KMT Livestock Case Study

Pathways To Systemic Change in Kenya’s Livestock Sector

Livestock is a significant part of the global economy, contributing to economic growth, poverty reduction and nutrition. The sector contributes 40% of global agricultural output and supports the livelihoods and food security of almost 1.3 billion people, including 500 million pastoralists.2 3 For these pastoralists, livestock provide income and employment, a store of wealth, resilience to shocks, food security, as well as in addition to holding cultural significance.

The livestock sub-sector is a significant player in our economy which must be enhanced to create more wealth and jobs for our people. A time has come for us to adapt our cultures to the needs of today. We must embrace new technologies in order to upscale our farming for quality production, if we are to survive and compete in the global market.

UHURU KENYATTA, PRESIDENT OF KENYA, 2018

Livestock is a fundamental part of life for the world’s poorest

Growing populations, rising affluence and urbanisation are translating into increased demand for meat products, particularly in developing countries. Global demand is projected to increase by 70% by 2050, to feed a population estimated to reach 9.6 billion.

Consumer preferences are also changing. Higher incomes in emerging markets are increasing demand for new meat products and higher food safety standards, whilst environmental concerns are leading consumers to avoid harmful chemicals and unsustainable production practices.

Growth in the livestock sector has the potential to help Kenya achieve its SDG goals

Whilst livestock is globally important, it is fundamental to Kenya’s economy. The sector contributes between 10% to 13% of national GDP and employs up to 50% of the agricultural labour force. The importance of livestock is set to rise further, as growing incomes lead to higher meat consumption. For example, demand for beef in Kenya is expected to increase by over 170% between 2010 and 2050.

Kenya’s meat production is predominantly through pastoralists, who are primarily low-income earners, living in ASAL areas, where they have to deal with climate change threats.

KMT’S Approach To Stimulating Systemic Change (2013 - 2020)

Growth in the livestock sector has clear potential for reducing poverty, and KMT has sought to achieve this by stimulating systemic changes in the market

KMT’s identified opportunities

To achieve this vision, KMT have identified three stages of the value chain. Each has its own vision, which has been used to identify opportunities for stimulating systemic change within the livestock value chain. The three stages and opportunities are outlined below:

KMT’s activity in the sector

KMT have been active in the livestock sector since 2013. During this time, they have been flexible in their approach, piloting several interventions in response to identified opportunities. They have focussed on attracting qualified members of staff, including both donor and private sector professionals, that have shown motivation to work to capture the benefits of economic development for the poor.

The following sections outline the pathways to systemic change taken by KMT during that time, focussing on what interventions were run, the impact these had on the market, and what lessons have been learnt in the process. An overview of their activity in the sector is below

Pathways and impact to date

Pathway 1

Improving primary production for pastoralists

Pathway 2

Strengthening the route to market for pastoralists

Pathway 3

Building the capacity of end-market processors and retailers

Pathway 4

Strengthening consumer awareness and demand for higher quality meat

Animal Health Inputs And Services Access

90,000 households +US $31m income

Access to livestock markets

1.5 million pastoralists have improved access to livestock markets

Increased incomes

1.2 million pastoralists with increased incomes from livestock

Investments

US$ 10m in public and private investments leveraged in the livestock sector

Cold chain technology adoption

-14% wastage and 15x revenue

Pathway 1: Improving Primary Production For Pastoralists

Historical context

Despite being the main source of income for Kenyans living in ASAL regions, pastoralism has historically been characterised by low productivity. Whilst there are many reasons underlying this low productivity, the following two historical trends have contributed to persistently constrained growth.

Low access to animal health inputs and information

Formal suppliers concentrate on urban areas, with the perception that pastoralists do not present a market for products. Expanding into rural areas, closer to pastoralists’ migratory routes, is seen
as too expensive, given the sparsity of pastoralists, their frequent migration, and low disposable income.

Pastoralists are exposed to climate events

Pastoralists in Kenya lead a nomadic lifestyle, where livestock are constantly moved cross communal rangelands in search of pasture and water. Pastoralists’ large migratory routes traditionally mitigate risks.

70.2% of pastoralists are not aware of any livestock insurance products

Building local agrovets’ sales networks to improve access to animal healthcare inputs and services

Despite being the main source of income for Kenyans living in ASAL regions, pastoralism has historically been characterised by low productivity. Whilst there are many reasons underlying this low productivity, the following two historical trends have contributed to persistently constrained growth.

Working with insurers and government has pioneered Insurance-Based Livestock Insurance (IBLI)

Previous pilots of IBLI in Kenya provided insurance to pastoralists in a way that relied on significant donor support. With IBLI seemingly successful in other countries, KMT supported the commercialisation of a product under development by the International Livestock Research Institute (ILRI). ILRI had been working on the model since 2008 but had never commercialised the model with a private partner, instead working with government and donors.

Lessons learnt

1. Focusing on businesses with entrepreneurial skills has demonstrated the commercial viability of providing inputs to pastoralists, leading to replication by agrovets and manufacturers.

The input market in Northern Kenya did not show a clear route to expansion when KMT first intervened. However, by selecting businesses that demonstrated clear entrepreneurialism, and who were receptive to trying new models, significant growth has generated interest.

2. IBLI is not commercially sustainable without subsidies from the government.

IBLI is not currently a product that is sustainable without subsidies. This contrasts with the typical types on interventions a market system programme traditionally focuses on.

Pathway 2: Strengthening The Route To Market For Pastoralists

Historical context

Despite being the main source of income for Kenyans living in ASAL regions, pastoralism has historically been characterised by low productivity. Whilst there are many reasons underlying this low productivity, the following two historical trends have contributed to persistently constrained growth.

1. Pastoralists rely on traditional methods of production and local markets

Pastoralists predominantly see livestock as assets to be maintained and expanded, only selling when necessary, rather than when they could get the best price.

2. There is a lack of information in the supply chain

Underlying pastoralists’ inability to interact with formal markets is the lack of market information.18 Pastoralists do not know how to produce cows in a condition that attracts formal buyers and the associated price premiums.

Impacts of lack of information on pastoralist production

Building ranches’ capacity to engage with pastoralists

Piloting livestock access to conservancies with Borana Ranch

In 2016, KMT partnered with Borana Ranch, a ranch that had historically good relationships with
the local community, to trial an approach where livestock from pastoralists could access the ranch for finishing and fattening. At this time, most ranches provided some support to local communities but did not regularly trade with pastoralists, preferring to donate to community projects.

Expanding a ranching model to encourage greater integration of pastoralists

KMT began work with Borana whilst other ranches were not interested in economic integration with local communities. However, after the violence of 2017 and 2018, the model attracted interest from ranches as a way of addressing tensions and reducing the risk of future losses.

Piloting livestock access to conservancies with Borana Ranch

In 2016, KMT partnered with Borana Ranch, a ranch that had historically good relationships with the local community, to trial an approach where livestock from pastoralists could access the ranch for finishing and fattening.

Lessons learnt

1. Pastoralists’ lack of financial education presents a risk to their
continued integration into markets.
2. Grass feedlots are a significant opportunity to intensify production on rangelands.
3. Creating commercial models is reliant on community behaviour and investing in understanding socio-economic norms is important to success

Pathway 3: Building The Capacity Of End Market Processors And Retailers

Historical context

Processors and retailers in Kenya’s meat market do not have the operational capacity required to follow common food safety standards. The modern cold chain for processing is not effectively used, and poor practices during slaughter, transportation and processing leads to high post-harvest losses, up to 14%. For consumers, it means relatively expensive, and low-quality, meat and unsafe meat that has been attributed to various health scares, and a lack of differentiated purchasing options.

Facilitating retailer investments in improving supply chains

KMT supported Tuskys Supermarket Limited, one of Kenya’s largest supermarket chain, to pilot Hazard Analysis and Critical Control Points (HACCP) international food safety standards
as a way of both decreasing losses and strengthening their reputation as a high-end supermarket chain.

Enabling processors investments in meeting international food safety standards

Neema slaughterhouse opened in 2015, with the aim of becoming a local high-quality slaughterhouse. However, it soon found that the low local prices could not justify the cost of maintaining high standards. KMT identified this as an opportunity to illustrate the premiums available to high-quality slaughterhouses.

Increasing industry coordination and investments to improve the value chain infrastructure

With Neema proving the commercial benefits available to those accessing high-value export markets, KMT recognised the potential for cost reduction through coordinated investments from exporters. KMT supported the formation of the Kenya Meat and Livestock Exporters Industry Cooperative (KEMLEIC) which was registered in 2017 as the first association of its kind in Kenya.

Lessons learnt

1. Processors targeting high value export markets were needed to justify investment in food safety standards. This is now translating into domestic improvements.
2. When influential market actors, such as Neema and Tuskys, improve practices, norms in the market can quickly change.
3. As standards increase, there is a high chance of displacement as informal providers are unable to compete.

Pathway 4: Strengthening Consumer Awareness And Demand For Higher Quality Meat

Historical context

On the demand side of the meat industry, consumers in Kenya generally prefer meat from the hot chain, where meat is slaughtered and sold without refrigeration typically the same day. Attributes that are used to define quality by consumers include: taste; freshness / slaughtered the same day; and leanness/ absence of fat.

Increasing consumer awareness to change demand patterns

After multiple years of working to improve the quality of the supply chain, KMT were frequently confronted with the persistent consumer preferences that encouraged retailers and processors
to continue traditional processing. KMT then focused efforts on understanding consumer tastes.

Working with government to implement national food safety standards

The government is reacting by increasing regulation within the sector. Due to its role in organising a sector response, KMT played a role in initiating the idea of a multi-agency task force to convene stakeholders, and has a seat on the task-force to input into regular meetings.

Enabling businesses to compete on quality and increase consumer information

Consumer and regulator pressure led retailers and processors to quickly adapt their behaviour, changing the way they deliver information to consumers. As quality becomes an increasing priority for consumers, it is vital they are educated on how to look for it.

Building an enabling environment for livestock identification

Another tool for increasing consumer information that has seen increased interest after the ‘Red Alert’ scandal is Livestock Identification and Traceability Systems (LITS). LITS has always been viewed as the gold standard for improving consumer information and regulatory implementation, and the State Department of Livestock had been trialling approaches to LITS since 2006.

Lessons learnt

1. The media can be a powerful tool, but must be carefully managed to reduce the risks of panics and incorrect information.
2. LITS can improve the quality of information but needs to be supported by national policies.

Sector Evolution

Since KMT entered the livestock sector in 2013, there has been significant growth. Manufacturers of animal health products have grown, expanding into new counties. Meat exports have risen significantly, focusing on Middle Eastern markets, and livestock insurance has covered over KES 196 million in livestock. At a macro-level, livestock production has increased by 33%, with beef production increasing by 53%, accompanied by increases in both the number of cattle and yield per carcass.

Future Pathways For Systemic Change (2020 Onwards)

a. Continued integration of pastoralists into modernised and climate-smart production systems

Pastoralist communities that have benefitted from KMT models now have better access to animal health inputs and services, whilst being closer to formal markets that provide consistent demand and higher prices. However, there are still constraints to pastoralists’ ability to meet higher production standards, particularly within practices for medicating animals and the end weights cattle can achieve. With increasing pressure for high-quality meat coming from consumers, pastoralists must have the information and tools available to allow them to meet these requirements.

b. Increasing education of consumers on quality meat and best practices, which in turn drives investment in improved quality, traceability systems and cold chain technology

The adoption of cold chain across the meat value chain is vital to reduce post-harvest losses and increase quality of meat. To drive these changes, it is important to educate consumers to demand improved quality meat from retailers and processors.

c. Building sector capacity to commercially produce fodder and manage rangelands while managing environmental impact and adapting to climate change

With better information to pastoralists impacting their ability to meet market requirements, the quality of fodder available to them has been identified as a new constraint. This is particularly experienced in the dry season where pastoralists rely on degraded rangelands that are experiencing increasing droughts

d. LITS is the next step in providing high quality information in the sector

Livestock Identification and Traceability System (LITS) has been repeatedly trialled in Kenya, with these trials consistently failing to develop a commercially sustainable mode. However, in recent years, significant steps have been taken to create a policy and legal framework for national implementation.

e. Fostering increased cooperation and self-organisation

With quality of meat becoming a significant factor for consumers amid the growing meat deficit in the country, there are increasing calls for institutions within the sector to better cooperate and coordinate to drive the needed improvements in quantity and quality, while managing environmental impacts.

KMT Case Study

Pathways To Systemic Change in Kenya’s Livestock Sector

Projected Climate Change And Its Potential Impact On Cattle In Kajiado County

Format: PDF
Size: 3.6 MB

View More Reports

We publish a number of reports and other publication on our website often. You can view reports on the reports page.

Subscribe to Our Content

Follow the latest news, reports, publications and much more from Kenya Markets Trust. Get updates on your email.

Share This Page

Menu