Family Bank has entered into a partnership with Performeter Agribusiness Limited in a deal that will see 100,000 farmers in dairy cooperatives access credit to finance fodder production, a critical barrier to the competitiveness of Kenya’s dairy sector.
Dairy farming remains a priority income-generating enterprise in more than 15 of 47 the counties in Kenya due to its potential to transform the economic well-being of the households involved in it. However, the earning potential from the dairy farming activities is greatly hindered by the seasonality of fodder and forage availability and the low nutritional quality of fodder fed to the cows. This means that cows do not get enough feed most of the year and the feed available do not have the required nutrition to support optimal milk production per cow. This has slowed down the growth of the Kenyan dairy sector.
Through this partnership, the Bank has set aside KES 1 billion to facilitate industrial production of fodder by financing the fodder production activities namely; land preparation, planting, fertilization, weed control, harvesting, ensiling, baling and transportation, up to the point where the dairy farmer receives the fodder at the farm. This is aimed at supporting the dairy farmers to have all-year-round access to good quality fodder that will enable them to double their milk production and consequently their income too.
In addition to working capital financing to farmers, Family Bank will also finance enterprises involved in bulk procurement of dairy farming inputs and equipment. The capital expenditure includes expansion of cold chain, set up of farm infrastructure, upgrading of milk processing facilities and renewable energy at the milk processing plants, among others. The Bank will also provide working capital for milk processors to finance purchase, processing and storage of shelf-stable milk products such as milk powder during the flash season for sale during the dry season.
“The importance of the dairy sector to Kenya’s economy cannot be underscored. The dairy sector, like any other sector, has also been affected by the COVID-19 pandemic, and as a result, we are experiencing low milk production in the country. This is why Family Bank in partnership with Performeter, an experienced player in the dairy sector, has set aside KES 1 billion as financing to enable farmers to access working capital and other financial services to support the dairy value chain and unlock its growth potential to the entrepreneurial dairy farmers,” said Family Bank Chief Executive Officer Rebecca Mbithi. “By working with dairy cooperatives, we believe that we can be able to target many small-scale entrepreneurs who contribute over 75% of Kenya’s total production and have an exponential growth effect of the sector in line with the President’s Big Four Agenda on food security,” she added.
A stagnating dairy sector means a slowing economic development nationally. To address this, the President’s Big Four Agenda ear-marked Agriculture development as a key vehicle for economic growth. CashCow is one of the flagship projects under the Big Four Agenda anchored on the Ministry of Agriculture Livestock Fisheries & Cooperatives and steered by the Kenya Dairy Board aimed at promoting industrial production of fodder in the country.
“Transforming Kenya’s dairy sector will require a concerted effort by key actors. The government has ample land resources that can be mobilized into industrial forage and fodder production and that will be the game-changer. A strategic intervention on fodder is the surest way to rejuvenate our dairy industry and move towards a net exporter status on milk, and as a sector, we can do this,” said CashCow Project Chief Advisor and a seasoned Industrial Economist Moses Nyabila.
The CashCow Project brings together many stakeholders in the dairy sector comprising of commercial banks, commercial fodder producers, dairy cooperatives, suppliers of seeds, fertilizer and machinery, insurers, contractors and milk processors who will play different roles to ensure production of up to 100,000 acres of fodder for use by dairy farmers. Perfometer, a leading dairy advisory and consulting company was assigned the leadership and coordination role in this project.
“In the last three decades, our country has made great strides in the development of genetics of the dairy animals. However, farmers will not be able to benefit from the improved breeds unless we feed them properly. Telling farmers how to feed the cow is not enough, because as long as that fodder is not available when it is needed, then the investment in genetics and training will be a loss. We are staring at a worrying trend where our milk consumption per capita is expected to grow faster than our milk production and therefore unless we take a step now, we will find ourselves in that unfortunate situation where we have to import milk to feed our people. This financing by Family Bank is a very timely gesture as it addresses the most significant constraint, which is fodder, which If properly addressed will allow the sector to even export milk” said Performeter Director and Head of Business David Maina.
In support for this Partnership, the Kenya Dairy Board Managing Director Mrs Margaret Kibogy applauded Family Bank for setting aside a significant portfolio to finance the fodder value chain and called upon other financiers and development partners to support the CashCow project especially with the technical assistance required across the chain.
“I urge the fodder producers to apply the most efficient production technologies so as to get the most value at the lowest costs possible, and for the dairy farmers to get the right advice on feeding their cows so that at the sector level, we can reap the benefit of the accelerated fodder production efforts’’ she added as she reiterated Kenya Dairy Board’s commitment to steer the CashCow Project jointly with Perfometer.