Policy Research Enhances Dairy Opportunities in Kenyan Highlands: More smallholder participation in markets

Dairy is an important enterprise throughout the densely populated highlands of central Kenya. Demand is extremely high because milk is an important part of the diet of both rural and urban Kenyans, with per capita milk consumption at 111 kg per year. Substantial quantities of milk from smallholders in central Kenya are marketed in Nairobi.

International Livestock Research Institute (ILRI) estimates dairy demand will increase 57% in the next 12 years, from 3,288 million litres in 1998 to 5,185 million litres in 2010. This is part of an on-going dramatic rise in demand for livestock products in developing countries that is being called a 'Livestock Revolution'.

The Kenyan dairy market suffered a setback in the mid-1990s, when the parastatal marketing system collapsed. But private firms and the informal sector are increasing their reach and purchases of milk, restoring and expanding markets for small farmers. Kenya's 625,000 smallholder dairy farmers provide about two-thirds of the country's milk supply. 73% of households in central Kenya and 38% in western Kenya own dairy cattle.

Most of these households practice some stall feeding, with 37% 'zero-grazed' in the intensive agricultural systems in the highlands. Herds average four cattle and farm sizes, 1 hectare. Lack of high-quality feed is the main constraint limiting milk production. Animal performance is relatively poor, with average daily milk yields of 7.21 litres and an average calving interval of 591 days.

Studies by ILRI, its collaborators and others, show clearly that smallholder dairy production is key to sustainable land use in many parts of the Kenyan highlands where land holding sizes are shrinking. Contrary to expectation by some, as land holdings shrink the incentives for and advantages of keeping a dairy cow increase. This is because on small land holdings, farmers may be compelled to crop the same land bi-annually, year after year, to provide subsistence food for their families. The nutrients and organic matter that cattle manure provides is a key ingredient to sustaining this intensive cultivation. Studies have shown that farms with dairy cattle have positive balances of important nutrients such as nitrogen. Further, because feed can be purchased or gathered from public land, small land holdings are not necessarily a constraint to keeping cattle. Surveys across central and western Kenya show that land holding size is not significantly related to the probability of having dairy cattle and that use of off-farm feeds increases the channelling of nutrients onto the farm through manure. Collaborative studies by ILRI and partners have also demonstrated that milk, meat and manure are not the only important benefits to small farmers, but that the value of cattle as assets, insurance and bank accounts is also high, particularly because formal credit sources are scarce in rural areas.

While livestock-based nutrient cycling contributes to sustainable land use management, increasing dairy milk production and marketing provides a sustainable economic enterprise and asset base, yielding a win-win situation in terms of economic and resource sustainability.

However, there remain constraints to uptake of dairying, and consequently to the sustainable land use possibilities that it offers. Poor road infrastructure reduces the milk prices dairy farmers obtain and the likelihood of farmers keeping dairy cattle. The negative effects of poor feeder roads are particularly significant. Poor commercial feed quality also hurts dairy producers. The reduction of public services such as artificial insemination and veterinary care have lowered the productivity of dairy animals and increased the risks entailed in dairying. These constraints may be particularly severe for the smallest farmers.

However, studies also show that economies of scale are insignificant in dairy production in Kenya, so small farmers can indeed compete. The extent to which they can do so over the longer term may depend on policies that reduce the constraints mentioned above. This is particularly important in light of the rising demand for milk and meat in developing countries such as Kenya, due to growing populations and incomes. If policies can reduce constraints to smallholder farmers, those farmers can benefit economically from this growing demand for livestock products, at the same time capturing the sustained asset accumulation and resource base that dairying offers.