Happening Now: Interviews for next IEBC chairperson begin
Why dairy farming is a loss-making venture
Dairy cows from Eldoret National Polytechnic in Uasin Gishu County, during the Agricultural Society of Kenya Eldoret National Show in March. A critical component in this trade is the high cost of fodder.
Dairy farmers are staring at losses of up to 16 percent, says a new study by the Kenya Dairy Board (KDB) that sheds fresh light on challenges facing the dairy business particularly the high cost of feeds.
The Board conducted the study using a micro-commercial farm with seven dairy cattle, four of which were lactating, assuming optimal feeding for the cattle and ensured strict adherence to recommended practices.
The farm generated Sh1.33 million in sales per year, including Sh1.02 million from milk sales and Sh310,000 from livestock sold. But the total costs hit Sh1.54 million during the same period, translating to a loss of 16 percent.
This means, the farm made a loss of Sh210,918, translating into Sh17,576 in losses every month.
“If the farmer doesn’t sell any livestock, the loss rises to Sh520,918 for the year, indicating how unsustainable dairy farming has become for smallholders under the current situation where the cost of feeds is high,” said the study.
The findings were published in the Kenya Dairy Industry Sustainability Map 2023-2032, launched by KDB on Friday in Nairobi.
A particular headache for the model farm was the high cost of feeds, which stood at Sh1.31 million or 84.8 percent of the total costs incurred in running the farm. The second and third largest cost was labour and breeding costs, which translated to 6.2 percent and 2.6 percent of the total costs respectively.
“If no action is taken, many farmers will abandon dairy farming. This will worsen the milk supply situation which is already constrained,” it said.
Kenya has faced challenges producing milk to satisfy demand due to droughts that have worsened in recent years affecting fodder production coupled with increased cost of other dairy inputs. This shortage has seen an influx of milk imports, especially from Uganda.
Kenya’s dairy sector is estimated at 14 percent of the country’s agricultural gross domestic product (GDP). Kenya's milk is primarily produced by smallholder farmers who account for 56 percent of the total output.
The struggle by dairy farmers prompted KDB to formulate the Kenya Dairy Farming National Commercialisation Model to ensure that most of the milk demand in the country will be met by commercial farmers.
According to the model, commercial farmers will deploy climate-proof production approachesto greatly reduce supply fluctuations occasioned by climate change such as droughts.
“This will be achieved through irrigated fodder production and conservation to guarantee proper feeding of dairy cattle regardless of the prevailing climatic conditions,” said the dairy board.
Kenya has the highest per capita milk consumption in sub-Saharan Africa, at 110 litres. The demand, currently at eight billion litres annually, is also expected to grow the increasing population.