The Sector

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  • Kenya has the second largest market in the dairy industry in Africa.

The Market

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  • Per capita milk consumption is estimated to be at 110 litres and projected to grow to 220 litres by 2030.
  • Of the marketed milk, an estimated 20% is processed and packaged through formal channels while 80% is traded through the informal milk market – 5% of which is processed and marketed through milk dispensers located at strategic outlets.
  • Kenya is a mainly liquid milk market with growing yoghurt, cheese and butter demand.
  • Milk and milk products are largely locally consumed, with some processors exporting minimal quantities to 9 African counties.
  • Only 10% of the estimated 300 concentrate feed millers are producing quality feed.

The Cattle

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The Farmers

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  • The sector is attracting medium scale commercial farmers.

Supply Trends

  • Increased demand for milk is encouraging farmers to seek ways to improve milk productivity
  • Dairy farmers are getting organized outside the traditional Co-operatives
  • Informal milk traders becoming organized and seeking recognition
  • Investment by County Governments in dairy has increased accessibility to cooling facilities
  • Dairy farmers are seeking access to insurance and financial support

Demand Trends

  • Urbanization and population growth leading to increase in milk consumption
  • Consumer demand for full cream milk is driving the growth of milk dispensing
  • Increased accessibility to milk through milk dispensers
  • Increase demand of dairy value added products leading to demand of quality milk
  • Increased milk demand due to increased powder milk processing capacities

Key Sector Challenges

  • Seasonal production due to poor planning on fodder production and conservation.
  • Feed availability and quality is a key issue in the industry.
  • New regulations have banned trade of raw milk through the informal markets due to safety concerns relating to alleged adulteration and contamination.
  • The cooperative movement, a key platform for milk marketing, has been facing management challenges and most cooperatives have been rendered defunct.

Current Average Farmer Gross Profit Earnings

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Raw Milk Market Segmentation

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  • Facilitating farmers’ access to quality and affordable concentrate feed and fodder by addressing key production and marketing constraints.
  • Supporting and facilitating the development of alternative milk marketing channels that meet set safety standards at affordable prices.
  • Supporting dairy hubs to engage professional management services for profitable business.

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2,500 score (according to Herfindah-Hirschman Index) of competitiveness of Kenya’s dairy processing companies.