Dairy supply chains in Kenya show a large variation in terms of size, geographical distribution, degree

of licensing, relative rewards, quality perceptions and long-term potential. A number of critical issues
affecting each point in the value chain and moderating future impact are described below:
  • Input Suppliers tend to be limited in their ability to provide appropriate services to farmers across Kenya. A lack of access to finance and technical expertise severely limits the quantity and quality of services they can provide to farmers. Long distances between input suppliers and the farmers they serve further limits their ability to effectively service smallholder farmers.
  • Small-scale farmers supply more than 80 percent of the total milk consumed in Kenya, obtained from mostly crossbred animals raised on open and semi-zero grazing systems. They sell milk directly to consumers or through local traders, and tend to have a diverse array of access issues, including difficulties obtaining feed, fodder, and water.
  • Informal milk traders are the single most important marketing actor, controlling over 70 percent of marketed milk.
  • Low quality and milk safety pose considerable constraints. Reliable quality testing is virtually non-existent and the equipment used for handling and transportation of milk does not meet the
    minimum food safety standards set by industry regulators.
  • Milk bulking/cooling centers have emerged as important business hubs for producers, minimizing the cost of collecting milk from small, scattered producers by the major processing firms. While there currently are an estimated 200 chilling plants in the country, poor management and a lack of efficient operational systems lead to prohibitive start-up costs and significant losses.
  • Milk dispensing enterprises have emerged as a popular alternative source of milk, providing low-income consumers with quality milk at affordable prices. They present significant opportunities to develop the dairy value chain but require interventions to identify safety issues and facilitate investments in more dispensing units, especially in lower income urban areas.
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