Kenya’s Dairy Industry Illuminates The Way Forward.

Kenya’s markets have been under the crucible for experiments of various economic models and political ideologies for a while. From the nationalization of key industries at independence to veiled socialism espoused by the Sessional Paper Number 10 of 1965 under the colourful and nostalgic banner of African Socialism. However the dairy industry continues to issue useful and systematic illumination as to what market models, socio-political and economic models the country should adopt.
The foundations of the dairy industry in Kenya were laid by the European settlers who annexed various highlands for dairy and other assorted agricultural production. For the purpose of the dairy industry however the settler farmers established the Kenya Co-operative Creameries (KCC) in the year 1925. They used the KCC to institute a market monopoly that banished African farmers to subsistent dairy production rather than commercial dairy production. At Kenya’s independence in the year 1963 the government gave in to political pressures from the populace and nationalized KCC as well as myriads of other institution that were at the hands settlers.
The nationalization of various institutions heralded a dark era in Kenyan market history characterized by gross managerial inefficiency and rent seeking in Kenya’s public sector and state corporations. Kenya’s founding father’s (Jommo Kenyatta) Swahili rhetoric “ hakuna cha bure’’ was misconstrued to mean that government services would not be dispensed without palm greasing rather than the actual meaning that there were no gains without toil.
The first post -independent decade was modest for KCC. However years of mismanagement caught up with KCC during subsequent decades. Milk farmers went unpaid for elongated periods of time. Since KCC was the only player in the dairy industry farmers had no reprieve. The Kenya Dairy Board (KDB) on its part continued to overzealously implement a law that prohibited sale of milk to individual consumers; during those times riding with a jerry-can of milk on a bicycle without license from KDB was enough to land one in police custody. During this time Kenya’s second president Daniel Moi tried cover up the unusual happenings in the dairy sector by the pitiful provision of free milk for primary going children in public schools. The epitaph of KCC as a monopoly in the dairy sector had already been written. It subsequently collapsed in the early 1990’s, debt ridden and in a shambolic state, it owed farmers millions of unpaid dues. In the town where I grew up; Nyahururu a small town in Kenya I remember us turning the derelict KCC buildings into grounds for simulation of our childish war games.
The fall of KCC and subsequent deregulation of the dairy sector provided an opportunity for the sector to regenerate under the watchful management of savvy private entrepreneurs. The competition in sector ensured that dairy farmers were not exploited while at the same time keeping the prices of processed milk down. Today, Kenya ranks first in sub-Saharan Africa in gross milk production and second only to South Africa in the whole continent. This has been achieved through the re-organization of the dairy sector to incorporate the small scale farmer using intensive farming methods to increase milk production. This has meant that a hitherto non-monetized sector is churning wealth for millions of Kenyan farmers.
The writing is on the wall, the bureaucrats should decipher that the panacea to Africa’s development impasse lies not in more state interventions or market intrusion, but rather minimalist states which are responsive to free markets signals for the balance of economic order.

Alex Njeru.
Ndungualexx@gmail.com