Grappling with the Hawker Problem

Of the estimated 2.7 billion litres of milk produced by local dairy farmers annually, up to 88% is consumed in raw form without going through the standard pasteurisation process, industry sources say. That leaves only 12% of the milk to be packaged by the processors. Unpacked milk is sold through informal channels, such as farm-to-farm, farm-to-house (in urban areas), farm-to-hotel, or farm-to-kiosk, as well as through hawking. According to Mr Vincent Ngurare, who was until last week the Kenya Dairy Board (KDB) managing director, the private dairy processors who handle an average 500,000 litres daily can only buy from farmers the amount of raw milk they are able to sell. 'The private dairy processors are commercial entities,' said Mr Ngurare. 'Before liberalisation, KCC was the buyer of last resort and could afford to buy all the milk from dairy farmers regardless of the market conditions because it enjoyed subsidies from the government. Now that KCC is not a monopoly any more, the surplus milk has found its way into the informal market.'

But there is another side to the hawking problem. The price of raw milk is currently at an all time low. Farm-gate prices for a litre of unprocessed milk that fetched between Sh12 and Sh17 towards late 1990s, now fetches slightly less than Sh10. This is why some farmers have resolved to hawk their milk rather than deliver it to milk processors. Milk vendors are an ingenious lot. They know that selling milk in small quantities and at low prices will definitely find a following among the urban poor, especially those living in slums, to whom packaged milk is out of reach. And they are not wrong. Most slum dwellers buy milk from hawkers.

Dairy farmers, the majority of whom are located in the Rift Valley, attribute the crisis in the dairy sector to the collapse of Kenya Cooperative Creameries (KCC), which had more than 13 milk processing plants in the province before its collapse.

Towards the end of 1999, KCC received more than 23 million litres of raw milk at its factories and cooling plants in Naivasha, Nakuru, Molo, Kapsabet, Eldoret, Eldama Ravine, Nanyuki, Kitale, Kilgoris, Sotik, Ainabkoi and Kamariny. This was a significant drop from the 42 million litres which it received in 1997. All the factories that the new KCC 2000 inherited from the moribund KCC have been wound up, except one in Sotik, which processes milk collected in Nakuru, Eldoret and other districts in the Rift Valley. The farmers say that the new KCC 2000 has yet to streamline its capacity to handle milk in the 18 districts of the Rift Valley served by KCC before its collapse.

It is the handling of hawked milk that the Kenya Dairy Board finds unnerving. After going through many hands, it is possible that the milk would end up being contaminated and unfit for human consumption, says Mr Ngurare. 'This is one of the main reasons why the board came up with the code of practice. There is also the charge that hawkers, intent on keeping the milk fresh for longer periods, lace it with hydrogen peroxide. Mr Ngurare sees a solution in processors improving the farm-gate price they pay for a litre of milk, but that is not feasible, especially in this era of liberalisation, he reckons. He advises that while attempts are being made to find ways of converting raw milk into powder to take care of contingencies during the dry period, private dairy processors should also target the East African Community and the Comesa markets, and diversify their range of milk products. 'Local milk processors are already selling small quantities to Tanzania, Uganda, Rwanda and Burundi, but they need to export more. They also need to process cheese, yoghurt, butter and flavoured milk in large quantities. That is the only way glut in the dairy sector can be overcome,' he says.