’s biggest dairy producers, according to ILRI agricultural economist Steve Staal. “The small farmers make use of family and other cheap labour and grass, crop stalks and other residues, to feed their cattle, rather than costly grain,” Staal said.

These and other issues were the topic of an international conference in Nairobi that ILRI convened (8-9 November 2007) to address how improved animal breeding can reduce world poverty—partly by helping poor nations benefit from the skyrocketing demands and prices for milk, meat and eggs.

Animal breeding can help small farmers exploit the growing milk markets

Seré noted that the region’s cattle breeders must be careful to conserve valuable local breeds, which are better able to survive harsh conditions than are high-producing cattle imported from industrialized nations. “In Kenya, for example, the familiar black-and-white Holstein dairy cow is a status symbol among smallholders, who want to own this high-milk-producing exotic animal,” Seré said. “Smart and sustainable breeding strategies that conserve local breeds can bring about higher smallholder milk production.”

In East Africa, milk production and consumption has always been big business, and in Kenya, the dairy industry is the single largest agricultural sub-sector--larger in value than horticulture or tea. Kenyans are amongst the highest milk consumers in the developing world, consuming an estimated 145 litres per person per year on average. Among all developing countries, only Mongolians and Mauritanians consume more milk per dollar earned than do Kenyans. The milk market in East Africa as a whole is estimated at USD1.7 billion a year. This excludes the 34 per cent of the region’s milk that is consumed on-farm, which is an important source of household nutrition.

Staal says the new breeding strategies for Kenya need to be two-pronged.

“The agriculturally high-potential highlands of Kenya are already ‘densely dairied’. One out of four households here already owns at least one cross-bred dairy cow. But dairy cattle in East Africa are currently low milk producers, averaging about 7 litres per day. We expect dairy expansion thus to happen on two fronts. We need higher-producing cross-breeds for the high-potential areas as well as hardier cross-breeds for less-favourable agricultural areas, particularly Kenya’s vast drylands where water, feed and veterinary services are scarce.”

Over the last decade, scientists at ILRI’s Nairobi-headquarters have worked with the Kenya Agricultural Research Institute (KARI), the Kenyan Ministry of Livestock and Fisheries Development, and civil society groups to help transform the country’s 39,000 informal ‘raw’ milk sellers into legitimate milk marketers. This achievement led to gains for Kenyan dairy producers and consumers—through improved market efficiency—of an estimated USD29 million per year. This research has also helped to deliver improved livestock technologies, including breeding strategies designed for poor farmers.

Pioneered in Kenya, these new dairy interventions are now being expanded into other countries of eastern Africa and Asia, especially India, where smallholder dairying is also booming.

“With better and more appropriate breeds and species of farm animals, many of the 600-million-plus livestock keepers in poor countries will be able to produce more milk, as well as meat and eggs, for the fast-growing global livestock markets,” Seré said. He noted that new science-based breeding technologies and policies will help raise smallholder dairy yields in sustainable ways, pulling millions out of poverty while conserving valuable local cattle breeds.

Unprecedented opportunities for Kenya’s smallholders

Researchers pointed out that higher prices, paired with surplus supplies of milk in Kenya, also could make Kenya a significant player in a growing second market—for ultra-heat treated milk (UHT) which needs no refrigeration until the packages are opened.

In a conversation with ILRI, Machira Gichohi, Managing Director of the Kenya Dairy Board (KDB), noted that Kenya is the only country in the region with exportable quantities of milk available.

“This year we have seen significant increases in exports from Kenya,” Gichohi said. “Buyers include major food manufacturers, such as Cadbury. We’re already exporting milk powder to other sub-Saharan African countries, including South Africa, as well as to Asia and the Middle East. In addition, the UHT milk market is opening up and we’re now exporting long-life milk to Mauritius and South Africa.”

“Private processors are considering building two new processing plants to respond to the increased opportunities,” Gichohi added.

Appropriate breeding strategies, and the science required to support them, will be critical to new income gains for small farmers.

About ILRI

The Nairobi-based International Livestock Research Institute (ILRI) works at the crossroads of livestock and poverty, bringing high-quality science and capacity-building to bear on poverty reduction and sustainable development. ILRI works in Africa, Asia, Latin America and the Caribbean, with offices in East and West Africa, South and Southeast Asia, China and Central America. For further information, please visit www.ilri.org.


Background Information
Quick Stats:
The latest figures for Kenya’s milk sector
In 2006, Kenya’s Smallholder Dairy Project (SDP) updated its dairy figures to reflect more accurately the true size and extent of Kenya’s milk sector.
1. Smallholder dairy farms: 1.8 million (up from 800,000)
The estimated number of 800,000 smallholder farms has been widely cited for many years, during which time Kenya’s population has grown significantly. SDP recalculates the number of smallholder dairy farms to be 1.8 million.
2. Milk hawkers: 39,650 (up from 30,000)
SDP recalculates the number of small milk vendors in Kenya to be 39,650.
3. Dairy cattle: 6.7 million (up from 3 million)
Official cattle figures for Kenya are unreliable; no livestock census has been conducted for decades and methods used to estimate cattle numbers are imprecise. A conservative estimate of the size of the national dairy herd made using detailed SDP survey data suggests that there are about 6.7 million dairy cattle (2.7 million high-grade and 4 million cross-bred cows) kept on 1.8 million rural smallholder farms, mainly in the Kenyan Highlands. This projected cattle population is more than twice the officially reported figure of 3 million for the national herd.
4. Milk produced: 4 billion litres per year (up from 3 billion)
Based on SDP’s recalculated cattle projections above, SDP recalculates total milk production in the rural highlands to be an estimated 4 billion litres per year.
5. Milk consumed: 145 litres per person per year (up from 100 litres)
SDP recalculates Kenyan milk consumption to be 145 litres per person per year, making Kenyans among the highest milk consumers in the developing world. The rural areas have an estimated population of about 14.5 million people. Assuming that the estimated 9.6 million people living in the urban areas depend on milk mainly from the high-potential areas, and that 13 per cent of the milk produced is spoiled or fed to calves, milk availability from the highlands was estimated to be about 145 litres per person per year. Previously, milk consumption in Central and Rift Valley provinces, which are important milk production areas, was estimated to be between 144 and 152 litres per person per year.

Source: Kenya Smallholder Dairy Project website: www.smallholderdairy.org

Jeff Haskins | EurekAlert!
Further information:
http://www.smallholderdairy.org
http://www.ilri.org/johnvercoeconference/

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