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
“To transform milk production and trade
into an innovative, commercially
oriented and globally competitive
dairy value chain by 2030”.
The key strategies include:
1. (a) Backward vertical integration (processor-
led)
(b) Productivity improvement (intensification
of production)
2. Forward vertical integration (artisanal
processing)
3. Strengthening the Kenya Dairy Farmer
Federation
 No. of existing
Processor (Proportion of market share) Milk-shed # of farmers
farmers

1. Sotik, Nyasiongo, Ndanai 10,722

2. Bungoma, Endebess, Kapsokwony,
Lugari 10,592

3.Nyeri, Sagana and Kieni East 4,182

New KCC (35 %) 4. Lolgorian, Emurua Dikirr, Kilgoris 8,807 3,809
1. Mau Narok, Narok South 3,653 1,899
2. Njoro, Molo, Keringet, Mauche 13,934
Brookside Dairies Ltd (40 %) 3. Ravine, Mogotio 2,630
1. Kamara, Londiani, Timboroa, Kuresoi,
Buzeki Dairies (8 %) Mumberes 10,545
Tetra Pak, New KCC, Kenya Seed Co. Ainabkoi, Torongo, Kapngetuny, 12,759 3,809
and KDFF and DFBAs
Nestle, New KCC, Kenya Seed Co. DFBAS Lelchego/Lessos 10,592 4,822
and KDFF
TOTAL 88,415 14,339
 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
 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.
 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
 To mobilize, bulk and
market high quality litres To mobilize, bulk and
from 81,268 LPD in year NKCC (18 hubs) market high quality
one to 447,668 LPD by •Sotik
litres from 22,313 LPD
•Ainabkoi
year five working with
57,654 farmers in 18
•Lessos
•Bungoma
in year one to 171,295
hubs. •Nyeri LPD by year five
•Kilgoris
working with 20,216
To mobilize, bulk and farmers.
market high quality
milk from 18,029 LPD
in year one to 200,769
LPD by end of year
EADD – KDFF &
five by working with Other apex
10,545 farmers from 5
dairy hubs farmer
Institutions
Brookside
Buzeki Extension & Coordination
(8 hubs)
(5 hubs) • Narok
Londiani • Molo
• Ravine
 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
 Processor Led Partnerships
TOTAL
NKCC Brookside Buzeki
Number of Milk
Sheds 6 3 1 10

Number of Hubs 18 8 5 31
No. of Farmers 57,654 20,216 10,545 88,415
No. of DMGs 4,083 1,111 627 5,821
 Entrenched within DFBAs more focused
interventions to build master dairy farmers
 Feed plans
 Breeding plans
 Farmer field schools – model farms
 Strengthened hub management
 Processor Led Partnerships
Brooksid TOTAL
NKCC e Buzeki
No. of extension SPs engaged by the
124 32 42 198
DFBA
No. of extension service providers
290 208 438 937
trained by EADD
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 240 96 60 396

No. of FFS established 100 72 12 184

 ANIMAL HEALTH SERVICE MANAGEMENT AND GOVERNANCE
PROVIDERS OF DFBAS

Processor Led Partnerships Processor Led Partnerships

TOTAL
TOTAL
NKCC Brookside Buzeki
NKCC Brookside Buzeki
No. of DFBA staff hired 295 154 152 601

A veterinary doctor
29 16 6 51 No. of CP staff trained 295 154 152 601
engaged by the DFBA
No. of DFBA Board
110 64 25 199
members trained
No. of AHAs 132 46 28 206
No. of DFBA review
110 480 25 615
meetings done
No. of AHAs and Vets
132 48 28 208
equipped No. of hub managers
86 54 15 155
trained
No. mini dairy labs Dairy management
20 8 5 33 22 17 6 45
established software installed

No. of Agro-vet established 51 29 15 95

No. AHAs, Vets
financed with Motor 132 48 28 208
No. of agrovet staff trained 310 126 75 511
bikes

No. of FSAs established 24 9 5 38

No. of routine
vaccination carried 117 91 55 263
No. of FSA staff trained 118 36 21 175
out
 Processor Led Partnerships
TOTAL
NKCC Brookside Buzeki
No. cows registered 238,335 82,582 50,181 371,098
No. of cows on performance
24,670 8,258 7,527 40,455
recording
Total artificial inseminations
393,095 82,276 29,918 505,289
performed
Number of DMG owned AI services
488 22 10 520
(Village bulls)
No. of active AISPs in the DFBA 130 39 18 187
Number insemination performed
388,765 100,748 28,422 517,936
"conventional"
Number of AISPs linked 130 39 18 187
DFBA equipped with AI kits 22 16 5 43
Number of AISP equipped with AI kit 130 39 18 187
Number of AISPs trained 130 39 18 187
 Processor Led Partnerships
TOTAL
NKCC Brookside Buzeki
Identify women and youth for active participation
in the dairy values chain
No of youth groups registered 936 222 125 1,283
No of women groups registered 957 333 188 1,478
Train women and youth on business opportunities
Identify financial institutions and link them to
organized women and youth groups
No of financial Institution identified 10 10 10 10
No of youth linked to access financial services 7,646 666 1,063 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 66 88 25 179
No. of women operating cottage industries 945 2,013 1,550 4,508
No. of loans for dairy
equipments:

milking machines 291 134 113 538

satellite coolers 34 23 10 67

Milk tanker trucks 14 6 3 23

 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
 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
 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 2030.
 The growth in per capita milk is projected to decline from 4.92% between 2010
and 2015 to 2.32% between 2025 and 2030. 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 12.76 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 2010. 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.
 Human population Milk demand Per capita milk consumption
Year
people Rate %* (Litres) Rate %* (Litres) Rate %*

2005 36,097,000 2.60* 3,299,266,000 8.13 91.4 5.54*

2010 40,483,000 2.32 4,500,000,000 5.84 111.0 3.85

2015 45,513,400 2.37 6,430,593,195 7.40 141.0 4.92

2020 49,705,400 1.78 8,448,150,000 5.61 170.0 3.77

2025 53,897,400 1.63 10,556,587,691 4.56 196.0 2.88

2030 58,089,400 1.53 12,760,000,000 3.86 220.0 2.32

 Dairy Master Plan (2010)

 Year Milk projection (000) at varying Milk projection (000) at varying high
moderate growth rates growth rates

Milk (000) Growth rate (%/y) Milk (000) Growth rate (%/y)

2005 2650 2 2782 3

2010 3071 3 3385 4

2015 3736 4 4320 5

2020 4769 5 5781 6

2025 6382 6 8108 7

2030 8092 7 10621 8

 Dairy Master Plan (2010)

 14 Supply_Medium grow th  Therefore satisfying
12 Supply_High grow th the targeted 220
litres per capita milk
milk (billion litres)

10
Demand targets

8
consumption by
2030 requires
6
sustained higher
4
growth rates above
2
2010 2015 2020 2025 2030 3%.

 Dairy Master Plan (2010)

 2007 2008 2009 2010 2011

Annual Processed
423,110,868
(Kg) 398,511,387 406,530,673 515,745,676 548,996,643

Daily Processed
1,159,208 1,091,812 1,113,783 1,413,002 1,504,100

EADD Sites
Annual DD Kg
11,862,172 18,588,344 40,312,943 77,255,341
sold

Daily Sales by CPs

32,499 50,927 110,446 211,658

Proportion 3% 5% 8% 14%
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
 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.
 Investment Number Cost for each Total Cost 70%
Satelite coolers 31 37,000,000 129,500,000 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 27 720,000 4,080,000 2,856,000

AI Tanks-Village Bulls 498 8,200,000 35,859,159 25,101,411

Motor Bikes: Youth 1,107 580,000 110,634,688 77,444,282

Motor Bikes: Women 290 440,000 28,017,536 19,612,275

Donkey/carts: Youth 235 300,000 19,030,929 13,321,650

Donkey/carts: Women 45 200,000 1,800,000 1,260,000

Dairy cows 4,771 480,000 381,689,045 267,182,331

Zero grazing units 4,771 240,000 190,844,522 133,591,166

Pulverizers 2,532 240,000 101,294,562 70,906,193

Bio-gas 2,386 420,000 166,988,957 116,892,270

Fodder establishment 19,958 90,000 299,367,096 209,556,967

Total 36,704 1,573,906,494 1,101,734,546

US $13,923,968
 Investment No. Cost for each Total Cost (Kshs.)

FSA 6,000,000 21,000,000

21
Agro vet 1,920,000 15,360,000
48
Satellite Coolers
19,500,000 38,500,000
5,000 capacity 11
Satellite Coolers
17,660,000 91,320,000
3,000 capacity 24
AI Tanks- Main 16,320,000 17,360,000
19
Milk Tanker 58,300,000 107,300,000
36
Totals 290,840,000
US $ 3,421,647
 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 48,348,169 124,636,040

US $ 1,519,952
 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
 Stakeholder
Institution On-going programs /activities
category
Public sector Ministry of Reforms including matching Ministries and parastatal
Livestock bodies such as privatization of dairy training school,
development extension & Training (KDB & Districts level collaborations)
Multilateral International Supporting development of smallholder dairy program
development Fund for (SDP) targeting farmers in the same locations as EADD.
partners Agricultural Support in increased production, access to markets and
Development training of milk traders.
(IFAD), a UN
agency
Farmer Org Kenya Dairy Leadership & Technical support
Farmer Investment and capital formation – towards value
Federation (KDFF) additions and services that enhance farmers productivity
Bargaining power – initiating long term partnership with
processors
 Stakeholder
Institution On-going programs /activities
category
NGO SNV SNV is implementing a dairy program ( Kenya Market-led Dairy
Netherlands 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
Stakeholder
Institution On-going programs /activities
category
Private Sector Processors (NKCC, Central to Kenya rapid up-scaling
Buzeki, Brookside, strategy
and Sameer)
Increase farmer productivity through
interventions in extension

Milk Markets
Banks 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)
 Targeted Investor Type of Partner Area of intervention Potential USD Remarks
Organization Amount
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 Parastatal Agric- DFBA, Farmers & FSAs 2.4 (Kshs.200 M) Complementary Committed
Corporation Financing Bank
Dyer & Blair Private Equity Venture capital arrangers 1.0 Investment Keen

Total Potential Co-funding ??? 8.15

Total Complementary Funding 11.2

Thank You