Watch and listen: building a dairy industry from the ground up in Kenya
Private companies and family farms have embarked on a massive dairy development drive in the highlands of Kenya. Thomas Hubert reports from the Mt Elgon area.

Under a baking sun in the northwestern Kenyan village of Kiminini, Christine Musiasia grabbed a bunch of freshly chopped feed – a mix of tropical Rhodes grass and protein-rich desmodium and calliendra crops – and brought it to her four animals. The two milking cows and two heifers rushed to the troughs. One year ago, they produced just enough milk for the family. This year, they are netting Christine a steady cash income.

“I used to take my cows along the road,” Christine told the Irish Farmers Journal. Skinny Kenyan cattle are often seen grazing on patchy grass verges or even trash, while farmers focus on growing maize – a crop in high demand in Kenya, but one vulnerable to drought, pests and price volatility.

In just 12 months, Christine’s farm has changed radically. She has ditched maize for a mix of fodder and food crops, used AI for the first time and built a simple but efficient housing unit for her cows. She dumps their manure into a small anaerobic digester which gives her cooking gas and nutrient-rich slurry. The farm supports Christine, her husband and six children, and two farm workers. “I also have more free time,” she says.

One of her neighbours, John Wakeli, has also started to grow fodder crops for his two goats and two in-calf heifers. “This is the first time we have cattle,” he said. “We will start milking soon.”

Another local farmer, Nathan Rono, made similar changes and proudly showed his milk dockets of the past year. From under five litres, his daily deliveries have grown to above 11 litres.

These are some of the 30,000 family farms targeted by the Livelihoods Mt Elgon project, which kicked off last year to develop dairying in this region over the next decade – all from private sector resources. VI Agroforestry, a farm support organisation operating across East Africa, is training farmers into new technologies and providing seeds for the new crops.

Listen to an interview with VI Agroforestry deputy regional director Wangu Mutua in our podcast below:

Finance comes under the form of a €3.5m investment from the Livelihoods Carbon Fund, an investment body for multinationals looking to achieve social impact and offset their greenhouse gas emissions.

Sustainable farming practices will avoid the emission of 1m tonnes of CO2 through sequestration in soils and increased cow efficiency

“There are three main benefits to the Livelihoods Mt Elgon project: the first one is its positive impact on the lives of farmers and their families, starting with increased and more stable revenues over time. The second is the additional milk produced for Brookside, contributing to more economic activity. And the last one is climate action as sustainable farming practices will avoid the emission of 1m tonnes of CO2 through sequestration in soils and increased cow efficiency,” said Livelihoods Venture president and co-founder Bernard Giraud.

The French dairy giant Danone is a major player here: it was the first investor in the Livelihoods Funds and owns 40% of Brookside Dairies, the largest milk processor in Kenya. The other 60% belongs to the Kenyatta family of the first and current presidents of Kenya.

Brookside has committed to buying all the milk from the farmers involved in the project for the next ten years as long as it meets quality criteria. Kenyan consumers are spending more and more on dairy products and the company can barely meet the demand for its liquid milk, yoghurt, cream, butter and ghee.

“We have an installed capacity of 1.5m litres/day, but we process between 300,000 and 800,000l/day,” said Emmanuel Kabaki, Brookside’s head of milk procurement and extension services. The drought that hit east Africa in the past year curtailed milk supply. Importing is not an option as it would attract a 60% tariff. A new drier built to transform any oversupply into milk powder remains idle.

“This year, a bonus had to be paid. It’s challenging,” Kabaki said, even though Brookside trains 20,000 farmers each year to increase productivity. According to Kabaki, most Kenyan dairy farmers milk one to three cows on 3ac to 5ac, with the average daily yield just six litres/cow.

Brookside is offering co-ops in the Mt Elgon project its current top price of 35c/l on one-year fixed-price contracts, investing in their bulk tanks and dispatching staff for maintenance and quality control. The company hopes to lift its daily collection from the area from 5,000 litres to 135,000 litres.

Co-ops are a key link in this emerging value chain, and 15 of them are involved in this project. During the Irish Farmers Journal’s visit to Mubere, farmers brought their milk and staff offloaded creamery cans from local collection points. A Brookside employee performed density and alcohol tests before accepting deliveries into the 3,000-litre communal bulk tank. The scene was reminiscent of Ireland 60 years ago.

Mubere Dairy Farmers’ Co-operative Society started informally in 2009 but registered as a co-op just two months ago. It is targeting 3,000 registered members and more than 3,000 litres/day in collection by the end of this year. It secured a government grant to fund its bulk tank and received assistance from VI Agroforestry to establish sound governance– a key point after many Kenyan dairy co-ops collapsed 30 years ago, exposing farmers to heavy losses.

“People had lost faith in the co-op movement with the mismanagement of the 1980s,” said project manager Edward Masinde. “We’re bringing them back.”

Of the 35c/l paid by Brookside, Mubere co-op keeps 3c/l to pay its eight staff and other costs. Farmers get 32c/l in cash, bank wire or mobile phone transfer – a common form of payment in Kenya. To become members, suppliers buy a €5 share. The co-op has weathered the recent drought well and volumes are picking up again, allowing it to set money aside.

“We want to buy our own premises,” said its chair Robert Makhanu. “We will also start a health service with a vet available,” he added.

Maximising output from land

The farmers taking part in the Mt Elgon project are transforming their maize-only farms into dense patchworks of crops designed for maximum yield. On just 1.5ac, John Wakeli grows green beans between maize rows, fodder and protein crops, bananas and sweet potatoes, a combination of trees controlling soil nutrients, moisture and erosion while providing firewood and timber, and a few coffee bushes. He also keeps rabbits, laying hens, and has a nursery with dozens of seedlings. This is a reminder that a farm’s main pasture or tillage production area always leave gaps – however tiny – to pack in additional sources of output and income.

Reporting supported by the Simon Cumbers Media Fund.

Read more

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Germany

German wheat production is set to fall to a 10-year low, with the recent spell of hot weather across Europe negatively impacting crop yields. German wheat production for 2018 is now pegged at 21.5m tonnes, which would be 12% down on last year.

China

The USDA has forecast that US soya bean exports for 2018/19 will fall 11% year on year to 55.5m tonnes, primarily as a result of falling market share in China after the Chinese government applied 25% tariffs on US soya beans.

Argentina

Argentinian milk production for the first five months of 2018 (Jan-May) stood at just over 3.7bn litres, which is almost 8% ahead of the same period last year. If milk production continues to expand at this pace, Argentina could see its annual milk supply break 10bn litres for the first time since 2015.

United States

The USDA has increased its forecast for US maize (corn) production in the 2018/19 season by almost 5m tonnes to hit 361.5m tonnes. This would still be short of the 371m tonnes produced in 2017 and the record 385m tonnes produced in 2016.

Tyson Foods issues profit warning as a result of trade tariffs
The largest meat company in the US has slashed its profit outlook, as oversupply and tariffs weigh on meat prices.

Tyson Foods, the largest meat company in the US, blamed the escalating global trade war as it issued a profit warning on Monday. The company said the current trade policy in the US, coupled with increased tariffs on US exports, had hit prices negatively, particularly for pork and chicken.

As a result, Tyson has reduced its profit outlook for 2018, revising its adjusted earnings guidance to $5.70 to $6 a share – down from its previous outlook of $6.55 to $6.70. Shares in Tyson have plunged more than 8% in trading on Monday, as markets take a dim view of the profit warning.

Import tariffs

Both China and Mexico, two of the largest export markets for US pork, have imposed import tariffs on US pork in recent months in retaliation to the 10% tariff that US President Donald Trump slapped on imports of steel and aluminium.

“The combination of changing global trade policies here and abroad, and the uncertainty of any resolution, have created a challenging market environment of increased volatility, lower prices and oversupply of protein,” said chief executive of Tyson Foods Tom Hayes.

On top of rising trade tensions, meat prices in the US are under downward pressure as a result of significant oversupply in the market. Higher production of pork and beef has pushed prices of both meats down in the US, which in turn has had a negative impact on chicken prices.

Trump reverts to soya bean politics
US President Donald Trump has said he is back on track with the EU after this week’s meeting in Washington.

With the world teetering on the verge of an unprecedented trade war, an unlikely saviour has emerged to soothe simmering tensions between old allies Europe and the US. This saviour, of course, is none other than the humble soya bean, which has found itself the unlikely antidote to a trade spat created entirely by US President Donald Trump.

Following crunch talks held in Washington this week with European Commission President Jean-Claude Juncker, Trump announced that the EU had agreed to buy billions of dollars worth of extra US exports, primarily soya beans and natural gas.

“European Union representatives told me they would start buying soybeans from our great farmers immediately,” tweeted Trump.

The US President added that the EU and US, which have a $1tn bilateral trade relationship, had struck a deal to work towards zero trade barriers, which Trump proclaimed a “new phase” in EU-US relations.

“We had a big day, very big. We agreed today, first of all, to work together toward zero tariffs, zero non-tariff barriers and zero subsidies on non-auto industrial goods,” said Trump.

Soya bean politics

For Trump, highlighting the soya bean angle as a big win is a clear play to his voter base in rural America. US farmers have found themselves a soft target in the escalating global trade war we’ve seen kick off in 2018. Earlier this month, China, the world’s largest buyer of agricultural commodities, slapped 25% tariffs on imports of US products such as soya beans, maize corn and pork.

In a bid to spare US farmers some of the pain from these tariffs, the US President this week announced a $12bn package of direct supports, which will include direct payments to farmers producing commodities such as soya beans, maize, and wheat, as well as dairy and pig farmers.

However, when you look past the theatrics and the tweets, President Trump is trying to spare US farmers from a trade crisis he himself has largely created. Since taking office, Trump has been determined to shake up the global trade system he believes has served the US so poorly. The US President has done this, however, in the only way he seems to know how – by smashing a wrecking ball at it.

Trump started the global trade war when he first slapped 10% tariffs on imports of steel and aluminium from key allies such as Mexico, Canada and the EU. He followed this up by targeting $234bn worth of goods imported from China with tariffs, and has promised more unless China bends to more favourable trade terms for the US.

As such, Trump’s claim that this week’s deal with the EU to buy more soya beans from US farmers is a significant victory rings hollow. For the last number of years, China has continued to import higher and higher amounts of US soya beans, which has driven prices and allowed US farmers to plant record acreages of the protein crop.

But with Beijing imposing retaliatory tariffs on imports of US soya beans, Chinese importers have started to move away from the US and are now looking to South America, and countries like Brazil, as their preferential suppliers.

Instead of going to China from now on, US soya beans are likely to end being shipped to ports in Europe. And while Europe is a net importer of protein crops, its import needs will never match China’s seemingly unquenchable appetite for soya beans.

Europe’s hypocrisy

From a European perspective, any cooling in the recent tensions with the US is to be welcomed. Many viewed this week’s agreement between the EU and US as a significant victory for European President Jean-Claude Juncker, having secured a détente in the recent war of words.

However, many EU farmers will be left scratching their heads when they see the President of the European Commission agreeing to import billions of dollars worth of GM soya beans, a technology that European farmers are banned from using, just to appease President Trump.

The agreement will be even harder for European farmers to stomach following this week’s ruling by the European Court of Justice (ECJ) that gene-edited organisms should be subject to the same restrictions as conventional genetically modified organisms (GMOs).

This means that new plant breeding techniques (NPBT) such as Crispr Cas9 will be subject to the same obligations laid down by the GMO directive.