Background

The first case of COVID-19 was detected in Kenya in early March 2020. After the government embarked on mass testing in April, the number of daily cases rose rapidly reaching as high as 49 by May 2020. The government also came up with various mitigating measures including restricted movement, such as the dusk to dawn curfew, while allowing transportation of agricultural products during the day. Thus all stakeholders have identified agriculture, and especially food production, distribution and marketing, as one of the essential services that must go hand- in- hand with healthy measures in order to ensure food security for majority of Kenyans.

Stricter COVID-19 prevention measures in the country include cessation of movement in and out of infection hotspots such as Nairobi Metropolitan and counties of Mombasa, Kilifi and Kwale. On May 16, 2020, the borders of Tanzania and Somalia were closed, except for cargo transport among the neighboring countries. As expected such interventions have serious implications on the transportation of milk and other agricultural products from farms to markets, including export ones, despite being classified as critical and essential products and services.

However, according to the three dairy processors participating in Africa-Milk Project (Mukurweini Wakulima Dairy Ltd, New Kenya Cooperative Creameries (NKCC) at Sotik, and Happy Cow Ltd) the devastating impact of coronavirus pandemic on the country’s economy and the subsequent measures taken by the government to curb high rates of transmission among the public have had mixed effects on diary production and marketing. Nevertheless, the three processors are experiencing one or more new challenges or setbacks arising directly or indirectly from this pandemic. These challenges are listed here-below.

Dairy experiences and/or challenges arising from COVID-19 Pandemic

1. Changes of consumer preferences

It has been noted that there is increased demand for long life dairy products in the Kenyan market. Dairy products outlets such supermarkets have been buying large quantities of long life products and especially ultra-high temperature processed milk. This induced demand shock may be due to the fact that with uncertainties in the dairy market, buyers and consumers can minimize risks associated with spoilage. There is particularly artificial buying and hoarding of milk products by most retailers though prices have not changed since scarcity has not yet set in. Similarly, there is increased demand for value added products such as yogurt and fermented milk. This increased demand is a blessing to the processors as value added products have also higher profits than fresh milk.

2. Increased on-farm milk production

Dairy animals’ productivity in the milksheds of the three Africa-Milk Project dairy processors has not been negatively affected by COVID-19. It has been noted that milk production has continued to crease since November 2019. Notably, COVID -19 infections have been low in the milkshed counties and agricultural activities have not changed much. Most of the government regulations on infection preventions are not being implemented in the milkshed areas, save for keeping social distance and wearing face masks. Thus with the continued favorable weather conditions since November 2019, the cost of production per animal has gone down due to availability of more fodder. The reduced availability of commercial feeds due to curtailed movement to Nairobi has also made farmers increase use of locally available fodder which is plenty in all the milksheds.

Since home-grown feed is cheaper than the commercial one, this dynamism has further led to reduction of costs of production though it has also reduced income for commercial feed suppliers.

3. Diversification of producer market channels

The processors were of the view that the increased milk production at farm level has not had a huge impact on their activities since, with children at home after schools’ closure, consumption of unprocessed milk has increased considerably. Nevertheless, with general public practicing self isolation and social distancing, some buyers such as restaurants and local eateries that used to buy unprocessed milk do not do so any more and therefore it is most likely that this excess share of milk is now being sold directly to the rural households.

4. Competitive farm-gate milk prices for producers

Just a month before detection of COVID-19 infections in the country, the government had instructed its own processor (the NKCC) to buy milk from farmers at KES 33 per litre. This order forced collectively owned and private processors to improve their farm-gate prices though most of them were already more competitive. The order has remained in force during the COVID-19 period and all the processors were buying milk at prices near or above the government set price. Since this price is well above the gross margin price (ranging between KES 22-27 per litre depending on feeding regimes) the welfare of farmers has continued to increase even in the midst of increased supply. This is probably because the consumer demand is also relatively high.

5. Reduced imports of dairy products

With curtailed movements from neighboring countries and increased bureaucracy in cargo transport, the country has witnessed reduced flow of imported milk and particularly from Uganda.

This has favored the Kenyan producers with stabilization of prices since the only supply of raw milk currently in the country is from local farmers.

6. Labor dynamics in the processing plants

It has been noted that the processors had to take precautionary measures in line with the government directives and especially by employing more staff as the number of work shifts increased. This was not only necessitated by the requirement for social distancing but also by the increased supply of milk to the processing plants and deliveries to consumer markets.

___________________________

1 Department of Agricultural Economics, University of Nairobi, Kenya, john.mburu@uonbi.ac.ke

2 Wageningen University & Research, Wageningen, The Netherlands, asaah.ndambi@wur.nl