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.
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.
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
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.
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.
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
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.
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.
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.
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