Dairy Cooperative On Verge Of Collapse
KENYA - The Limuru Dairy Farmers Cooperative Society is on the verge of collapse because of heightened competition in milk processing and a sharp increase in middlemen, who take over 60 per cent of the firm's daily milk supply.
6 December 2011
2 minute read
AllAfrica reports that the once prosperous milk processor in Central Province is receiving less than 30,000 litres of milk a day, a huge drop from the 100,000 litres it used to process in its hey day.
Founded in 1997, Limuru Dairy was a leading milk processor after the fall of the Kenya Cooperative Creameries (KCC).
Liberalisation of the milk sector in the 1990s saw Limuru Dairy lose its core markets in Kiambu, Nyandarua, and Laikipia counties to new businesses such as Brookside and Githunguri Dairy, the manufacturer of the Fresha milk brand.
The revival of KCC in the past four years has not helped Limuru Dairy's operation.
"Our society faces a big risk due to milk hawking. We lost much to the new and fast growing processors but the worst of them all are the middlemen, who buy milk from members registered in our society and then sell it to Nairobi hotels," said Limuru Dairy chairman, Joshua Njoroge.
He added that the cooperative has continued to lose members, noting that some are abandoning dairy farming for real estate.
The Githunguri Dairy Cooperative Society, which neighbours Limuru Dairy, started processing milk in 2004 and has grown to become a busy milk plant, operating at a capacity of 200,000 litres a day.
It had been ranked third after KCC and Brookside, which merged with Tuzo.
Limuru Dairy pays Sh28 a litre to its members. Mr Njoroge said middlemen offer slightly more to attract farmers.
Traders, he said, were using motorbikes to fetch milk from producers' homes, adding that they also buy milk rejected at the plant due to poor quality.
With this dire situation, Mr Njoroge said, the plant is unable to improve its machines, being one of the oldest in the country.
He said increased costs of production caused by biting inflation have increased the firm's operating expenses.
"Fuel and power bills have gone up tremendously, while milk prices in the market are not going up. I would appeal to our farmers to bring their milk to us because we are incurring high costs while processing little milk," said Mr Njoroge.
This, he said, has been caused mainly by increased prices of animal feeds and farm inputs.
"Dairy farming is not earning farmers much. The cost of feeds has gone up and the profit margins have dropped. Many farmers are quitting," he said.
Other farmers, Mr Njoroge said, have reduced the amount of commercial feeds to their animals, leading to decrease in milk production.
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