Agribusiness team

ESADA conference 24 Sep 2014 in Nairobi

Rien Geuze© Agriterra 2014

Rien Geuze

Agricultural Economist

Born 1956 on dairy + crop farm in NETHERLANDS

Since 2011 in KENYA + UGANDA

Today: Share my views with you on Dairy Sector Development

+ Farmers Organizations

Is there a future in Dairy Farming?

Normally I say YES

But today I say NO

Why: Farming = growing• Crops• Animals• Enterprise • Income

And what do we see ?

• Fertile soil, but little Feed Crops • Good climate, but weak calves & cows• Educated people, but preaching

Is there money in dairy?

Normally I say YES

But today I say NO

Why:• Zero grazing, but zero results• Free range grazing, but no yields• Business people starting large scale, but they

cannot farm

‘Farming does not just happen, whether it is ancient, historic or modern. It is an extremely complex process requiring great skill in balancing the different component elements, inputs and outputs, gambling against the greatest uncertainty of all, the climate, and managing to have sufficient reserves to survive the worst possible outcome’

Peter J. Reynolds, Ancient Farming, 1987

So what is needed?

WHO LIKES COWS?WHO LOVES COWS?WHO FEEDS COWS?

A real Dairy Farmer #1-living on the farm -feeding 24 hours/day

It’s a full time job

Not a telephone farmer

Price stability # 2

Volatile farm gate prices kill farmer’s incentive

Jan Feb Mrt Apr Mei Jun Jul Aug Sep Okt Nov Dec0

2

4

6

8

10

12

Monthly milk prices KE

Price stability # 2

Higher prices are always welcome to farmers, but stable prices are key driver for growth, before all other things.

If something needs to be improved: pay a premium; otherwise change takes forever.

1. Go up or down with max. 1 currency unit (1-3%)2. Quality standards: Use bonus/malus system3. Coolers: Many stand idle; if to be operational pay not

equal but above operational costs.

No more ‘Preaching’ # 3

100+ farmer trainings are:- fun- NOT effective

→ Only spreads information

→ Implementation = hard work

+ at farm level + in small groups

X

Modern dairying: it’s all about

- Efficiency: # 4

how many cows …how many workers …

Modern dairying: it’s all about

- Efficiency:

how many cows 6how many workers 2 farmer included

= only 3 cows per worker!

It’s not a hobby, it’s business

Modern dairying: it’s all about

- Efficiency: another farm

how many cows 24how many workers 6 farmer included

→ still only 4 cows per worker

Target: 8 cows per worker !

Land use: time for change #5

Silage: Maize–Sorghum–Napier, year around

Rhodes grass: cut hay early→ fertize → need protein: 2 → 3 → 4 cuts/year

NEW: Brazilian (= KE/TA) grass for paddocking → 31

paddocks

31 paddocks, 1 day per paddock, 30 m², electric fence, irrigate

New pasture, for paddocking / grazing

Study groups: grow together #6

Research ≠ Practical

Need: - Extension- Study groups - Grow together

1 → 2 → 3 → 5 → 8 cows

And on and on and on

16 → 32 → 64 → 128 cows

Never be satisfied

Structural change dairy sector #7

# 1 # 2 # 3 # 40

10

20

30

40

50

60

Market share processors Kenya

2010 2013

Future

-Milk sales = 24 hour economy so milk processing………..?-Mergers and Acquisitions

→ Coops: mergers→ Private enterprise: acquisitions

-Involve Farmers Organisations-Less Copy & Paste → real new products

7 conclusions for Dairy SSA

1. Need real dairy farmers2. Price stability farm gate3. No more ‘preaching’4. Efficiency: farm & processing5. Change land use: feed crops, new

grassland, paddocking?6. Study groups: grow together7. Sector: more Mergers and Acquisitions

Thanks for your attention

Feed for thought