KMT has contracted SBO Research to conduct a study on the Informal Milk Markets in Kenya.
KMT Dairy Sector Lead, Dr. Chris Silali (left) and SBO’s Boniface Ngahu excahnge signed contract documentation for a partnernership in carrying out a research on Informal Milk Marketing Channels.
This follows a Sector Review (Deep Dive) KMT recently conducted on its Dairy Sector work, to critically evaluate sector interventions in relation to the wider potentials of the sector. The Deep Dive brought about a number of market systems gaps that need to be addressed, among them the informal milk marketing channels that meet set safety standards at affordable prices.
The informal milk markets are largely affected by the on-going discussion on milk marketing and the new regulation banning raw milk trade. One critical factor, which is often overlooked, is that markets are consumer driven with a preference for raw, full fat fresh milk at lower price point..
The informal milk trade brings around £700 million/year into the rural areas and this has a significant ripple effect in the rural economy. Some farmer groups and traders are also developing small businesses around existing coolers or pasteurizers, serving the immediate market through milk dispensers, at a price point acceptable to customers. Where these businesses are owned and operated by the farmers – farmers and traders get the opportunity to take advantage of some of the value addition and increase the supply of safe and affordable milk. The prices paid by the traders are always competitive at times higher than formal marketing channels
The move to formalize and package all milk traded off-farm (55% of all milk production) has largely been driven by two issues – the belief that informally traded milk is largely contaminated and poses a health threat to consumers, and at times perceived to protect investment by processors. There is need to examine and analyze the implications of increased formalization on price incentive to farmers, production and current markets. As a way of concretizing models of intervention, recommendations and key learnings, KMT is carrying out a field study on the informal milk markets.
The SBO Research will help KMT in:
- Determining the demand and delivery patterns of liquid milk and document the extent to which existing marketing channels (formal and informal), chilling and dispensing structures meet demand.
- Draw a comparison between formal and informal markets, analyzing level of investment, market segmentation and consumer preference.
- Research on current installed processing capacity, any immediate future investments, market share among processors, current product range, export potential and current export market.
- Identify constraints in sourcing of transport equipment, storage, pasteurizing, and dispensing methods currently in use and the investment cost. The research should also draw information from successful models in other countries with informal markets serving smallholder farmers.
- Analyze safety and adverse effects of raw milk consumption on the consumers using hospital data, testimonials and basic pasteurizing methods.
- Analyze current and correct information on informal milk marketing association functionality, capacity to lobby and support their membership and areas of improvement.
This study is expected to propose appropriate informal milk market strategies to ensure effective solutions to safe milk trade in a way that is profitable, viable and fosters business relationships among market players.
Post the research, we will disseminate the validated research results and proposed marketing platform through a workshop for milk marketing, processing and regulatory players.