Case study

DFID Research: Milking the benefits for small scale dairy vendors in Kenya

Policy change in Kenya's dairy industry, has improved handling and hygiene of milk, increased profit margins, given greater access to milk, and provided employment.

Kenya’s informal milk sector dominates the milk marketing chain.

Kenya’s informal milk sector dominates the milk marketing chain. Picture: WRENmedia

Evidence-based research to inform policy change in Kenya’s dairy industry has resulted in formal licensing for smallscale milk vendors previously excluded from retail markets. The benefits of policy change include improved handling and hygiene of milk, increased profit margins for smallscale vendors, greater access to milk for consumers, and employment for many others in the sector, providing estimated economy-wide benefits of US$33.5 million annually.

Evidence-based research by the DFID-funded ‘Smallholder Dairy Project (SDP)’ revealed the economic and nutritional significance of the informal milk sector and the potential for improved handling and hygiene practices, which would ensure quality and safety of milk from farm to cup. The second phase of the project (2002 to 2005) involved more active engagement with policymakers to raise awareness of its research findings on the informal milk market, its importance for livelihoods, and to allay public health concerns while simultaneously working with milk vendors to pilot training and certification approaches that effectively improve quality. Updated dairy industry regulations, designed to streamline licence application processes for smallscale milk vendors, were issued by the Ministry of Livestock and Fisheries Development (MoLFD) in September 2004.

Total economy-wide gross benefits accruing to the sector from the policy change are estimated at US$33 million per annum, as a result of reduced transaction costs and less milk spoilage due to improved practices by newly-trained vendors. More than half of the benefits accrue to producers (increased incomes) and consumers (lower milk prices). Licensing of smallscale milk traders by the Kenya Dairy Board (KDB) has also led to formation of groups under the umbrella of the Kenya Smallscale Milk Traders Association. A further legacy of the project is the establishment of self-employed business development service providers, who are paid by dairy companies and traders to provide training on milk handling and business development. The lessons learnt from the SDP are being applied across East Africa, particularly Tanzania and Uganda, and also in India.

Read the full version of this case study, written by WRENmedia.

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Published 18 March 2011