Previous Page Table of Contents Next Page


Impact of marketing liberalization on dairy marketing and the dairy marketing system in Kenya


I: Background
II: Dairy marketing in Kenya
Ill: Dairy marketing system in Kenya
IV: Summary and conclusions
References


Stephen G. Mbogoh,
Department of Agricultural Economics, University of Nairobi, P.O. Box 29053,
Nairobi, Kenya

I: Background

1. Kenya's dairy industry is regulated through the Dairy Industry Act, Chapter 336 of the Laws of Kenya, as enacted in 1958. Under the Act, the Kenya Dairy Board (KDB) was established in order to "organize, regulate, and develop efficient production, marketing, distribution and supply of dairy produce in Kenya". Hence the KDB has broad powers over the organisation of the dairy marketing system in Kenya. However, over the years, the KDB has limited its operations primarily to the regulation of businesses involved in the processing and distribution of dairy products, at the risk of leaving the industry in the hands of a nationwide cooperative dairy processing and marketing cooperative called the Kenya cooperative Creameries Limited (the KCC), at least upto 1992 when the "Winds of Change" in the name of marketing liberalization began to sweep across the industry.

2. Marketing liberalization aims at improving efficiency in resource allocation by facilitating more or less automatic price adjustments in response to market competition through the forces of supply and demand. The rationale is that market competition, over time, should lead to stability in production and consumption. The result is thus expected to be beneficial to the society as a whole.

3. The most critical step in the liberalization of Kenya's dairy industry was the decontrol of both producer and consumer prices of milk in May 1992, followed by an explicit policy statement that any party interested in getting into dairy processing and marketing business could be licensed, provided that the business premises met the minimum hygiene standard requirements.

4. Prior to 1983 when the government licensed two small scale cooperative rural dairies (i.e. Meru Central Farmers Cooperative Union (MCFCU) and Kitinda Dairy Farmers Cooperative Society (KDFCS)) to receive, process and distribute milk and milk products for their members, any license to process and distribute milk and milk products in Kenya was always issued on the agency of the Kenya Cooperative Creameries Limited (the KCC). That is to say that any party issued with the license had to undertake business as an agent and member of the KCC. Clearly, this practice was restrictive and it gave the KCC near monopoly/monopsony power over the dairy industry in Kenya. Even though only about 40% of the estimated milk production in Kenya (estimated at about 2.4 billion litres) enters the marketing system, the KCC used to handle over 90% of this marketed milk production prior to the liberalization of Kenya's dairy industry, i.e. prior to May 1992.

II: Dairy marketing in Kenya

II. 1 Key Players in Dairy Marketing in Kenya

5. Dairy cooperatives dominate the marketing of milk in Kenya. Most of marketed milk production in Kenya is from small scale farmers. By the very nature of their operations, small-scale milk producers have found it necessary to organize themselves into dairy cooperatives in order to be able to supply their raw milk to the KCC and the other market outlets in the high potential milk producing areas of Kenya. Hence the predominance of cooperatives in dairy marketing in Kenya.

6. There are over 100 primary societies that are registered as dairy cooperatives in Kenya, but only about 70% of them are functional. In addition, there are over 200 multi-purpose cooperatives which undertake dairying as one of their main activities in the country. These cooperatives serve their dairy farmers by collecting milk from the members, bulking it and either distributing and selling it as wholesome raw milk within the surrounding areas, or by transporting and supplying it to the milk processing plants or collection centres of the KCC. An exception to this general practice would thus be the dairy cooperatives in Meru and Bungoma districts that collect and supply their members' milk to their own processing facilities.

7. Even though the Government of Kenya (GOK) has been encouraging the dairy cooperatives in the areas that are poorly served by the existing KCC milk collection and processing facilities to establish their own processing facilities through the Rural Dairy Development Project (RDDP) since the early 1980s, only the Meru Central Farmers Cooperative Union (MCFCU) in Meru District and the Kitinda Dairy Farmers Cooperative Society (KDFCS) in Bungoma District have established their own milk processing facilities through the support of the RDDP so far.

8. Milk requires proper handling to ensure that it reaches the processing facilities or the consumers of fresh wholesome milk in good condition. Milk coolers may be necessary at bulking or collection centres. About 60 dairy cooperative societies have been supplied with milk coolers through the RDDP in the past, but only about 50% of these coolers are believe to be functional at present. In the absence of such coolers, most cooperatives collect milk only at one time in the morning, and the farmers are unable to market their evening milk output leading to high levels of home consumption as proportion of total milk production.

9. Milk production in Kenya generally exhibits seasonality in line with the rainfall regime and the availability of nutrients from cheap grazing or fodder. The KCC is regarded as a milk buyer of the last resort, but it is, in practice, the major milk buyer that is available to the dairy farmers when peak production occurs and the local markets for raw milk that are normally available to them become saturated. Unfortunately, even the KCC is not in a position to accept all the milk offered for sale to it during the flush periods due to plant capacity limitations. During such times the KCC dairy plants find it convenient to refuse to accept the milk brought by the cooperatives and individual farmers, usually on alleged grounds of poor quality. This is a status of affairs which has seriously warranted the case for and support of the entry of other competitors to the KCC as a processor and distributor in the dairy industry in Kenya in the past. Marketing liberalization should take care of this problem in the long run.

10. As far as milk intake, processing and distribution are concerned, there are both the KCC and non-KCC cooperative and private enterprises. These are briefly discussed hereafter.

II. 1.1 The KCC Enterprises

11. Kenya Cooperative Creameries (KCC) has hitherto had a virtual monopoly in the commercial processing and distribution of liquid milk and other dairy products in Kenya. Its market share is believed to be over 90%, the rest being held by the Meru, Kitinda and Kilifi Plantation dairies, and by some other small private producers of pasteurised milk and special products such as cheese, yoghurt, ice creams and ghee.

12. By far the largest part of the KCC milk is processed at Dandora in Nairobi, mainly for distribution as fresh milk in the Nairobi area. The major part of the milk processed at Dandora is received as pre-pasteurised milk from Naivasha, Nakuru, and Sotik factories and from Molo Cooling Centres. These transfers imply double or more pasteurisations for a considerable part of the total KCC milk intake. The milk transfers from up-country, via Dandora, to Miritini in Mombasa undergo an additional pasteurisation at Dandora before further dispatch to Mombasa. The major milk transfers by the KCC are thus from Naivasha, Nakuru, Molo, and Sotik to Dandora in Nairobi and from Dandora to Miritini in Mombasa.

II.1.2 The Non-KCC Cooperative Enterprises

13. The GOK policy on dairy development is to encourage local cooperatives to diversify their activities into milk processing. This policy has already been transformed into concrete action through the establishment of the dairy plants at Meru and Kitinda, as already mentioned elsewhere in this paper.

II.1.3 The Interface between Private and Cooperative Subsectors

14. The private and cooperative dairy enterprises do interact in milk collection and processing, thereby making the role of cooperatives in Kenya's dairy industry even more significant. Apart from the Delamere dairies who produce, process and market their own milk, the two other major private dairy enterprises in Kenya are the Donyo Lesos Cheese Factory at Eldoret and the Kilifi Plantation at Kilifi, Coast Province. Hence the sources of milk supply for the private dairy factories are variable, with:

· Donyo Lesos Cheese factory at Eldoret, which has been buying milk as a raw material for its operations primarily from the KCC Eldoret factory;

· Kilifi Plantation which has been using milk primarily from its own production, but also accepting surplus milk from the Bahari Dairy Farmers Club; however, it should be noted that the Kilifi Plantation has also in the past delivered surplus milk to the KCC Miritini factory;

· Other dairy processors who have entered the industry since 1992, such as the Brookside dairy and Farmbest whose produce is now widely sold in Nairobi.

15. Since milk is of a very perishable nature, the operation of milk cooking facilities is an important activity in the area of milk collection and processing. There are a number of both KCC and non-KCC milk cooling facilities in the cooperative dairy subsector in Kenya, as mentioned elsewhere in the paper.

16. The KCC operates over 10 Milk Cooling Centres (MCC) in Kenya. The purpose of the MCC is to ensure that the milk quality is maintained in transit between the time of intake (from the producers) and final processing.

17. A number of farmers dairy cooperative societies (FDCS) also operate their own Milk Cooling Centres (MCC). A number of such cooperative MCC have been established through donor-supported dairy development projects in Kenya, the most recent and notable one being the Rural Dairy Development Project (RDDP), which has so far supplied about 60 milk coolers, distributed in the main milk producing zones of Kenya. Since 1987, the Bahari Dairy Farmers Club in Kilifi has operated a milk cooling and distribution centre with a cooling bath for milk cans.

18. All these dairy cooperative societies' MCC collect farmers milk for cooling and distribution in nearby areas, villages and towns. Most of the cooperatives distribute cooled, raw milk in bulk, but the Bahari Club also supplies raw, cooled milk which is filled into plastic sachets and sealed. Additionally, it makes milk ice lollies in plastic tubes, sealed and frozen in a cabinet freezer.

II.2 The Main Milk and Milk Products Marketed

19. The major products of the dairy processing enterprises in Kenya include:

· Pasteurised and Ultra-Heat Treated (UHT) milk;
· Mala (Fermented milk) and Yoghurt;
· Cheese;
· Ordinary cheese and Processed cheese;
· Cream;
· Butter;
· Ghee;
· Ice-cream;
· Condensed Milk and Sweetened condensed Milk;

II.3: Distribution

20. In milk surplus districts, such as Nandi, Uasin Gishu, Bungoma and Meru, the distribution outlet is the processing plant, either that of the KCC or that of the cooperative or private sector [DANIDA (1991)]. The transport, as arranged, takes milk from the producer/member direct to the plant on the same day, usually by later morning. The societies that have coolers have milk transported to the place where the cooler is located. This could also take care of the evening milk to be kept overnight for transportation to the plant the following day or for subsequent sale by the society in the local market.

II.4: Payments by Customers

21. Payments for milk are generally made on the basis of cash on delivery. There are, however, arrangements for monthly payments, usually in advance for individual customers. Also there are a few credit arrangements for public institutions. But the long delays by some Government public institutions in remitting payments has become a matter of grave concern, especially for the weaker dairy cooperative societies. In the circumstances, many dairy cooperatives societies regard the KCC as the market channel for disposal of surplus milk if a KCC plant is within reach. Payments from the KCC, if regular, could provide lumpsum stable earnings to the societies.

II.5: Payments to Dairy Cooperatives Society Members

22. As would be expected, cooperatives make payments to the members only after receiving payments from the customers. In the case of the societies dealing with the KCC, cheques are made out on regular basis to the societies. However, the statement of payment showing quantities of milk received by the KCC comes separately, always much later. It is the contention of the societies that they must wait for this statement to ascertain any discrepancies there might be before making any payments to members, and this inevitably leads to delays in payment to members.

23. Even where societies decide to pay before receiving the statement, there are contingency arrangements. These can take the form of advances to members or payments based on the previous month's information. The final payments are then only made when the society receives the statement. The active dairy cooperatives try and make payments to members monthly whatever the pay-out rate. The most disturbing issue for some cooperatives are the payments being in arrears in some societies for three or more months. Kakamega and Taita-Taveta Dairy Societies have been cited as cases in point.

24. Even more serious is the case of dormant societies, particularly in Kilifi, where large sums of payments due to members are locked up in a society that is no longer in business. The delay in paying members, and more so the failure to make any payments at all, are serious matters. They are bound to undermine the faith and commitment to the cooperatives included. The negative image of cooperatives is thus generally linked first and foremost to problems with payments to members.

II.6: The Customers

25. The range of customers in the local market are varied. There is the individual customer in the rural area. This category includes those who are not themselves producing milk as well as those in milk deficit areas, usually the drier ecological zones. Secondly, there are individual customers in the rural trading centres or towns. These comprise the urban population, mainly consisting of rural businessmen and wage earners who have regular income and, therefore, tend to have a higher milk consumption level. One can also group together individual customers in larger urban centres located in their areas, such as Meru, Embu, Bungoma, Kakamega etc., as they are basically similar in characteristics.

26. Lastly, there are institutions located in the rural and urban centres. These include both public institutions (such as government hospitals, prisons, etc.) and private institutions (mostly hotels).

II.7 Key Market Characteristics

27. The different customers serve as useful pointers to certain key characteristics of the local market which are of significance for dairy business operations. The customers generally take limited quantities of milk with a few exceptions. There is stiff competition from milk producers who are not members of cooperatives but are members of the same community/local area and therefore personally known to the customers. However, the face-to-face personal knowledge of customers could work to the advantage of the cooperatives in establishing stable marketing channels, or be disadvantageous if discussions of problems within the cooperatives spill over 10 customers, thereby tarnishing the image of the society.

II.8 Impact of Marketing Liberalization

28. The main change in dairy marketing in Kenya since the marketing reform programme in Kenya started being implemented in 1992 has been the licensing of new dealers, either as individuals or as private companies. The KCC is no longer "protected" through the licensing and inspectorate activities of the KDB. Both producer and consumer prices of milk increased by 20% - 40% between 1992 and 1994, but they appear to have remained relatively stable since early 1994.

29. Despite the negative publicity that the KCC has been exposed to in recent times owing to its association with the importation of contaminated milk powder from the Ukraine, the KCC still plays a dominant role in the marketing of milk and milk products in Kenya. However, the latest saga whereby the consignment of the imported milk powder which was declared unfit for human consumption is said to have been destined for reconstitution by the KCC may have cost the KCC some of its market share. Unfortunately, no recent studies nave been undertaken to determine the current market shares of the different firms in Kenya's dairy industry.

30. Despite marketing liberalization, the dairy marketing system in Kenya still remains as described under III below, but with the expansion of the formal marketing subsystem as more dealers get licensed to engage in dairy processing and distribution businesses. Impact of marketing liberalization on prices has not been documented, despite the observation made above, and there is need for a detailed study on the actual pattern of price changes for milk and milk products in Kenya since 1992.

Ill: Dairy marketing system in Kenya

31. The marketing system for milk and milk products in Kenya can be divided into two subsystems, formal and informal, depending on whether the parties involved in marketing are licensed by the KDB or are agents of a KDB licensed dealer or not. Those engaged in formal marketing operate under a license issued by the KDB, or they may be agents of a licensed dealer, such as the KCC. However, the informal marketing subsystem deals with marketed milk and milk products that do not enter the formal marketing subsystem. The two subsystems are briefly reviewed below, focusing at the situation prior to 1992 when the fever of marketing liberalization began to sweep the dairy industry in Kenya. This review borrows heavily from Mbogoh and Ochuonyo (1990).

III.1: The Formal Milk Marketing Subsystem Prior to Marketing Liberalization in 1992

32. KCC used to handle most of the marketed milk that is not sold and consumed in the rural areas before 1992, and it is believed that the KCC is still a market leader in this direction. Since its incorporation in 1925 and until the licensing of the Meru Central Farmers Cooperative Union (MCFCU) and the Kitinda Dairy Farmers Cooperative Society (KDFCS) as dairy processors in 1983 and 1986 respectively, the KCC was virtually the only player in the formal marketing of milk and milk products in Kenya.

33. The KCC has two types of members, namely the private (individuals but large-scale dairy farmers or companies) and cooperative members (primarily the dairy farmers' cooperative societies, consisting of small-scale dairy farmers). Such members own some shares in the KCC. Therefore, the KCC can be said to be a farmers' organisation. As the key player in the formal marketing of milk and milk products, the KCC has continued to play a major role in the development of the dairy industry in Kenya.

34. The licensing of MCFCU and KDFCS as dairy processors and marketing bodies independent of KCC constituted a new concept in the improvement of dairy marketing through the formal marketing subsystem in Kenya. Before 1983, any license issued to any party to process and distribute milk and milk products in Kenya was issued on the implicit understanding that the party concerned was a member of the KCC, e.g. Kilifi Plantations Limited at the coast, which used to be a private member of the KCC and which had been licensed to pasteurise, package and distribute milk to the Mtwapa, Malindi and Watamu areas "on behalf of the KCC".

35. Both the MCFCU and the KDFCS dairy plants were established through the Rural Dairies Development Programme (RDDP). This programme used to promote the formation of rural dairy cooperative societies and also to provide financial support to any such societies which proved that they can organise themselves and collect sufficient amounts of raw milk from their members to warrant the establishment of a dairy processing plant to facilitate the marketing of their members' milk and milk products. To ensure coordination and orderliness in the marketing system, the areas recommended for establishment of rural cooperative dairy plants under the Programme had to be remote from the milk catchment area of an existing KCC dairy plant. However, the MDFCS dairy plant and the KDFCS dairy plant had little effect on the role of the KCC as the main dairy marketing organisation within the formal sector. For instance, whereas the two rural dairy plants had a combined raw milk intake of about 2.4 million litres in 1988, the KCC had a total raw milk intake of about 340 million litres in the same year.

36. Like the KCC, the rural dairies were expected to serve their members by assisting in the collection, processing and distribution of milk and milk products. Initially, both the MCFCU and the KDFCS dairies started as milk collection centres as well as informal market outlets for fresh milk and were free to deliver to the nearest KCC plants any raw milk that could not be sold locally. The two dairies are now equipped with modern processing and packaging facilities, through government and donor aid, and are producing short life ultra-heat treated (UHT) milk (i.e. UHT milk with a shelf-life of about 14 days).

37. A major role of the KCC is to receive, process and distribute fresh milk (as pasteurised milk) on a daily basis. However, the KCC also produces UHT milk for distribution to more remote areas and also for distribution to primary schools under the School Milk (Feeding) Programme. In addition to this, the KCC also produces some other processed milk products, ranging from sour milk (mala) to skim-milk powder, and including butter, cheese, ghee, cream and yoghurt.

38. To facilitate collection, processing and distribution, the KCC has established a network of collection centres and dairy processing plants throughout high-potential milk-producing areas of Kenya. It now has a network of 10 collection centres and 11 factories.

39. Even though the KCC was restructured during 1990/92 period to better serve the interests of its members, it should be noted that, by law, the KCC is actually licensed to undertake dairy processing and distribution as a private enterprise and should, thus be under the control of the KDB. However, owing to its size and importance as dairy and a cooperative processor in Kenya the KCC has so far assumed an independent and statutory role in its activities in the dairy industry in Kenya.

40. The main role of the KDB prior to 1992 used to be the licensing of trade in milk and milk products and in the enforcement of regulations to ensure that the zoned areas' are supplied with milk only by licensed dealers. Since the KCC used to be the main dealer in urban areas, the KDB used to be seen by most dairy producers and other interested parties as a protector of the KCC's interests and also as if it was acting to suppress the efforts of private and rural cooperative dairies. This adverse image should change under a liberalized dairy industry.

III.2: The Informal Milk Marketing Subsystem Prior to and After Marketing Liberalization in 1992

41. As defined, the informal milk marketing subsystem deals with marketed milk that does not enter the formal marketing subsystem. This subsystem involves sales of raw milk by producers to consumers or by producers' agents to consumers. It may also involve hawking of milk from home to home in the rural areas by itinerant traders who do not usually need or seek licenses to do such business.

42. Marketing of raw milk and milk products through the informal marketing subsystem is permissible and tolerated in areas that have not been "zoned-off" by the KDB. Hence the informal milk marketing subsystem is especially important in rural areas. However, it also operates in "zoned" (urban) areas, even though the parties involved know that the transactions are illegal.

43. Most small-scale dairy farmers market their milk through their farmers' dairy cooperative societies (FDCS). These serve two main functions:

· collection of milk from their members, who often are widely dispersed; and
· delivery of that milk to their customers.

Most FDCS find it advisable or necessary to join the KCC as cooperative members so that they can supply the KCC with the excess milk which they cannot market locally during the peak or flush production periods. And this is where the formal and the informal marketing subsystems become intrinsically linked.

44. The FDCS that are close to the KCC dairy plants (or collection centres) normally sell their members' milk to these plants or centres, but they are not bound to and are free to sell their milk where they wish. However, such choice is often limited in the milk-surplus areas and in those areas where only the KCC or its agents are licensed to sell or distribute milk and milk products.

45. The FDCS may be viewed as an important medium that facilitates the sale of small-scale farmers' milk through both the formal and the informal subsystems. Even though individual large-scale dairy farmers could participate in the informal marketing of milk (and some do, to a limited extent), the nature of their operation forces them to become private members of the KCC so that they can sell their milk to it as and when necessary.

46. The preceding account on the operations of the formal and informal milk marketing Subsystems in Kenya suggests that the two subsystems are interlinked, particularly because: o the very existence of the informal subsystem reflects the existence of small-scale milk producers; and o small-scale milk producers often depend on FDCS for the marketing of their surplus milk, and such FDCS often depend on the formal marketing subsystem to dispose of milk that they cannot sell to local consumers.

47. Almost all the milk marketed in Kenya is from small-scale and large-scale farmers. Very little milk is sold by pastoralists outside their production areas. Since it is estimated that the KCC used to handle over 90% of the milk marketed in Kenya prior to 1992, the amount of milk taken in by the KCC from the different types of producers is indicative of who the significant contributors to marketed milk production in Kenya are. Available records in the 1980s suggest that, of the raw milk received by the KCC at its various plants:

· 34% came from large-scale producers;
· 54% came from small-scale producers, through their cooperatives; and
· 12% came from individual small-scale farmers who supplied the KCC directly.

The above percentage shares of different types of suppliers of milk to the KCC may not have changed significantly in the 1990s, even though the share of the large-scale producers may have declined.

48. The preceding account on the marketing system for liquid milk in Kenya prior to 1992 points to a highly centralised system of dairy processing and distribution. Generally, there is sufficient amount of information on the marketing system at the farm, processing and distribution levels, but the system is least understood at the consumer or retail level. The general consensus is that the system is still not well organised at the farm collection level. Inefficient milk collection is largely responsible for a large proportion of milk that is retained by producers for home consumption.

IV: Summary and conclusions

49. This paper has reviewed dairy marketing and the dairy marketing system in Kenya, before and after the government started to implement marketing reforms in the country.

50. The decision by the government (GOK) to relax licensing procedures and bureaucracy has made it relatively easy for anyone interested in engaging in dairy processing and distribution business to get a license to undertake such business. Hence the immediate impact of marketing liberalization in Kenya's dairy industry has been intensified market competition among the existing dairy firms, especially the KCC and the other cooperative dairy plants and businesses. A number of new dairy processors have entered the market, and this has undoubtedly caused some changes in the market shares. However, the KCC still remains the dominant firm in Kenya's dairy industry. Intensified market competition also appears to have resulted in relatively stable milk producer and consumer prices since 1992, but no detailed studies to investigate this aspect have been undertaken. Time now appears to be ripe for studies to document the patterns of actual changes in prices of milk and milk products and market shares among the major players in Kenya's dairy industry since the "Wind of Change" in the name of marketing liberalization began to sweep across the industry in May 1992.

References

Bager, T. (1980). Marketing Cooperatives and Peasants in Kenya Scandinavian Institute of African Studies, Uppsala, Sweden.

CBS (Central Bureau of Statistics). 1979. The Integrated Rural Survey 1977. CBS/IRS, Nairobi, Kenya.

DANIDA (1991). Kenya Dairy Master Plan Study Reports. The Danish International Development Agency (DANIDA) and the Ministry of Livestock Development, Nairobi, Kenya.

GOK/WB/DDWG. (1984). Dairy Development Working Group Report No. 1. Ministry of Agriculture/Ministry of Livestock Development, Nairobi, Kenya.

Hyden, G. (1973). Efficiency versus Distribution in East African Cooperatives. East African Literature Bureau, Nairobi, Kenya.

Mbogoh, S.G. and J.B.O. Ochuonyo (1990). "Kenya's Dairy Industry: The Marketing System and the Marketing and Pricing Policies for Fresh Milk", Paper presented at a Workshop on Dairy Marketing in Sub-Saharan Africa, held at Addis Ababa, Ethiopia, November 26-30, 1990.

Minishi, L.S. and T.M. Mutugu (1986). "The Role of Cooperatives in Agricultural Marketing in Kenya -Their Efficiency and Effectiveness". Paper presented at the Kenya Economic Association's Workshop on "The Role of Cooperatives in the Development of Kenya's Economy. held at Kericho, Kenya, November 10-14, 1986.

Stotz D. 1980. "Grade Dairy Cattle, an Attractive Innovation for Small-scale Farmers in the Highlands of Kenya". Quarterly Journal of International Agriculture 19 (2): 147-160.

USAID (United States Agency for International Development). 1982. USAID/USDA Dryland Cropping Systems Research Project (Kenya): Joint Interim Evaluation Report. USAID, Nairobi, Kenya.

World Bank. 1989. Kenya: Agricultural Growth Prospects and Strategy Options (Draft Reports). World Bank Regional Mission Office, Nairobi, Kenya.

DISCUSSION

Q. Muwaya Stephene

How are farmers organised under Meru Farmers Cooperative and how do they benefit from the newly introduced Dairy plant there.

Response: Dr. Mbogoh

The cooperative hires management to run the Dairy plant.

Q. G. Burrell

What is the position with respect to taxes in Kenya, since formalized/regulated processors get caught in the tax net while informal sector does not. This acts as a disincentive to process formally in the regulated market as happens in Tanzania.

Response:

In Kenya taxes are limited to the Dairy Board case while VAT is levied on nearly all products.

Q. G.B.M. Phiri

Between multipurpose and specialised Dairy Co-operatives, which ones perform better in Kenya?

Response

The multipurpose ones tend to have more difficulties. However, most of the co-operative undertakings milk marketing are specialized single (dairy) cooperatives.

Q. Dr. G. Mwakatundu

The impact of liberalization has led to importation of milk and other dairy products competing with KCC. What has the government done to clear its name regarding the importation of bad milk into Kenya?

Response:

The importers was a private company, but powder was to go to KCC. The government of Kenya ordered re-export of contaminated produce to original country.


Previous Page Top of Page Next Page