Thursday, June 3, 2010

CDE contributes to modernizing major dairy cooperative in Kenya

The CDE undertook in 2008 a feasibility study for the establishment of a milk processing plant in Kenya’s Niery district, a rural area some 200 kilometers from Nairobi. The promoter, Kieni Diary Products Ltd. (KDPL), is a limited liability company established in 1997 by six dairy cooperatives, with a total membership of 6,000 farmers.

Originally, KDPL collected and marketed only raw milk, which constrained it vis-à-vis competition in the national market. In Kenya, as in other ACP countries, the high consumption of raw milk entails serious health risks for the local population, which is increasingly demands homogenized and pasteurized milk. This explains that the CDE has placed the dairy sector in the forefront of its activities to ensure food security, especially in rural areas.

The objective of the study, carried out by Ms. Kiruthu, an expert in food processing and quality assurance [from Log Associates], was to identify the appropriate equipment and technology needed to develop processing capacity. A market survey was undertaken in parallel by the CDE, to determine a marketing and packaging strategy for the six cooperatives forming KDPL.

The feasibility study laid out a roadmap and strategies which will enable KDPL to reach its goals. In the short term, the company was advised to provide a cooling facility for the members’ raw milk. This step will be followed by developing milk processing.

The feasibility report also enabled KDPL to enter a co-financing arragement in 2009, with the East African Dairy Development Project (EADDP) for the construction of a milk cooling plant with a capacity of 20,000 litres/day. EADDP is a development programme funded by the Melinda and Bill Gates Foundations, active in Kenya, Uganda and Rwanda.

KDPL has been able to raise 7 million Kenyan shillings (KS), while the Foundation was to be provide a loan of KS 13 million over a four year period. The cooling plant was built starting in July 2009 and are currently in operation. They currently handle 27,000 litres of milk/day and supply New Kenya Cooperative Creameries, the largest milk processor in the country.

The benefits of the modernization include: reduced milk loss, more efficient collection and marketing of milk, added value for the chilled milk, job creation, stimulation of other support services.

The CDE’s intervention was a crucial step for KDPL’s development, namely in decision-making and access to finance, enabling the modernization of the company’s plant.