KMT Livestock Case Study
Commercialising and Professionalising the Management of Dairy Hubs
The value of Kenya’s dairy industry is estimated at USD 1.4 billion, with more than two million households believed to be involved at the production level of the value chain, many of whom are rural poor. For these households, dairy is the leading source of agricultural income contributing to over 20 per cent of household income.
Despite 80 per cent of all milk sold coming from the informal dairy value chain, working with the formal sector offers the greatest opportunities for sustainable value-creating enterprise development.
However, there remain systemic constraints related to the interconnectivity of various service markets feeding into dairy as well as how the process of formalisation is evolving. With this, there is a need to work with dairy hubs to improve their effectiveness and efficiency in business operations. The major focus is on business practices that have particular implications for farmers.
Constraints facing market actors along the dairy value chain:
- high cost of production
- low adoption of appropriate dairy production technologies
- lack of access to markets
- poor infrastructure
- poor milk quality
- inconsistent production
In 2016, KMT and PKF entered a partnership aimed at developing Kenya’s dairy sector through commercialising and professionalising the management of dairy hubs.
The aim of the project was to unlock dairy hubs potential by transforming them into thriving businesses that offer affordable quality services and better prices to farmers. PKF developed a hub management package that sought to unlock the potential of dairy hubs and eventually that of smallholder dairy farmers.
When PKF started implementation, three business models were developed and adopted. Six dairy hubs were engaged after taking them through a rigorous selection criterion.