THE LESSONS AND STRATEGIES

FOR NCE AND CE PERIOD FOR

EADD KENYA

Augustine Cheruiyot & Team

Introduction to Kenya dairy sector

Kenya produces an estimated 5 billion litres of milk

per annum by 1.5 million farmers annually of which

over 2.5 billion litres is marketed.

Smallholder farmers produce 70% of milk

20-25% of production is processed

Milk glut in some season continues to be a

challenge to farmers

EADD farmers does less than 5% of what is

marketed

High expectations from the Gov’t & partners from EADD project

Achievements Highlights

110,480 farmers registered with 80,637 being registered

suppliers

An average LPD passing through the CPs is 213,605 for 2011

Extension departments established in all CPs

37,587 AIs by Sept 2011 bringing the total to 108,267

91,664 acres of improved fodder established

Tanykina Community Health Plan & the Feed plant launch

Good partnership with the banks

CFCstanbic financed Kabiyet (Kshs.6.5m) & Metkei (Kshs.9m) to

acquire milk tanker trucks, Tanykina (Kshs.10million) to buy 4

satellite coolers

Cooperative banks – Kshs.3m for Olenguruone for satellite

cooler

Taifa SACCO finance Kieni (Kshs. 6.25m) to get a milk tanker

truck

Loans takeover by banks in 8 CPs – 5 to sign before the

close of the year – Sot, Sirikwa, Kokiche, Tinderet &

Cherobu

Key Celebrations!: Tanykina Building, FSAs, Satellite & Gala

Taragoon Dairies

Out of the 110,480 registered farmers, 59,187 (53.5%) are in our

database and 33% are female with 51% (10,030) female headed

households.

Registered farmers in data base 53.5%Female 33%Youth 32%Lives <5 km from hub 32%Lives <10 km from hub 60%Own < 5 acres 68%Own < 5 cows 56%Female headed households 51%

Sampled average cow productivityNo. Site Number of Cows Grand total Average per day /cow

1. Kabiyet 48 268.1 8.6

2. Tanykina 56 250.4 8.1

3. Olkalou 37 311.2 10.4

4. Kieni 8 292.3 9.4

5. Kapcheno 40 163.6 5.3

6. Kokiche 10 302.2 9.7

7. Cherobu 21 259.0 8.4

8. Sot 15 285.6 9.2

9. Siongirio 18 256.7 8.3

10. Lelan 14 217.5 7.3

267 260.7 8.5

Low milk quality Initial TVC over 20m! - Quality Intervention

Dairy CPQuality training(Staff,

Farmers, BDS)

Sop /Quality

audits

Satellite

coolers

MILK

TANKER/TrucksT.V.C (in million)

Metkei 180 3 0 1 0.570

Lelan 20 2 0 0 1.1

Chepkorio 40 2 0 0 1.7

Cherangany 34 1 0 0 1.8

Tanykina 240 2 3 0 1.2

Kabiyet 180 3 2 1 1

Kipkelion 120 1 0 0 1.3

Kaptumo 80 1 0 0 1.6

Tinderet 56 0 0 0 1.9

Siongiroi 64 2 0 1 0.5

Sot Dairies 48 1 1 0 1.2

Cherobu 86 1 1 0 1.4

Kokiche 46 1 0 0 1

Olenguruon 26 1 1 0 1.4

Kieni dairy 120 1 1 1 1.1

Ol Kalou 46 1 0 0 1

By Sept. 2011; 15 out of the 19 active

DFBAs reported positive cumulative profits

for the period.

o Revenues US$ 20,088,618

o Farmers payment US$ 17,591,412

o Net profits US$ 389,933

o Milk intake Kg 54,261,981

o 33% of active suppliers are women

Chilling plant Business Highlights 2008 - 2011

CP Results

Summary 2008 2009 2010

By Sept.

2011Total

Chilling plant

Sales US $3,687,905 6,382,000 11,537,217 20,088,618 41,695,740

Money paid to

farmers US$3,252,339 5,616,753 10,027,429 17,591,412 36,487,933

Total Milk sold by

farmers Kg11,862,172

18,588,34

440,312,943 54,261,981 125,025,440

Net Profits US $ 44,675 163,672 463,681 389,933 1,061,961

Month by Month LPD 2011

-

50,000

100,000

150,000

200,000

250,000

300,000

Jan Feb Marc April May June July Aug Sept

Litr

es

Months

LPD 2011

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

Litr

es

Cooling Plants

LPD 2011 by CP

0%

5%

10%

15%

20%

25%

30%

35%

40%

Jan Feb Marc April May June July Aug Sept

Proportion of active women milk suppliers

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

Jan Feb Marc April May June July Aug Sept Oct Nov Dec

Ksh

s.

Price Spread

2010

2011

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

Jan Feb Marc April May June July Aug Sept Oct Nov Dec

Kgs

Annual Month by Month Milk Intake

2009

2010

2,011

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

Dec-10 Jan Feb Mar April May June Jul Aug Sep

Total Number of shareholders

Women shareholders

FSA Shareholding 2010-2011

FSA Key Indicators Total

Total Number of shareholders 7,828 Women shareholders 2,985 Total shares mobilized (Kshs.) 7,936,518

Shares mobilized by women 2,145,344 Total savings mobilized (Kshs.) 283,451,522

Total savings by women 30,254,443

Lessons & Challenges

Loan default by Taragoon – good lessons for all of us!

Governance & Leadership challenges: leadership changes in

Cherobu, Tinderet governance challenge

Sot & Siongiroi turnarounds – Key drivers are management

and full adoption of extension structures in milk mobilization

Glut – Presently processors give CPs max. limit they should

deliver to qualify for premium prices

Partnership – NKCC & Molo milk, Tetrapak, CDF, CFC bank

NCE & CE Goal and

Strategies

Our Goal – an LPD of 311,841

Focus on enhanced business growth and

competitiveness of all the dairy / milk chilling

plant enterprises and structured dairy business

diversification to develop a strong foundation for

business development services (BDS) and

sustainable extension services

311,841 LPD

Business Development & Marketing

Hub development

Marketed volume and cold chain development

Ownership and control

Management systems and

capacity building

Production and Extension services

Farmer Mobilization

Mobilization and DMG formation

Capacity Development on leadership & Group

Dynamics

DMGs collecting

Milk

Breeding and Animal Health

Cow registration, cows on lactation &

performance recording

AI, village bulls, check offs and

calve registration

Active AISPs and training

Active AHAs & vet kitting

Mini –lab establishment

Feeds and Animal Husbandry

CESP engaged and farmer trainings

Field days and farmer exchange visits

Feed plans and pasture establishment

Set up of Agrovet chain and feed processing

plants

Business Development and marketing Improve/ enhance financial health and overall

capital structure of the dairy business;

Enhanced value proposition to farmers – increased

registered suppliers , shareholders and hub related

services

Enhanced value proposition to market / industry

Key Interventions

Enhance daily milk collection and quality

Increase LPD to 314,214 Litres per day

Enhance the chilling capacity through satellite development

Work towards meeting HACCP and ISO 22000

Train Staff and milk handlers on quality

Facilitate milk quality improvement in collection centres by

equipping them with testing equipments

Promote sale of quality milk

Develop incentives to increase milk quality

Set up advanced quality laboratory

Strengthen farmer ownership and control of business

Increase share capital mobilization through share contribution

and deduction from milk sales

Regular farmers meetings with consistent audits and AGMs

Train DMG leaders on Management

Enhance the capacity of DFBAs by improving its

management systems and operations

Hire competent general managers staff as business expands

Establish control systems within the businesses

Board and staff trainings

Improve efficiency by installing and upgrading management

information systems

Diversify business activities (Hub develpment)

Agro-vet services commercially launched

FSA/Sacco launched

Streghthen BDS service providers

Develop financial services linkages

Establish a feed plant for manufacturing concentrates

for the three DFBA's

The Solution – Transforming Chilling plants to Business Hubs

TRANSPORTERS TESTING

FARMERS

FIELD DAYS

FEED SUPPLYAI & EXTENSION

VILLAGE BANKS

OTHER RELATED MEs

HARDWARE SUPPLIERS

CHILLING HUB

Extension and animal Health

The project will endeavor to strengthen the

DFBA entrenched extension services and

BDS services to ensure a sustainable,

effective and predictable milk supply

through the DMGs - Enhance value

proposition to the farmers

Position DMGs as sustainable forums for

training and milk collection

Farmer, DMG registration and capacity

building.

Dairy cow registration and performance

recording

Farmers trainings through DMGs

Exchange visits & Field days

Animal health service sustainably entrenched

within the extension department

Engaging and kitting of the AHAs, AISPs &

Vets with starter kit and motorbikes

Establishment of Mini labs

Disease control: Vaccination, Tick control

Breeding and genetics

There are four key challenges related to

breeding in Kenya:

Low uptake – nationally it is 7% and 18% in

EADD sites our target is to increase this to 30%

level

AI efficiency – level of repeat is still high in some

areas

Cost of AI is still high

Stunted calves

Establish a sustainable breeding delivery system

within the DFBAs

Decentralization of AI delivery structures through

equipping DFBAs &

Promote localized access by equipping DMGs

with breeding equipments in form of "village

bulls".

Promote check-off for all players – AISPs &

Farmers

Establishing Services: Equipping AISPs

Equip the farmers with the knowledge and

capacity to AIPS for efficiency

Track and report calves born via CESPs, DMGs and

AISPs by registration

Through DVOs office monitor and track the performance

of each AISP using available information from the CP

Promote continuous refresher training for AISPs to

increase their level of efficiency

Mr & Mrs Kiprono from Chepkorio, born 6thJune 09

Mr & Mrs Kogo of Tanykina Dairy celebrate the birth

of twin calves

Mr & Mrs Francis Warui, Olkalou

Calve management improvement

Production of simple SOPs on calve management

Transform AISPs to go beyond insemination and

calve registration but also get involve in calve

management

The outcomes!

Fodder Interventions

Seasonality and fluctuations in milk

production mainly due to seasonality in

the availability of feed during the dry

season and milk gluts during the rainy

season.

Develop Feed plans for each site

Determine feed availability and gaps during

the dry and wet season using the FEAST Tool

Use the tool to generate feed plans for each

site

Develop and promote Water harvesting

technologies in each cluster

Initiate cluster DFBAs feeds stakeholder

platforms

Facilitate and strengthen network and

linkages among stakeholders in each

cluster and the feeds industry

Develop and promote commercial feeds

production and delivery

Develop feed storage facilities at the DFBA and farm

level

Facilitate trainings at the DMG and farmer level in

preparation for supply contracts with the DFBA

Facilitate fodder markets and marketing, contractual

fodder production, training interventions etc

Gender and Youth

Lack of access to productive resources by women and

you to enable them participate actively in the dairy

value chain.

Identify women & Youth Led DMGs for formal registration and

training

Enable over 8,000 women to access loans to acquire productive

asset through linkages with financial institutions and through their

established FSAs/SACCOs.

Promotion of specific activities that have direct benefits to

women and youth i.e. Biogas promotion, and motorbike kitting.

Chilling Plant Projected BEP Key areas of focusKabiyet Dairies Apr-12 Farmer value proposition - Extension strengthening

Kapcheno Dairies

Metkei Multipurpose Aug-13 Hub dev’t and financial management

Chepkorio Dairies May-13 Hub dev’t, governance & Leadership and financial management

Lelan Highlands Apr-13 Hub dev’t, governance & Leadership and financial management

Sirikwa Dairies Feb-15 Hub dev’t, governance & Leadership and financial management

Sot Limited Mar-14 Financial management & IT

Kokiche Limited Apr-15 Hub dev’t, governance & Leadership and financial management

Cherobu Limited Jun-13 Governance & Leadership & Hubs Devt

Taragoon Dairies Feb-15 Hub dev’t, governance & Leadership and financial management

Tinderet Dairies Aug-15 Hub dev’t, governance & Leadership and financial management

Lelchego Company

Kieni Dairies

Siongiroi Dairies Sep-12 IT & value proposition to the farmers

Ol Kalou Dairies

Kipkelion Dairies

Tanykina Dairies Mar-12 Financial management & Mnagament support and hub streamline

Olenguruone Dairies Sep-12 IT & value proposition to the farmers

Cherenganyi Dairies Jan-14 Hub dev’t, governance & Leadership and financial management

Ochobosei Sep-14 Hub dev’t, governance & Leadership and financial management

Muki Dairies

Key partners & stakeholders

Quality : Cold chain

development - value

proposition to the market

• Processors – NKCC, Molo Milk, Daima

& Brookside Dairies

•Nestle & Tetrapak

•KDB, DTI

•Banks – CFCstanbic,

Coopbank & Fina bank,

Amtech

Extension and animal

health• MOLP : Livestock Production &

Veterinary Services department

•Sidai

•KVA

•Banks : Family Bank,

Coopbank, Juhudi K

AI and Insemination • MOLP : Department of Veterinary Services

•KABGA

•KDFF

•SANGOnet

•DGEA

•Banks : Family Bank, Coopbank

•Universities: Egerton & Moi

Feeding •IFAD – SCDP

•CIP- SASHA

•Sidai

•Seed Companies

Gender, Governance &

Leadership and FSAs

•MYA

•Microfinance Institutions – Faulu, KWFT,

Juhudi Kilimo

•Banks – Coopbank, Family Bank

•KIM

•Fethalink - Coopbank

Site/Cluster BUSINESS PRODUCTIONTOTAL

(%)AVERAGE STAGE

A

LELAN 59.7 47 106.7 53.4 3

METKEI 53.7 41 94.7 47.4 3

CHEPKORIO 36.9 37 73.9 37.0 2

SIRIKWA 31.9 40 71.9 36.0 2

CHERANGANY 32.7 49 81.7 40.9 3

TARAGOON 29 24 53 26.5 2

B

SIONGIROI 47.6 53 100.6 50.3 3

SOT 46.2 47 93.2 46.6 3

KOKICHE 33.5 45 78.5 39.3 2

CHEROBU 25.4 33 58.4 29.2 2

OLENGUROUENE 49.6 41 90.6 45.3 3

OLCHOBOSEI - 5 5 2.5 1

Site/Cluster BUSINESSPRODUCTIO

NTOTAL

(%)AVERAG

E STAGE

C

TANYKINA 59.9 71 130.9 65.5 4

KABIYET 78.8 57 135.8 67.9 4

LELCHEGO 30 16 46 23.0 2

KAPCHENO 49.4 32 81.4 40.7 3

TINDERET 35.5 34 69.5 34.8 2

KIPKELION 43.5 50 93.5 46.8 3

D

OLKALAO 51.1 42 93.1 46.6 3

KIENI 46 50 96 48.0 3

MUKI - 74 74 74.0 4

Stage gate findings summary

Metkei – DFBA of the year!

Kieni – DFBA best on financial management!

Siongiroi – DFBA best on HR focus!

Site/ Determinant

L&M HR COM FM IIT&KM CSR&EF P&Q Performance

Index

Kipkelion 4 2 3 4 3 3 2 3.0

Tanykina 7 6 4 5 6 6 6 5.7

Kabiyet 7 3 1 1 1 7 4 3.4

Taragoon 3 2 2 3 3 2 2 2.4

Cherangany 2 2 2 3 2 2 3 2.3

Lelan 4 3 3 4 2 3 4 3.3

Tinderet 3 2 2 2 2 3 2 2.3

Kapcheno 3 2 2 2 2 2 2 2.1

Metkei 7 6 6 5 5 6 7 6.0

Chepkorio 3 3 2 3 2 2 3 2.6

Cherobu 3 3 3 3 2 2 3 2.7

Kokiche 3 2 3 3 2 2 3 2.6

Siongiroi 5 7 4 4 4 4 4 4.6

Sot 6 6 4 3 3 3 4 4.1

Olenguruone 4 3 3 3 2 3 3 3.0

Average 4.4 3.5 3.0 3.4 2.8 3.4 3.4 3.4

Industry wise OPI findings summary

Metkei – DFBA best on Productivity & Quality,

CSR & Environmental Focus !

Mr. Rugut - Director of the year!

EADD Kenya activities budget for the

CE period by cluster & Partner

COSTS PER EXPENSE CATEGORY CLUSTER A CLUSTER B CLUSTER C CLUSTER D Country TOTAL (KES)

A: Training and Training material

Development 22,483,668 24,020,714 20,677,241 8,041,888 - 75,223,510

B: Workshop and Conferences 1,765,071 1,800,729 1,873,010 748,818 6,843,230 13,030,858

C: Kitting and Field Suppliers 425,925 1,332,092 1,629,750 230,775 - 3,618,542

D: Product development and ICT 59,760 96,960 86,400 27,360 3,055,667 3,326,147

E:Financial Services - - - - 4,572,928 4,572,928

F: Building Farmer Associations - - - - 13,094,160 13,094,160

G: Exchange visits and Technical

Tours 3,025,688 3,362,225 3,776,848 1,283,625 267,000 11,715,386

GRAND TOTAL (KES) 27,760,111 30,612,719 28,043,249 10,332,466 27,832,985 124,581,530

Clusters/

Partner

A B C D

Total CostsNorth Rift South Rift North Rift Central

National

Level

Heifer 185,415.98 205,581.82 215,339.35 77,633.21

347,912.31 1,031,883

TNS 78,745.99 90,668.13 76,295.50 27,645.58

-273,355

ABS 14,000.33 13,283.95 13,928.96 8,540.75 49,754

ICRAF 48,427.24 50,615.74 24,356.77 7,738.88 131,139

Total326,590 360,150 329,921 121,558 347,912 1,486,130

Our Journey in Lelan !

Construction!

Farmers in Business – Selling 13,000Kgs now!

Thank You!