Corporate Leadership in Dairy Industry (Case of Kenya Dairy Board)

Abstract

The corporate leadership in Kenya Dairy Board is dormant in ensuring linkages between the Government and Public Private Partnership benefits the farmer, small scale milk processors instead leaving big timers in dairy industry to dominate. The recent trend has been towards big processors embarking in buying-out small milk processors. Brookside is on record to have bought-out  Ilara Dairy, Spin Knit Dairy, Buzeki Dairy and its tactical disposal of 40% shareholding in favour of Banone Company of France. The dairy industry is headed for a monopoly in milk processing if the current trend is anything to go by. This is taking root despite Kippra clearly stating that the sector is un- exploited hence the Government should take this advantage of the poverty- reducing potential of livestock sub-sector. Recommendations over years on ways to revitalize the dairy industry with a view to empower the producer have never been implemented fully including the lukewarm participation of the market regulator KDB and the Government. The Government has been keen to privatise KCC, which will give private milk processors a leverage to continue dictating the terms of trade in the industry. There is a lot of emphasis on marketing activities of milk products where the farmer has no say or input. This is due to the fact that farmers are not directly involved in what happens after they struggle to deliver milk to the buyer.  Kenya Cooperative Creameries (KCC) role in conjunction with KDB is not clear.The researcher will investigate corporate leadership in Kenya Dairy Board towards growth of dairy industry. KDB should demonstrate leadership in ensuring a level playing field for the farmer, small and big processor, in cost of inputs and services offered by professional in livestock sub- sector. The general objective of the study is to investigate corporate leadership in dairy industry (case of Kenya Diary Board).Specific objectives are cost of production, quality of milk, infrastructure in dairy farming areas, informal milk trade and competition among milk processors.    The target population are small, medium, large dairy farmers in central Kenya region. The milk processors in central Kenya composing of all sizes. The role of the Government, KDB and KCC, should be investigated with a view to bring the farmer into the picture concerning the returns on the efforts they make in the dairy industry. Concerning cost of production, volatility in milk and feed prices is a challenge to dairy farmers, cost to produce milk differ significantly- the range is from 4 to 128 USD per 100 kg milk, annual benchmarking a part of strategic dairy development is extremely important to benchmark the competitiveness of the current dairy farming system annually. Quality of milk is affected by post harvest losses, public health risk, lack of cooling system (cold chain).  Tuei, (2010), found that farmers are not aware of regulations governing the dairy sector. Strengthening farmer and stakeholder groups will empower them to lobby for services such as credit, education, milk cooling facilities, roads or piped water all of which will improve the quality and quantity of milk. Infrastructure in milk producing areas, (SDCP) appraisal report recognizes that poor rural infrastructure is a main constraint to economic development of rural areas in Kenya. Informal milk trade resulted from problems in the formal milk trade. According to RDCoE, this compromises quality while offering direct completion to dairy processing industry. Competition in milk processing has indications that the dairy industry is headed to a monopolistic tendencies. Brookside already owns 60% of dairy industry. It is projected that in the next 5 years, barriers to entry will emerge and coming in of international brands into the sector through a buy-out of existing dairies to tap into the Eastern Africa market. The Government, KDB, KCC, informal traders, hawkers, transporters, cooperatives and processors are all involved directly in dairy industry. The KDB should play its role rightfully to regulate the sector and the farmer be considered as central to all who eke a living out of dairy farming. The researchers have continued to dwell on almost similar challenges in the dairy sector and the buck stops with the regulator for want of implementation. KDB is hence expected to exhibit leadership in handling of the sector. The Government on recommendations of the KDB should address issues of legislation; infrastructure (road rehabilitation and upgrade) and the regulator take up the rest of infrastructural development. All other stakeholders are recommended to exert necessary pressure with the producers (dairy farmer) interest at the centre. The Government is urged to actualize the School milk program as contained in its manifesto to reduce wastage estimated as worth ksh. 9 billion each year.

Keywords: Corporate leadership, Dairy industry, Kenya