Agri-investment
By providing financial and technical support to dairy farmers in Kenya, a local agribusiness is diversifying its product line whilst enabling farmers to expand their operations.
Growing private investment in Kenya’s dairy sector is increasing the availability of high quality and nutritious dairy products across the country. Bio Food Products Ltd, which is supported by the USAID East Africa Trade and Investment Hub, works with dozens of local farmers to produce and sell a range of milk-based products, including yoghurts, creams and flavoured milk drinks, to its retail and hospitality customers across East Africa. The company has supported dairy farmers by paying above-market prices for their products and offering loans so that farmers can invest in technology, such as milking machines, storage tanks, cooling systems and other equipment to scale up their operations.
At Amagoro farm on the outskirts of Kitale in Kenya’s Rift Valley region, Christopher Joroge, a 39-year-old farmer, decided to switch from crop to dairy production a decade ago, after repeatedly experiencing dismal yields. “When I started dairy production, I realised it was the right decision” says Joroge, who now has a herd of 50 cows. Joroge started with just two cows and initially, did not have the capacity to store any of the milk he collected. He was thus forced to sell his product locally and at a low price of around Ksh 30-35/l. However, after securing a loan from Bio Foods in 2015, he was able to purchase a cooler with the capacity to store 1,000 l, which has helped him to expand his business and sell his milk on to Bio Food for a better price of Ksh 45/l. Using this technology, Joroge also collects and stores milk from neighbouring smallholder farmers, acting as a collection point for Bio Food. “I sell my fresh milk to Bio Food Products under a special agreement,” he explains. “The financial loan has helped stabilise my business… I no longer incur losses,” says Joroge, who collects and sells about 350 l of milk per day.
Bio Food currently purchases 1.2 million l of milk per year or 100,000 l per month from local farmers, and the company’s products are now available in over 800 retail outlets. The products are also being exported to neighbouring markets in Rwanda, Tanzania and Uganda. Bio Food also provides technical support to farmers to help them produce better quality products. Farmer training focuses on simple, low cost, low technology and effective measures to reinforce quality cattle feeding and improved milk hygiene by cleaning equipment, including the cooling systems. “Our dairy products are of a higher quality [due to effective on-farm chilling to increase shelf life], which is why consumers don’t hesitate to pay more for them,” says Gerald Mwangi, the production manager at Bio Food.
According to Joachim Westerveld, the company’s managing director, staff employment has also increased from 143 in 2016 to 249 in 2018. Jobs at the Bio Food factory include food scientists, packaging staff, cooks, tasters, shop floor workers, accountants and customer safety managers. The company has also expanded its product line to include complementary products like honey and jam.
