Vision : Improved sustainable livelihoods of 74, 000 smallholder farm families through a competitive and inclusive dairy industry in Kenya

Transcription

1

2 Vision : Improved sustainable livelihoods of 74, 000 smallholder farm families through a competitive and inclusive dairy industry in Kenya How the strategies adopted will address the Levers of Change to result in: Sustainable dairy production and productivity Expanded markets and access to markets Conducive policies and partnerships that drive growth Learning and knowledge-driven dairy industry

3 To transform milk production and trade into an innovative, commercially oriented and globally competitive dairy value chain by 2030.

4 The key strategies include: 1. (a) Backward vertical integration (processorled) (b) Productivity improvement (intensification of production) 2. Forward vertical integration (artisanal processing) 3. Strengthening the Kenya Dairy Farmer Federation

5 Processor (Proportion of market share) Milk-shed # of farmers No. of existing farmers 1. Sotik, Nyasiongo, Ndanai 10, Bungoma, Endebess, Kapsokwony, Lugari 10,592 New KCC (35 %) Brookside Dairies Ltd (40 %) Buzeki Dairies (8 %) Tetra Pak, New KCC, Kenya Seed Co. and KDFF and DFBAs 3.Nyeri, Sagana and Kieni East 4, Lolgorian, Emurua Dikirr, Kilgoris 8,807 3, Mau Narok, Narok South 3,653 1, Njoro, Molo, Keringet, Mauche 13, Ravine, Mogotio 2, Kamara, Londiani, Timboroa, Kuresoi, Mumberes 10,545 Ainabkoi, Torongo, Kapngetuny, 12,759 3,809 Nestle, New KCC, Kenya Seed Co. DFBAS and KDFF Lelchego/Lessos 10,592 4,822 TOTAL 88,415 14,339

6 16.2% of the target farmers for phase 2 are existing farmers linked to five existing hubs these are: Olchobosen Taragoon Lessos Lelchego Sot Sot is targeting to set up a satellite cooler in Narok south and already receive some milk from some farmers

7

8 I: Under the NKCC processor Led cluster To be able to set up 18 new dairy hubs managed through 6 clusters/milk sheds around NKCC processing plants & cooling plants selling 81,826 LPD in year one to 447,668 LPD by end of year five II: Under the Brookside processor Led cluster To mobilize, bulk and market high quality litres from 22,313 LPD in year one to 171,295 LPD by year five through 8 dairy hubs from 3 milk sheds. II: Under the Buzeki processor Led cluster To mobilize, bulk and market high quality milk from 18,029 LPD in year one to 200,769 LPD by end of year five through 1 dairy hubs from 1 milk shed.

9 Processors leading on specific clusters/milk sheds Presently 5 processors Proposed to work with them to build dairy hubs in 31 new hubs set around existing sites and their processing plants Other players are the banks, TetraPak, Nestle and other industry players

10 To mobilize, bulk and market high quality litres from 81,268 LPD in year one to 447,668 LPD by year five working with 57,654 farmers in 18 hubs. To mobilize, bulk and market high quality milk from 18,029 LPD in year one to 200,769 LPD by end of year five by working with 10,545 farmers from 5 dairy hubs Buzeki (5 hubs) Londiani NKCC (18 hubs) Sotik Ainabkoi Lessos Bungoma Nyeri Kilgoris EADD KDFF & Other apex farmer Institutions Extension & Coordination To mobilize, bulk and market high quality litres from 22,313 LPD in year one to 171,295 LPD by year five working with 20,216 farmers. Brookside (8 hubs) Narok Molo Ravine

11 Building trusts between the farmers and the processors Putting in place enforcement mechanisms through KDFF participation Pre-signed agreements clarifying roles controls and management of the chilling equipments provided by the Processing plant and eventual ownership of the cooling equipments by the farmers All parties contributing to the cost of extension services

12 Processor Led Partnerships TOTAL NKCC Brookside Buzeki Number of Milk Sheds Number of Hubs No. of Farmers 57,654 20,216 10,545 88,415 No. of DMGs 4,083 1, ,821

13 Entrenched within DFBAs more focused interventions to build master dairy farmers Feed plans Breeding plans Farmer field schools model farms Strengthened hub management

14 No. of extension SPs engaged by the DFBA No. of extension service providers trained by EADD Processor Led Partnerships NKCC Brooksid e Buzeki TOTAL No. of farmers trained 40,827 11,108 6,273 58,208 No. of farmers on exchange visits 8,165 2,222 1,255 11,642 No. of Field Days No. of FFS established

15 ANIMAL HEALTH SERVICE PROVIDERS MANAGEMENT AND GOVERNANCE OF DFBAS Processor Led Partnerships NKCC Brookside Buzeki TOTAL Processor Led Partnerships TOTAL NKCC Brookside Buzeki No. of DFBA staff hired A veterinary doctor engaged by the DFBA No. of CP staff trained No. of AHAs No. of AHAs and Vets equipped No. mini dairy labs established No. of DFBA Board members trained No. of DFBA review meetings done No. of hub managers trained Dairy management software installed No. AHAs, Vets financed with Motor bikes No. of routine vaccination carried out No. of Agro-vet established No. of agrovet staff trained No. of FSAs established No. of FSA staff trained

16 Processor Led Partnerships NKCC Brookside Buzeki TOTAL No. cows registered 238,335 82,582 50, ,098 No. of cows on performance recording 24,670 8,258 7,527 40,455 Total artificial inseminations performed 393,095 82,276 29, ,289 Number of DMG owned AI services (Village bulls) No. of active AISPs in the DFBA Number insemination performed "conventional" 388, ,748 28, ,936 Number of AISPs linked DFBA equipped with AI kits Number of AISP equipped with AI kit Number of AISPs trained

17 Processor Led Partnerships NKCC Brookside Buzeki TOTAL Identify women and youth for active participation in the dairy values chain No of youth groups registered ,283 No of women groups registered ,478 Train women and youth on business opportunities Identify financial institutions and link them to organized women and youth groups No of financial Institution identified No of youth linked to access financial services 7, ,063 9,376 No. of women linked to financial access 11,365 2,499 1,063 14,927 Promote women owned and operated cottage industries linked to the hubs No. of training for women on cottage industries No. of women operating cottage industries 945 2,013 1,550 4,508

18 No. of loans for dairy equipments: milking machines satellite coolers Milk tanker trucks

19 The Kenya hub model will follow two financing structures. One financing structure will involve farmers receiving loans from the banks. The Cooperative Bank of Kenya, CFC Stanbic Bank, Family Bank, Juhudi Kilimo Bank and others have set aside more than Kshs. 1 billion ( $ 12 million) to be lent to dairy farmers who meet their lending criteria. Banks will fund up to 70% of initial investment capital and farmers will raise 30%. The second financing structure will be through the milk processors. The initial chilling plant will be supplied by the partnering processor. Farmers investment will directly go to other hub services including agrovets/ai, FSAs establishments, opening of satellite coolers and thereafter investment in milk trucks/tankers. Farmers will eventually own the main cooler based on an agreement drawn with the processor. Farmers will start paying 30ct per liter towards their share equity contribution

20 Expanding to new areas as given below and reaching additional 74,000 farmers Scaling up will be driven by: Processor led milk shed development KDFF leadership in terms of management of the hubs External catalyst which includes the population growth, market expansion and availability of financing opportunities Scaling up will also be possible through space by partnerships developed by EADD, Learnings and sharing as well as enabling policy environment created by the Kenya Government The pathways of scaling up will be through hub model development which strengthen social capital among rural communities and develop trust between the farmers and the private sector

21 1) Population growth 2) Growing Per capita milk consumption 3) Growing demand especially the Urban areas According to the Kenya Dairy Master Plan 2010, the growth in population is projected to decrease from 2.37% between 2010 and 2010 to 1.53% between 2025 and 2030 while growth in milk demand estimated at 7.40% between 2010 and 2030 is to decline to 3.86% between 2025 and The growth in per capita milk is projected to decline from 4.92% between 2010 and 2015 to 2.32% between 2025 and The per capita milk demand is projected to double from 111 litres in 2010 to 220 litres in 2030 and the total domestic milk demand increasing 2.83 folds from 4.5 billion litres to billion litres. The highest demand for milk in Kenya is in the urban areas where per capita incomes are highest. The urban population growth is rapid with a change in the total population from 24% in 1999 to 30% in The projected urban demand is an average rate of 5% which has to be met with domestic production because Kenyan milk consumers have a strong preference for liquid fresh milk.

22 Year Human population Milk demand Per capita milk consumption people Rate %* (Litres) Rate %* (Litres) Rate %* ,097, * 3,299,266, * ,483, ,500,000, ,513, ,430,593, ,705, ,448,150, ,897, ,556,587, ,089, ,760,000, Dairy Master Plan (2010)

23 Year Milk projection (000) at varying moderate growth rates Milk projection (000) at varying high growth rates Milk (000) Growth rate (%/y) Milk (000) Growth rate (%/y) Dairy Master Plan (2010)

24 milk (billion litres) 14 Supply_Medium grow th Therefore satisfying 12 Supply_High grow th the targeted Demand targets litres per capita milk consumption by 2030 requires sustained higher growth rates above 3%. Dairy Master Plan (2010)

25 Annual Processed (Kg) 423,110, ,511, ,530, ,745, ,996,643 Daily Processed 1,159,208 1,091,812 1,113,783 1,413,002 1,504,100 EADD Sites Annual DD Kg sold 11,862,172 18,588,344 40,312,943 77,255,341 Daily Sales by CPs 32,499 50, , ,658 Proportion 3% 5% 8% 14%

26 4) Existence of underutilized installed processing capacity 5) Installed processing capacity is expanding 6) Opportunity in regional market Total volume exported in 2007 is less than 15 million litres in liquid milk equivalent (LME). This is about 3.5% of the total milk processed in the country, less than 1% of the dairy cattle production and about 2% of the marketed production. The volume of 2007 imports was less than 3 million litres LME, about 20% of the exports and less than 1% of the processed milk. 7) Learnings and lessons from phase 1 8) Experienced pool of human resource

27 a) The financial flow from dairy production through sales of milk and surplus heifers and bull calves will enable farmers attain financial sustainability; b) The families will have good nutrition through consumption of milk, they will educate their children who will gain skills and use their healthy bodies in farming activities.; c) The families will use income generated from the dairy enterprise to increase their physical assets including farming equipment, improved housing, Biogas, household items like furniture, radios and television sets and mobile phones. d) The social capital is built through membership in DMGs, DFBAs and Cooperative societies. e) Natural capital including land and water will support the farmers in agricultural productivity, cooking and washing and sanitation.

28 Investment Number Cost for each Total Cost 70% Satelite coolers 31 37,000, ,500,000 90,650,000 Agro vet 42 5,600,000 20,800,000 14,560,000 Milk Tanker 11 46,000,000 84,000,000 58,800,000 AI Tanks- Main ,000 4,080,000 2,856,000 AI Tanks-Village Bulls 498 8,200,000 35,859,159 25,101,411 Motor Bikes: Youth 1, , ,634,688 77,444,282 Motor Bikes: Women ,000 28,017,536 19,612,275 Donkey/carts: Youth ,000 19,030,929 13,321,650 Donkey/carts: Women ,000 1,800,000 1,260,000 Dairy cows 4, , ,689, ,182,331 Zero grazing units 4, , ,844, ,591,166 Pulverizers 2, , ,294,562 70,906,193 Bio-gas 2, , ,988, ,892,270 Fodder establishment 19,958 90, ,367, ,556,967 Total 36,704 1,573,906,494 1,101,734,546 US $13,923,968

29 Investment No. Cost for each Total Cost (Kshs.) FSA 21 Agro vet 48 Satellite Coolers 5,000 capacity 11 Satellite Coolers 3,000 capacity 24 6,000,000 21,000,000 1,920,000 15,360,000 19,500,000 38,500,000 17,660,000 91,320,000 AI Tanks- Main 16,320,000 17,360, Milk Tanker 36 58,300, ,300,000 Totals 290,840,000 US $ 3,421,647

30 Year 1 Year 2 Year 3 Year 4 Year 5 TOTAL Bungoma 1,291,788 1,532,184 2,688,026 5,105,012 7,048,187 17,665,197 Kilgoris 1,012,435 1,261,326 1,713,274 2,821,864 4,252,952 11,061,851 Sotik 1,752,710 2,387,025 3,984,286 6,964,833 9,559,808 24,648,663 Ainabkoi 3,143,448 4,153,559 6,099,341 7,993,181 11,655,305 33,044,833 Lessos 830,088 1,549,271 2,688,026 5,105,012 7,048,187 17,220,584 Nyeri 746,496 1,876,193 3,629,961 5,958,531 8,783,730 20,994,911 Sub-Total 8,776,966 12,759,557 20,802,916 33,948,433 48,348, ,636,040 US $ 1,519,952

31 Leadership & Technical support Investment and capital formation towards value additions and services that enhance farmers productivity Set up main wholesale agro-vet distribution centre Animal feed plant Artisanal processing Bargaining power initiating long term partnership with processors Successful management interventions so far in Cherobu, Kipkelion, Taragoon and Cherangany

32 Stakeholder category Public sector Multilateral development partners Farmer Org Institution Ministry of Livestock development International Fund for Agricultural Development (IFAD), a UN agency Kenya Dairy Farmer Federation (KDFF) On-going programs /activities Reforms including matching Ministries and parastatal bodies such as privatization of dairy training school, extension & Training (KDB & Districts level collaborations) Supporting development of smallholder dairy program (SDP) targeting farmers in the same locations as EADD. Support in increased production, access to markets and training of milk traders. Leadership & Technical support Investment and capital formation towards value additions and services that enhance farmers productivity Bargaining power initiating long term partnership with processors

33 Stakeholder category NGO Institution SNV Netherlands On-going programs /activities SNV is implementing a dairy program ( Kenya Market-led Dairy Project- KMDP). The project will be implemented in most districts with smallholder dairy farmers. On going joint activities include: a) The studies on feeds, milk payment on quality, policy and privatization of dairy training institute supported by SNV will benefit EADD farmers through awareness on results of all these studies. b) Reforms efforts towards privatization of the dairy training school. Private Sector Tetra Pak Tetra Pak has given milk processing and packaging equipment to all major milk processors in Kenya: NKCC, Brookside, Sameer and Buzeki. All must operate on full capacity and profitability to enable them service the loans on equipment. Tetra Pak will support in increased milk production through financing extension services in some of the dairy clusters

34 Stakeholder category Private Sector Institution Processors (NKCC, Buzeki, Brookside, and Sameer) On-going programs /activities Central to Kenya rapid up-scaling strategy Increase farmer productivity through interventions in extension Banks Milk Markets Financing opportunities available in the dairy value chain Commitment made so far by CFCStanbic (Kshs.200M), Juhudi Kilimo (Kshs.100M), The Government through AFC (Kshs.200M)

35 Targeted Investor Organization Type of Partner Area of intervention Potential USD Amount Remarks UNDP Development Partner Extension 0.15 Co-Funding Approved Land O Lakes Devt Partner Innovation Fund 0.1 Co-Funding Engaged SNV Devt Partner Capacity building 1.0 Co-Funding Keen SDCP/IFAD Devt Partner Capacity building 3.0 Co-Funding Keen New KCC Processor Milk production 1.4 Extension/Co Committed Tetra Pak Packaging/processor Milk production 0.5 Co-Funding Committed Brookside Processor Milk production? Extension/Co Keen Nestle/Kabiyet processor Milk production? Co-Funding Keen Buzeki/Molo Milk processor Milk production 0.3 Extension/Co keen CFC Bank Bank Direct DFBA financing 2.4 (Kshs.200 M) Complementary Committed Cooperative Bank Bank Direct DFBA financing 4.0 Complementary Committed Family Bank Bank Direct DFBA financing 1.2 Complementary Engaged Juhudi Kilimo Micro-finance Direct financing to farmers 1.2 (Kshs.100 M) Complementary Committed Agricultural Finance Corporation Parastatal Agric- Financing Bank DFBA, Farmers & FSAs 2.4 (Kshs.200 M) Complementary Committed Dyer & Blair Private Equity Venture capital arrangers 1.0 Investment Keen Total Potential Co-funding??? 8.15 Total Complementary Funding 11.2

36 Thank You