KENYA – The dairy industry in Kenya is one of the most critical sectors of the economy, contributing an estimated 4% of the national GDP, 14% of agricultural GDP and 44% of livestock GDP, making it well poised to significantly contribute to the Kenyan government’s Big Four Agenda on food and nutrition security and manufacturing.
However, with the occurrence of the COVID-19 pandemic, the dairy industry has been severely hit registering a 36% decline in milk production since the beginning of the year which has also resulted to Kenya missing 91% of its export market in the second half of the year.
To alleviate the negative impact felt by most farmer, Family Bank, a commercial bank in Kenya has entered into a partnership with dairy farming investment advisory firm, Performeter Agribusiness Limited to offer finance credit to farmers for fodder production.
Through this partnership the bank is targeting 100,000 farmers in dairy cooperatives by setting aside Ksh 1 billion (US$9.2m).
“This financing by Family Bank is a very timely gesture as it addresses the most significant constraint, which is fodder, which If properly addressed will allow the sector to even export milk”
David Maina – Performeter Director and Head of Business .
The facility will finance fodder production activities namely; land preparation, planting, fertilization, weed control, harvesting, ensiling, baling and transportation, up to the point where the dairy farmer receives the fodder at the farm.
This is aimed at supporting the dairy farmers to have all-year-round access to good quality fodder that will enable them to double their milk production and consequently their income too.
“The importance of the dairy sector to Kenya’s economy cannot be underscored. The dairy sector, like any other sector, has also been affected by the COVID-19 pandemic, and as a result, we are experiencing low milk production in the country.
“This is why Family Bank in partnership with Performeter, an experienced player in the dairy sector, has set aside KES 1 billion as financing to enable farmers to access working capital and other financial services to support the dairy value chain and unlock its growth potential to the entrepreneurial dairy farmers,” said Family Bank Chief Executive Officer Rebecca Mbithi.
In addition to working capital financing to farmers, Family Bank will also finance enterprises involved in bulk procurement of dairy farming inputs and equipment.
The capital expenditure includes expansion of cold chain, set up of farm infrastructure, upgrading of milk processing facilities and renewable energy at the milk processing plants, among others.
The Bank will also provide working capital for milk processors to finance purchase, processing and storage of shelf-stable milk products such as milk powder during the flash season for sale during the dry season.
CashCow project promoting fodder production
CashCow is one of the flagship projects under the Big Four Agenda anchored on the Ministry of Agriculture Livestock Fisheries & Cooperatives and steered by the Kenya Dairy Board aimed at promoting industrial production of fodder in the country.
The CashCow Project brings together many stakeholders in the dairy sector comprising of commercial banks, commercial fodder producers, dairy cooperatives, suppliers of seeds, fertilizer and machinery, insurers, contractors and milk processors who will play different roles to ensure production of up to 100,000 acres of fodder for use by dairy farmers.
Perfometer, a leading dairy advisory and consulting company was assigned the leadership and coordination role in this project.
“This financing by Family Bank is a very timely gesture as it addresses the most significant constraint, which is fodder, which If properly addressed will allow the sector to even export milk” said Performeter Director and Head of Business David Maina.
In support of this Partnership, the Kenya Dairy Board Managing Director Mrs Margaret Kibogy applauded Family Bank for setting aside a significant portfolio to finance the fodder value chain and called upon other financiers and development partners to support the CashCow project especially with the technical assistance required across the chain.
“I urge the fodder producers to apply the most efficient production technologies so as to get the most value at the lowest costs possible, and for the dairy farmers to get the right advice on feeding their cows so that at the sector level, we can reap the benefit of the accelerated fodder production efforts’’ said Mrs Kibogy.
According to the Kenya Dairy Board, milk production in the country is estimated to grow to 12 billion liters by 2030 with a growth intake to the formal sector rising to 1 billion liters in 2022.
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