Dairy cooperatives in Molo Nakuru county have grown from the sole role of marketing milk for farmers to providing financial services.
Cooperatives and Micro and Small Enterprise CS Simon Chelugui said the significant role has been attributed to the cooperatives' improved per capita income.
He said milk sales through cooperatives had been boosted by sufficient dairy animal feeds such as silage and dairy meal.
Molo subcounty has an estimated population of 156,000 residents, majority of whom are farmers.
Chelugui said cooperatives in Molo had bolstered the dairy sub-sector by encouraging farmers to invest more in animal feeds to boost milk production.
According to estimates, at least five per cent of the national Gross Domestic Product is generated from milk.
“Cooperatives are key components that turn the wheels of the dairy industry in Kenya. Through bulking, cooperatives in Molo have reduced the cost of milk marketing and enabled farmers to realise higher returns, through provision of a reliable and remunerative outlet for milk,” he said.
Chelugui spoke when he officially closed a week-long capacity training for more than 500 dairy farmers.
He said lack of proper structures had delayed government's intention to assist dairy farmers.
“The government assists farmers in organised groups. Most farmers in the dairy sector are in production as individuals, which makes it hard for them to tap maximum market potential and access to quality extension services and affordable credit facilities,” Chelugui said.
Towards this, the CS urged farmers to form cooperatives to help them tap market opportunities and attract government investments.
He said cooperatives provide small agricultural producers’ opportunities and a wide range of services.
These include, improved access to markets, natural resources, information, communications, technologies, credit, training and warehouses.
“State initiatives through the Kenya Industrial Estates, Youth Enterprise Development Fund and Uwezo Fund support cooperatives formed by women and youth groups," Chelugui said.
"The organisations give start-ups and micro businesses to broaden competitiveness and provide opportunities for jobs, income and productivity.”
He said the state was formulating new policies and governance structures to increase country's milk production from 4.6 billion litres to 10 billion litres per anum.
The CS said well managed cooperatives can address weak market frameworks, shortage of agricultural extension services, and unavailability of certified seeds.
This is in addition to expansion of storage facilities to mitigate post-harvest losses.
Working in groups among farmers, he said, will increase farmers' bargaining power and order inputs therefore, lowering their expenditures and increasing their chances to access markets.
Chelugui urged farmers to utilise the state-of-the-art storage facilities, noting that surplus milk will be processed for export.
He asked county governments to train farmers to conserve fodder for use during dry spell.
Liberalisation of milk marketing and withdrawal of governments’ technical services as part of industry reforms two decades ago, forced dairy cooperatives to assume greater roles.
Today, some groups have set up agro-vet services, where members access inputs on credit, recoverable from proceeds of milk deliveries.
Dairy groups are also playing empowerment roles through training.
Chelugui said the ministry has partnered with research agencies and learning institutions to train farmers on how to boost their production.
The training program, he said has exposed farmers to local and international exchange programmes to widen their knowledge scope.
“We are encouraging devolved units to revamp their extension services programmes. The dairy training sessions in partnership with cooperatives are strategies to empower members and expose them to best practices in dairy cow husbandry,” he said.
Chelugui said many farmers had improved their incomes after sustained efforts by various stakeholders.
He said dairy cooperatives play an integral role to eliminate post-harvest losses in the milk value chain.
In the past, there have been concerns over weak management structures of dairy cooperatives that led to poor business planning, unrealistic and conflicting goals and targets.
The Kenya Dairy Board Managing Director, Margaret Kibogy said the organisation has banked on a cooperative model to eliminate brokers in the dairy sector.
The plan will see farmers invest in dairy infrastructure and directly engage processors.
Kibogy said the elimination of costly transporters will enable farmers to get more share of the producer price paid by processors.
Nakuru County Deputy Governor David Kones said the county will channel funds to cooperatives to empower residents.
“The reason why I love cooperative societies is because they empower members directly compared to the other ventures,” he said.