Mugumango dairy farmers milk processing plant
In general Kenya offers an attractive market opportunity in dairy processing and this is favored by the fact that the demand for these dairy products in the country is quite high standing at 15 percent per annum. Although there is a ready market for dairy processing owing to current high demand levels there’s a deficit experienced due to limited processing of the dairy products.
This situation provides an opportunity for potential investors to invest in the various stages of the value chain such as; boosting production levels, supporting provision of high quality dairy inputs like feed production and setting up milk cooling and processing plants. Furthermore the byproducts of milk processing provide a further business opportunity along the value chain.
Just like any investment there are risks involved in dairy processing such as competition from other processors, the poor and substandard quality of input, low yields and unpredictability in the environmental factors. All these need to be taken to account for investments to generate gainful returns and be sustainable.
When it comes to strengthening the country’s agricultural sector dairy processing has played a great role and this is attributed to the fact that the demand of dairy products by Kenyans is significantly higher than any other county in the East African Union with expectations of its demand growing at 2 percent per annum.
Demand for dairy products is witnessed locally and also regionally. In Uganda or Tanzania dairy products are in high demand and this is expected to increase as the years go by. It is also attributed to the increase in population.
The supply of dairy products in the country has risen over the years and this is also influenced by the increase in demand but even though demand and supply is high there are still exists a gap in the supply and demand chain and this is influenced by a number of factors such as limited processing capabilities and the rising input costs.
Though there being great demand for airy products and dairy cattle available, the market is still concentrated and this actually leads to low quality products because we have the market flooded but processors are limited. The ones present are outdated in terms of technology and machinery and lack funds to upgrade or buy new ones creates a rift leading to low produce both in quantity and quality.
However, this can be changed if the stakeholders involved in processing agree to partner with other existing dairy processor. This could result in high quality of processed dairy products since overall experience would be reinforced jointly whereby (stakeholders in processing would partner up with stakeholders manufacturing and selling animal feeds. These synergies would both enhance quality and access high quality dairy inputs at reduced costs.
The way dairy processing industry works is that you first identify your target market-have to establish if it is local or regional, identify your products, prices, channel, production and processing process and your source.
As a processing industry you have to know that you cannot make it alone hence the establishment of schemes such as the centralized out growers scheme that collects dairy farmers from the central region and this helps them in animal feeds, prices and distribution of profits.
The aspect of finances in the industry is important because like stated above investment in this industry generates a lot of revenue with a margin of thirty percent as the years go by.
Increased Revenue can also be realized if investor ventured into other dairy products other than raw milk, concentrate on things like yoghurt, cheese, flavored milk powdered milk and butter also this products will generate revenue that will boosts the finances of the industry.
The government plays a role in boosting this industry having bodies that regulate and support dairy processing and also assists in funds for the animal feeds. Such bodies’ include the Kenya Dairy Board, New Kenya Cooperative creameries and Ministry of agriculture livestock and fisheries.
Other than the bodies that facilitate dairy production the government has come up with initiatives as a public sector to ensure that the industry flourishes.
Industrialization of towns is another initiative the government has provided with building of a power plant and processing plant to ease the concentration in the market and making it illegal to hawk raw milk is another initiative passed on by the market and this helps the farmers in that they will get their income at the end of selling the products.
Just like any business the dairy industry has East Africa Dairy Development a project that is aimed at making small scale farmers in transition from being subsistence farmers and grows to be commercial farmers and it’s an objective that will see them gain income for their products.
This objective is realized by educating them on the methods and technologies and making them aware of how to use them. It also offers financial support so as to help them realize this objective and produce high quality yields.
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