Early on in the year, a lot of attention was given to the crisis in the Kenyan dairy sector, especially by the media. This situation though extremely unfortunate is not unique. It has been occurring in Kenya for many decades, yet it appears that the dairy industry and its key stakeholders, who include Government, farmers and processors, continue to be reactive in addressing the issue only when it arises, rather than group together as an industry and find a collective, sustainable and long term solution to this recurring situation.
Globally the dairy industry is cyclical, and Kenya is no exception. The milk supply has periods of surplus and shortage, which occur year after year, and every couple of years extreme conditions are experienced which amplifies the raw milk supply curve resulting in the desperate shortages and then ‘floods’ of raw milk, as we recently saw in Kenya. It needs to be mentioned that it is difficult for the dairy industry and in particular the processors, to plan for the periods when these extreme conditions occur. However, there needs to be an awareness and acceptance from the stakeholders that this will happen every few years, and as an industry it is crucial to work together to deal with the situation.
This problem is a recurrent issue that is dealt with in many countries by addressing the issue as an industry from two angles. Firstly, it is necessary to try and secure a consistent supply of raw milk through ensuring good relations between farmers and processors, training farmers in animal husbandry and hygiene as well as offering extension services, develop more ‘zero’ grazing farms and ensuring milk is channeled into purposed value-add structures. This will secure the income of the farmers, even if they receive a slightly lower price, their cost base remains the same yet they will receive a higher income due to the additional and consistent volumes of raw milk supplied to the processors.
Secondly, it is necessary to ensure consistent supply of processed and packed products to both local and export markets, through packing and storing processed milk into long life products such as UHT (Ultra Heat Treated) milk, milk powder and cheese during the surplus periods, and then selling these stocks during the periods when raw milk availability is lower. In doing this we must carefully consider the cost implications of converting the raw milk into powder first and then reconstituting it back into processed and packaged milk, essentially a double process of removing the liquid out of the raw milk and spray drying the milk solids, and then adding back the water and mixing it with the powder to ‘recreate’ milk. In my view it is would be simpler and less costly to convert the raw milk directly into intended long-life end products rather double or triple process it in a country where energy costs are so prohibitive. Since over 90% of milk in Kenya is consumed in liquid form it would appear more prudent to invest in various long-life fresh-milks – primarily UHT and “sterilized”, store it and sell it, when there is a lack of sufficient raw milk for processing.
In addition to this, it is important to ensure that there is a consistent demand for the processed and packaged products. This is only possible when it is sold at an affordable and competitive consumer price which in turn guarantees that the consumer will have continuous access to a hygienic product … everyone benefits.
This is how it works in almost all countries that have a strong dairy sector, as it is about a win-win scenario rather than a win-lose which is the way it works in Kenya, i.e either the processors win by getting a lot of raw milk and the farmers lose due to a lower raw milk price, or the farmers win when there are shortages of raw milk sold at higher prices and the processors lose as they don’t get sufficient raw milk to satisfy the market demand, therefore losing out on valuable profit.
As long as this issue is not dealt with on an industry level with the involvement of all key stakeholders, and all the major processors and farmers continue to drive their own agendas, the current situation will occur over and over and over again!
EADD is ready to assist the industry structure and plan its way back into profitable and sustainable path through purposed studies and consultations if there will be takers for the outcome. Let us all contribute to make this country a true land of “milk and honey” and not “spilled milk and sour honey”.