KENYA – The Kenya Dairy Board (KDB) has released a detailed report shedding light on the cost of milk production across various regions of the country.
The study, conducted in 2024 by Tegemeo Institute of Agricultural Policy and Development , builds on previous research conducted in 2020 and aims to provide critical insights into the dairy sector’s cost structure.
With dairy being a significant sector for Kenya’s economy, this study aimed to formulating data-driven policies that will support dairy farmers and improve the sector’s competitiveness.
According to Dr. Andrew Karanja, the Minister of Agriculture and Livestock Development, the primary objective of the research was to identify the key cost drivers in milk production, with the hope of reducing the overall cost of production and increasing farmers’ profitability.
The study was conducted in 25 counties, mainly in the western, central, and southeastern regions, which account for 74% of the country’s total milk production.
Notably, the study also included five additional counties compared to the 2020 study, thereby providing a more comprehensive picture of the dairy sector.
Rising feed costs contribute significantly to dairy production expenses
One of the main takeaways from the report is that dairy production in Kenya remains profitable, though costs remain high, primarily due to the escalating prices of feed.
The study indicated that feed costs account for between 43% and 58% of the total cost of milk production, making it the largest cost driver.
Other significant cost factors include labor and animal health management, particularly in the open grazing systems where the management of herd health and breeding also contributes to a considerable portion of costs.
The study also identified a significant variation in milk yield across different production systems. Zero-grazing farms, where animals are fed exclusively on harvested fodder and feed concentrates, yielded an average of 3,600 liters of milk annually per cow.
In contrast, open grazing systems, where cattle are allowed to graze freely on pasture, produced approximately 2,165 liters annually per cow.
This disparity highlighted the productivity gap between different farming practices, with zero-grazing systems showing more efficient milk production, though they still fall short of global competitiveness in terms of milk yield.
Additionally, the report revealed that the average price of milk, paid mostly by dairy cooperatives, ranged from 37 to 48 Kenyan Shillings per liter, with an overall mean price of 43.5 Ksh per liter.
While the prices are competitive within the local context, they are not sufficient to cover the high production costs in some cases, especially for smallholder farmers who are most vulnerable to cost fluctuations.
Recommendations focus on improving milk yield and cost management
To address these challenges, the Kenya Dairy Board’s report offers several recommendations aimed at reducing production costs and improving sector sustainability.
One of the key suggestions is to focus on improving feed production and efficiency. The study found that many farmers are either purchasing feed or producing it on their own, with feed concentrates accounting for up to 30% of the total cost for zero-grazing systems.
For open-grazing systems, the report emphasized the need for better pasture management and the development of fodder banks to stabilize feed supply and costs.
Furthermore, the report stressed the importance of enhancing labor efficiency through training and the adoption of better herd management practices.
On a broader scale, the report advocates for the establishment of a formula for calculating a fair and sustainable producer price of milk, taking into account the cost of production, labor, and other critical factors that influence the dairy farming business.
The report also examined model farms that demonstrated the best practices in dairy farming. These farms, which had larger herd sizes and employed advanced management practices, showed higher milk yields.
However, the costs associated with these farms were higher, largely due to investments in infrastructure, pasture development, and labor.
Nonetheless, the study found that while the cost structures were similar, the profitability per liter of milk produced was higher for these model farms, suggesting that proper investment in farm infrastructure can lead to greater efficiency and higher returns over time.
In conclusion, the report’s findings provided valuable insights into the core challenges facing farmers, highlighting the need for targeted interventions in feed production, labor efficiency, and overall cost management.
The Kenya Dairy Board, together with the Ministry of Agriculture, is expected to use this data to inform future policy and initiatives aimed at improving the sustainability and profitability of Kenya’s dairy industry.
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