African Farmers need to Concentrate on Quality Not Quantity, AGRA

The road to urban food markets for African smallholder farmers leads through the nascent agricultural processing sector, especially staples food.

With the transformations in food-induced by rapid urbanization and a growing middle class, the domestic food market is becoming more attractive for farmers than traditional export cash crops

Beyond stimulating sales and income growth among smallholders, transforming staple and other agribusiness value chains such as dairy has the potential to become a core segment of renewed industrialization strategies.

From processing to packaging, transport, distribution, sales and advertising, and safety and certification services providers, agribusiness value chains have the potential to create many well-paying jobs while contributing to the diversification of the production structure of African economies.

From cassava and maize to millet thousands of small- and medium-sized enterprises drive the transformation of the staples value chains. The enterprises are often women-led and employ a handful of workers. These enterprises tend to be concentrated in the main production areas or around the large urban centers

The Kenyan Dairy industry can be used as a case study:

Commercial dairying was introduced into Kenya in the early 20th century, but indigenous Kenyans were not involved in it until the mid-1950s.

After independence, most dairy cattle were transferred to the indigenous people, marking the beginning of smallholder domination of the dairy industry. The policy environment for dairy is divided into four phases: Milk production is mainly from cattle (3.5 million Friesian, Ayrshire, Jersey and Guernsey breeds and their crosses, and 9.3 million indigenous animals), camels (1 million) and goats (13.9 million). Dairy cattle produce about 70 percent of total national milk output (more than 3 billion liters).

The bulk of dairy cattle feed is from natural forage, cultivated fodder, and crop by-products. Commercial feeds include a dairy meal, dairy cubes, calf pullets, maize germ, maize bran, molasses, cottonseed cake, wheat pollard and wheat bran. About 500,000 tons of commercial livestock feed was produced in 2007.

Estimated annual per capita milk consumption ranges from 19 kilograms in rural areas to 125 kilograms in urban ones. About 55 percent the milk produced in Kenya, mainly from dairy cattle, enters the market. Most (more than 75 percent) is marketed through informal (unlicensed) channels, with about 30 processors and other formal milk marketers handling about 400 million liters a year, much of it in liquid form.

Owing to the large amount of milk that is marketed unprocessed and the weak monitoring of markets, there are concerns about public health risks from diseases and drug residues.

Milk product safety is controlled through the existing food safety standards and regulations contained in two main laws—the Dairy Industry Act (CAP 336) and the Public Health Act (CAP 242)—neither of which is very effective.

Possible negative environmental impacts of dairy production activities include loss of vegetation through overgrazing of natural pastures and pollution from industrial processing.

At the farm level, dairy activities are estimated to generate, for every 1,000 liters of milk produced daily, about 23 fulltime jobs for the self-employed, 50 permanent full-time jobs for employees, and three full-time casual labor jobs. This totals to 77 direct farm jobs per 1,000 liters of daily production, or about 841,000 full-time jobs in total (585,000 for full-time hired workers and 256,000 for self-employed/farm owners).

In the processing sector, 13 jobs are generated for every 1,000 liters of milk handled, or a total of about 15,000 jobs. The informal sector accounts for about 70 percent of the jobs in dairy marketing and processing, generating 18 employment opportunities for every 1,000 liters of milk handled, or 40,000 jobs.

Licensed milk traders include producers, mini dairies, cottage industries and cooling plants, whose number has been increasing and is now over 1,500. Processors handle more than 80 percent of the total milk and dairy products marketed through the licensed (formal) market channel.

In the absence of innovation in production technology and improved business practices, the number of enterprises continues to rise and profit to decline. This inevitably leads to a large concentration of low productivity, persistently small enterprises, with no capacity to grow or create well-paying jobs.

If countries fail to escape from the trap of the quantity expansion phase and enter the quality improvement phase, the process of successful industrialization, in which some enterprises consistently succeed in improving product quality, raising profitability, and growing in size grinds to a halt.