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dairy value chain

Clusters: The power of banding together

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With the dairy sector in a bad shape, experts have advanced reasons for this state of affairs. Lack of teamwork between actors in the production value chain has been singled out.

The best way to work is to create value and share value, says Mr Moses Nyabila, an agribusiness adviser

Fragmentation is the bane of our industry, Mr Moses Nyabila, an agribusiness adviser with over 20 years’ experience in managerial consultancy and public policy advisory, says.

“We don’t operate as an industry. The essence of a team is not only the individual, but also how they perform together. In our sector, everyone is playing on their own,” he adds.

“Because we don’t work together, we are not excellent at anything. As a result, our feed and milk are expensive and of low quality. Our consultants are busy doing other things, while everyone wants to rob the other. It is, therefore, not surprising that our final output is very low quality milk,” he says.

While some parts of the sector are developed others are still operating at pre-industrial level, Mr Nyabila says. “When it comes to processing, we are first world; we’ve built topnotch processing plants with great capacity, but the rest of our operations are pre-War. We are where the US industry was in 1920, when their cows were producing 10 to 12 litres a day.

“Our level of mechanisation is also where the world was pre-War, before the internal combustion engine was invented,” he adds. How can the sector operate like that and expect to grow? To progress, you have to bring the entire industry into modern practices and technologies. Mr Nyabila points out that unless our processors sit down with cooperatives and farmers to plan, we are going nowhere.

If a processor, for example, needs 1,000 litres of milk a day, they should plan with the cooperative and the farmer where the required fodder and quantity, and water, etc., will come from.

“Dairy production actors, marketers and processors must work together as a team,” says Mr Alex Gathii, a dairy consultant and cow signals expert.

“The marketers must create demand for good quality products, he adds, while Mr Cornelius Moss, a dairy technologist, stresses the importance of clustering.

“When you bring farmers together in clusters, you can reduce the cost of producing a litre of milk. The farmers can now think about how to get fodder? Who is going to grow it? How can we reduce the cost of the fodder?” he says.

Mr Nyabila is for processors and cooperatives operating out of joint action plans that connect them and also to the farmer.

These action plans should project feed requirements and what to procure locally and elsewhere. It should also plan for sourcing of things like molasses in bulk.

“We often do things in an ad hoc manner. No planning. You a buy product and come back when you’ve ran out of stock only to find out that the product is not there anymore. You go at a loss on the farm.

“The way we do things needs to shift. The farmer needs to plan, the cooperative aggregates all the plans of the farmers, and then procures the feed. While cooperatives are an important part of the cog, they have often been faulted for poor management and planning. “The idea is to equip the cooperatives with the right people,” Mr Nyabila says.

“If we plan at cooperative level, and the cooperative plans with a processor, you are able to know each farmer’s production; the amount of grazing he does, what the gaps are, in feed, etc. Then you can decide, we will store this amount forage etc,” he says.

This can be done with water as well. There’s no reason why one person will have rainwater collection tanks when another does not have, yet there saccos that can provide loans. A cow will need water, so there’s no question of whether the tank is needed or not.

According to Mr Nyabila, one of the challenges faced by cooperatives is lack of reliable data on members.

“Too many cooperatives operate on estimates that range from five to 15,000 members. They don’t operate on a register. How will they be able to plan for the needs of their farmers if they don’t know how many they are?”

With cooperatives collaborating with the farmers, they can procure materials at the right time. For example, different raw materials could be 1/5 of the cost in the rainy season compared to drought. They, therefore, can get huge savings. Cooperatives can also use the right financial instruments such as getting into forward contracts that can then be funded, where in this case, farmers would be considered too risky. Farmers might not afford to employ experts, but a cooperative can do so.

Processors are able to go to any part of the world and get people able to plan, says Mr Nyabila. According to Mr Gathii, processors must produce good quality products and practise diversification.

If they can work on product diversification then they can penetrate the market and increase milk per capita consumption.

Mr Gathii says farmers need to work on the quality and production of milk to meet demand.

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According to Dr Dominic Menjo, a food security adviser, there’s no one size fits all on clustering. However, he suggests that a general masterplan that can be contextualized to particular clusters like economic blocs be created.

“We can do it based on economies of scale. If we are to produce silage, for example, we can grow 500,000 acres of fodder on the government land at the coast. If you link it with

SGR and calculate the economies of scale, we could produce it, transport it and deliver to a farmer in Nyanza at a fraction of the cost,” he explains.

Also read: its-time-to-bring-back-kenyas-dairy-sector

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