KAAA PRIORITY VALUE CHAINS
The Kenya Agribusiness and Agro-Industry Alliance has identified 5 priority value chains in which to engage in through capacity building, resource mobilization and market linkages. Each of the value chains plays a significant role in Kenya’s economy employing millions of Kenyans providing food for Kenyans and earning the country foreign exchange.
According to a report by the EPZ on Dairy Farming, production stands at 3.1 billion litres per annum. This is sufficient for the Kenyan Market but not yet enough for export. Kenya has an estimated cattle population of 13 million heads with dairy, mainly grade cows, being about 3.3 million. The Kenyan dairy industry is based mostly on smallholder milk production. About 600 000 smallholders produce some 70% of the country’s marketed milk. Approximately 56% of this milk is sold raw in the unregulated informal market.
The Government of Kenya supports and emphasizes the importance of dairy farming through:
Improving extension services. Every administrative division in the country is covered by extension officers who from time to time update the farmers on ways of improving their stock.
Extending credit facilities to farmers through co-operatives.
Holding agricultural shows at district and provincial levels as well as the Nairobi International Show as a means of educating wananchi on the importance of good dairy farm management.
Investing in research and availing training opportunities for farmers and milk processors.
Setting up demonstration projects such as the Emali Livestock Multiplicity Project that breeds high quality bulls to be used by farmers for breeding.
The New Kenya Creameries Cooperative
The largest single milk processor is the New Kenya Cooperative Creameries. Milk production and processing of products such as yoghurt, butter, cheese, ghee and powdered milk have increased significantly in recent years, giving rise to smaller dairy processing factories across the country.
Milk production in Kenya is dominated by small scale producers mainly in the Rift Valley, Central and Eastern provinces. Various production systems, which mainly rely on rain-fed agriculture, are used. The current dairy cattle population is estimated at four million. Total milk production is estimated at about 4.8 million tonnes – cow milk estimated at 4.5 million tonnes, goat milk 150,000 tonnes and camel about 50,000 tonnes.
Dairy marketing milk is done both formally and informally. The formal comprises 27 milk processors, 64 mini-dairies, 78 cottage industries, 1,138 milk bars and 757 primary milk producers. The milk marketed through the formal sector has increased in recent years as a direct result of interventions taken by the Government and other stakeholders.
The dairy sub-sector plays a critical role in the livelihood of many Kenyans and is a significant contributor to the country’s GDP. Kenya exports substantial quantities of milk and milk products to the region. Intra-regional trade in dairy products in the East African Community has continued to gain momentum and benefits the Kenyan dairy industry. The main products exported are long life milk and powder milk.
The livestock sub-sector in Kenya contributes about 10% of the National Gross Domestic Product (GDP). This is 30% of the agricultural GDP. It employs about 50% of the national agricultural workforce and about 90% of the workforce in the arid and semi-arid lands (ASALs). The livestock resource base is estimated at 60 million units comprising of 29 million indigenous and exotic chicken, 10 million beef cattle, 3 million dairy and dairy crosses, 9 million goats, 7 million sheep, 0.8 mi camels, 0.52 mi donkeys and 0.3 million pigs. Kenya is broadly self-sufficient in most livestock products but is a net importer of red meat. This industry also produces eggs, hides, skins and wool from cows, sheep, goats and poultry. 80% of all meat consumed locally is red meat, i.e. beef, mutton, goat and camel meat. Of this red meat, 67% is produced in the arid and semi-arid lands (ASALs) under pastoral production system.
Kenya’s main export markets for meat products include United Arab Emirates (UAE), Tanzania and Uganda, while the main markets for hides and skins are Germany, United Kingdom, Netherlands and Italy. The value of meat products exported increased from Kshs. 190 million in 1999 to Kshs. 285 million in 2002 while the quantity of hides and skins exported increased from 7,302 tonnes in 1999 to 13,910 tonnes in 2003. Kenya’s competitive advantage as an investment destination for the meat industry is supported by investor friendly factors such as the availability of beef cattle, stable political environment and market access to local and regional markets.
Government supports this subsector through the following interventions
Government has stepped up plans to increase livestock production through investment in genetic improvement.
The Ministry of Agriculture, Livestock and Fisheries is of the view that shortage of disease resistant breeds, which produce more milk is a hindrance to the development of the livestock sub-sector.
The Ministry plans to create more forums where farmers can access information on cattle breeds, feed production and animal husbandry practices to increase the contribution of livestock to the national GDP, currently standing at 12 percent.
The ministry has finalized plans to establish disease – free zones in all counties. This will ensure livestock products attract better prices in the international market.
The Government encourages private sector participation in the realization of its development agenda. The ministry also hopes to work with county governments to rejuvenate extension services at the grassroots.
Players in the industry, including Brookside Dairies, have been promoting modern breeding methods like embryo transfer through agricultural shows. The company also plans to sponsor 20 farmers for educational tours of Israel.
The Kenya Meat Commission
The Kenya meat Commission was established in 1950 through an act of parliament with an objective of providing a ready market for livestock farmers and providing high quality meat and meat products to consumers.
Since the Kenya Meat Commission was re-opened in 2006 after a 15 year hiatus, the demand for processed meat has been steadily growing leading to the need to revamp and modernize the facilities. Plans are underway to modernize the facilities to enable it to process more meat. This is alongside plans to process pork and poultry to meet consumer demand.
Currently, The Kenya Meat Commission exports an average of 500 tonnes of fresh and frozen meat products of goat and lamb every week to United Arab Emirates, Kuwait, Qatar, Saudi Arabia, Sudan, Egypt, Democratic Republic of Congo, Tanzania and Uganda.
Kenya has for a long time grown horticultural crops both for the domestic and export markets. Kenya’s ideal tropical and temperate climate is ideal for horticulture production and development.
The sub-sector is characterized by a tremendous diversity in terms of farm sizes, variety of produce, and geographical area of production. Farm sizes range from large-scale estates with substantial investments in irrigation and high level use of inputs, hired labor and skilled management to small-scale farms, usually under one acre.
The sub-sector generates over US$ 300 million in foreign exchange earnings. The total horticultural production is close to 3 million tonnes making Kenya one of the major producers and exporters of horticultural products in the world.
Europe is the main market for Kenyan fresh horticultural produce with the main importing countries being United Kingdom, Germany, France, Switzerland, Belgium, Holland and Italy. Other importing countries include Saudi Arabia and South Africa. The industry has had remarkable growth of about 7% per annum. The sub-sector earned Kenya KShs 36.5 billion in 2003 with cut flowers dominating horticulture exports, followed by a variety of fruits and vegetables. This increase is mainly attributed to good weather, improved crop husbandry and a conducive horticulture export environment, as well as increased markets for fruits and flowers in Europe.
Government support and intervention
Government intervention has been minimal, mainly facilitating the sectorial growth through infrastructure development, incentives and support services. Structural and macroeconomic reforms and introduction of a more liberal trading environment has also provided a major boost to the country’s horticultural prospects. The tremendous performance of the horticulture sub-sector presents an ideal opportunity for investors.
The Horticultural Crops Development Authority (HCDA), a parastatal established by the Government under the Agricultural Act 1967 has the sole aim of developing and regulating the horticultural industry. The organization does this through providing technical and marketing services to farmers and other stakeholders in the horticulture industry.
The agro-grain processing sub sector is one of the leading and well-established industries and it includes major cereal foods such as maize, wheat, rice, sorghum, millet and barley among others. Lately the sector has seen an increase in production and area under crop for all the grains and cereals. Maize is the most popular cereal and is used in many different forms forms. Traditional cereals such as Sorghum and Millet are struggling due to the popularity and marketability of maize. However concerted efforts are being directed at increasing the popularity and use of these grains.
Wheat and rice is also grown in Kenya although production is significantly below the annual national consumption. Rice and wheat farmers are challenged by uncontrolled cheap imports thus making the grains difficult to produce profitably.
Barley in Kenya is grown specifically for the brewery industry. Farmers produce barley on contract by major brewers.
Amaranth has for a long time been grown as a leafy vegetable. More recently its seeds/grains have become popular as part of a healthy eating trend. The grain is considered to be highly nutritious with medicinal value.
Government support and Interventions
The government has started a project to revive pest and drought resistant cereals like sorghum and millet that are native to Kenya. The project is known as the ‘Orphan Crops’ project. It is hoped that the project will help reduce the country’s overdependence on maize.
The National Cereals and Produce Board of Kenya (NCPB) established in 1985 under the National Cereals and Produce Board Act (Cap 338) of the laws of Kenya is mandated by the Government to regulate and control the marketing and processing of grains in Kenya. It does this through licensing and regulating the key players in the sector, who include traders, farmers and millers among others.
Cotton in Kenya is grown in across the country except in the desert areas. The cotton is grown largely under rain-fed conditions and by small-scale farmers in marginal and arid areas on small land holdings averaging about a hectare. It’s estimated that Kenya has over 200,000 small-scale farmers. The Cotton Development Authority also estimates that 400,000 hectares are suitable for rain-fed cotton production with the potential of producing 260,000 bales of lint annually, and 34,500 hectares for irrigated cotton with the potential to produce 108,000 bales of lint annually.
In 2005 national production stood at 5,000 tonnes from 30,000 ha, intense government intervention has seen production increase to 10,000 tonnes from 46,000ha in 2008. The governments vision 2030 aims at re-investing in this sector that holds great potiential as a foreign exchange earner.
Government support and interventions
The Government has put in place measures to protect the local industry by imposing a 100% duty on imported goods. This has seen the local textile industry grow by up to an average production capacity of over 70 per cent.
The government has also made an effort to boost production through irrigation schemes in arid and semi-arid parts. Between 1963 and 1990, the Government introduced controls in the sector: It helped cooperative societies buy ginneries from the colonialists, controlled marketing fixed producer prices and invested heavily in textile mills.