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REPUBLIC OF KENYA

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Dairy Processing and Marketing in East African Dairy Value Chains: Opportunities and Challenges

Michael N.I. Lokuruka, Ph.D.Associate Professor of Food Science, Karatina University, and Commissioner, Public Service Commission of Kenya

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Global Dairy Status and Outlook

Current Global Production about 800 mill MTFastest growing Food sectorAfrica produces about 7-8% of global milk

output (HE VP of Rep of Uganda about 4%)Africa World trade share of dairy products

only 0.2%-Opportunity and yet a ChallengeAfrican output of milk and dairy products

growing (era of “white gold” to 2050)East African Status-better compared to other

African regions but need to do more apparent

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East African Dairy Status and OutlookEast African output of milk about 8

billion liters (8 million MT) about 8% of African output

Egypt is Africa’s leading milk producer-using intensive scientific dairy farming along the Nile (Challenge to Nile Basin Countries)

Kenya is East African leader with declining order of Tanzania, Uganda, Rwanda and Burundi (Uganda likely to overtake Tanzania!)

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East African Dairy Status and OutlookSouth Sudan has best potential

for higher output among EAC block countries

Major dairy products-both short-life and long-life

Include processed milk, fermented products, butter, skim milk, cheeses, milk powders in the declining order by volume

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Opportunities in EA Dairy Value Chains

High populations of 141 mill going to 240 mill by 2025; growth rate across region of 2.6%/annum, so market is assured but what of purchasing power?

Meeting domestic demand is the EAC countries main pre-occupation

Export potential existsHigh unmet demand, <12% of

production processed even in Kenya the region’s highest producer of milk

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Opportunities in EA Dairy Value Chains

No restrictions on milk consumption except for Hindus and few strict-vegetarians, who don’t consume milk

High and increasing dairy herd numbers

Improving animal husbandry, breeding and health practices

Liberalization of the dairy sector-Governments are facilitators virtually no product or ingredient price controls exist currently

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Opportunities Contd. Manpower needs assured-training of

dairy technologists and business courses in local Universities

Potential of Intra-African and Africa-East trade due to non-tariff barriers in Europe, USA and other Western democracies

Increasing financial service providers for sector support (MFIs-SACCOs, etc.)

Technology and Science support improving-zero grazing, AI, disease control, processing; etc.

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Production ChallengesInadequate and low quality local

feeds Poor farm and off-farm business

management practicesHigh milk and product losses due

to lack of cold facilities on farm, and in transit to processing facilities

Low deliveries-low installed processing capacity

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Production Challenges contd. Inadequate and expensive

veterinary extension servicesLow yielding dairy herds-breeding

strategyLow uptake of financial services-

expensive, collateral, etc. Growing scarcity of agricultural

landIntensive systems need scientific

knowledge application-extensive favored

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Processing challengesInadequate installed processing

capacity-due to expensive imported machinery

Inadequate dairy technologists and food engineers

Waste of by-products, e.g., whey; loss of value and environmental pollution

High energy costs-expensive products, low margins

Processing machinery imported and is expensive

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Processing challenges contd.

Low milk deliveries to processors-due to low prices paid to farmers for deliveries; Hawking milk

Delayed payments to farmers by processors vs. COD by hawkers

Poor quality and inadequate water for processing

Restricted consumer product choices-low diversification by processors

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Marketing opportunitiesMilk has wide acceptance as food among

many consumersIncreasing marketability potential for other

species milk -goat, sheep, donkey, camel, llama, etc.

Increasing cold facilities for end-products in transit to market or at storage waiting for sale

Improving quality of dairy products-raises demand

Knowledge of health-giving properties of milk and dairy products-raises and maintains demand

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Challenges in dairy marketingLack or inadequate cold preservation

facilitiesLong distances between processing

facilities and markets-loss of products, expensive products

Poor rail or road infrastructure between producers and markets

Lack of markets-purchasing power, Mismatch of product and consumer

needs-characteristics, type of product, quality, price

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Recommendations for EA dairy value chain growth

Invest in training of dairy scientists and technologists, food engineers, business savvy entrepreneurs

Invest in dairy research appropriate for region

Raise production, improve infrastructure, quality and extension services

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Recommendations for EA dairy value chain growth

Keep energy costs low and use green renewable energy

Enforce best business practices, decentralize regulatory services and enforce demands by Importers

March consumer needs, purchasing power, with products produced and marketing

Value of Extension Services-knowledge and information transfer, sharing, policy implementation

Sustainability of the Study Area, Food Production and Enterprise-Schools, Consumers, Farmers

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AcknowledgmentsThe Host Country Committee of

ALICE 2014Special gratitude for Mr. Peter

Ngaruiya-Executive Director of ESADA and Programme Leader for ALICE

My employers the PSC for permission to be here

Audience for taking time to listen

QUESTIONS

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Thank You