UNLOCKING VALUE OF SMALLHOLDER DAIRY THROUGH HUB MODEL – CASE OF KENYA

Moses Nyabila – EADD

East Africa Dairy Development Project

Funded by a grant from The Bill and Melinda Gates Foundation

4 year (2008 – 2011) farm-to-table industry development project

Primary objective of doubling incomes of 179,000 small holder dairy famers, transforming livelihoods of 1 million people

Implemented by a consortium of 5 partners led by Heifer International

Currently in 2nd year of a 4 year pilot program implemented in Kenya, Uganda and Rwanda

The Basis for the project

The Problem

East Africa is an agricultural economy Small-scale, resource-poor farm communities

115 million people, half subsisting on less than $1 per day

Women responsible for 80% of food produced in Africa, but have little to show for it

Opportunity•Declining food intake, •Poor education and health services,•Degraded and disappearing grasslands for their herds,

• and little-to-no access to commercial market systems.

Introduction to Kenya dairy sector

4 billion liters of milk produced by 1.2 million farmers annually

Small holder farmers produce 70% of milk

10-15% of production is processed

50-60% of dairy farmers subsist on less than 2 dollars per day

Challenges facing the small holder farmers

Economics = poor efficiencies Fragmentation = majority of small holders on

their own Poor supply of inputs and services No bargaining power No reliable largely informal markets

Diluted government led extension Climate change

Why the hub model? Unlocks potential of rural economies

Attracts investment to rural Africa One stop for collection of quality milk for

processors Contract = assurance of market Access to services and input for farmers More sustainable compared to government

and donor support

The Solution – Transforming Chilling plants to Business Hubs

TRANSPORTERSTRANSPORTERS

TESTINGTESTING

FARMERS

FIELD DAYSFIELD DAYS

FEED SUPPLYFEED SUPPLYAI & EXTENSIONAI & EXTENSION

VILLAGE BANKSVILLAGE BANKS

OTHER RELATED MEsOTHER RELATED MEs

HARDWARE SUPPLIERSHARDWARE SUPPLIERS

CHILLING HUBCHILLING HUB

How Farmers pay for Services through the Business Hub

TRANSPORTERSTRANSPORTERS

FEED SUPPLYFEED SUPPLY

AI & EXTENSIONAI & EXTENSION

HARDWARE HARDWARE SUPPLIERSSUPPLIERS

CHILLING HUBCHILLING HUB

FARMERS

VILLAGE BANKVILLAGE BANK

SERVICES SERVICES & INPUTS& INPUTS

Examples of success:

Tanykina Dairy•Milk Chilling•15,000 litres/day•3,500 farmers Muki Dairy Co-operative

•Milk Chilling•25,000 litres/day•2,500 farmers

Sabatia Dairy •Chilling•9,000 litres/day•2,000 farmers

Wakulima Dairy Ltd.•Milk Chilling•22,000 litres/day•5,300 farmers

$6.3m p.a.$6.3m p.a.

Over Over 70,000 70,000

Liters DailyLiters Daily

Over 13,000 Over 13,000 farmersfarmers

Requirements for successful hub

Commitment by farmers and government

Corporate approach to management

Collaboration with suppliers

Start up support by skilled NGO or donor

We are looking for partners for scale up phase1. Governments2. Processors3. Suppliers

www.eadairy.org

Thank you!