Kenya’s Dairy industry to double in 10 years

By Steve Umidha

Rising demand for fresh and packaged dairy products is broadening the base of Kenya’s modern dairy sector.

Working hard to meet this demand are thousands of milk farmers and producers in the country, while close to 80 percent of these milk farmers are located in the interiors of the country, the biggest markets for milk still exist in town and cities.

Bringing these farmers under the organized sector of the milk cooperatives – commonly known as Saccos, has greatly helped standardize milk production in the country as well improved the quality of milk reaching our homesteads.

And now the growing interest in the processed milk business is seen as preparing players and stakeholders in the industry for an anticipated rise in demand for the commodity, driven by rapid urbanization and incomes growth.

Available information shows that packaged milk consumption rises and falls from the performance of the broader economy, highlighting the fact that rich and middle- income consumers in urban centers are the major targets of dairy products.

Industry data further shows that processors of fresh milk such as Brookside and New Kenya Co-operative Creameries (KCC) can expect gross margins of between 15 percent and 20 percent year to year and the figures are expected to grow in the next decade judging by the current trend in the demand.

The two companies, arguably major players in the industry make a net profit of at least Sh13 from every litre of milk they buy from farmers at Sh38 as at February this year, with wholesale prices standing at an average of Sh88 per litre, taking retail prices to Sh 96 per litre after the retailers have added their trading margins.

Githunguri Dairy Farmers Co-operative and Sameer Group which acquired Daima milk business from Adarsh Developers are some of the active processors in the country among others firms.

The availability to access to bulk coolers and latest milk processing technologies that convert milk into other dairy products with a longer shelf life have not only reduced losses due to the perish- ability of milk but also opened up new markets for surplus milk production.

The statistics also show that the consumption of processed milk has been rising since 2011 having peaked at 549million, compared to the previous years.