Press release number: IFAD 04/06

Rome, 25 January 2006 – Thousands of poor, small-scale milk producers and traders will benefit from a new development programme in Kenya. It will strengthen their ability to create and respond to market opportunities in the largely informal dairy sector.

The US$19.8 million Smallholder Dairy Commercialization Programme will be financed by a US$17.5 million loan and a US$845,000 grant from the International Fund for Agriculture Development (IFAD). The loan agreement was signed today at IFAD headquarters in Rome by the President of IFAD, Lennart Båge, and the Ambassador of Kenya to Italy, Anne Belinda Nyikuli.

Kenya’s dairy sector is one of the largest and most developed in sub-Saharan Africa, accounting for 3.5 per cent of the country’s GDP. Yet, about three quarters of traded milk is sold outside the formal processing sector. Farmers prefer to deal with informal mobile milk traders because they pay higher prices than factory processors. However, the farmers largely remain poor, with limited ability to intensify their production. There are also public health concerns due to the poor hygiene in the handling and transport of dairy products to the major cities, Nairobi, Mombasa, Kisumu and Nakuru, where urban dwellers consume 125 to 150 litres of milk per person every year.

IFAD will work with the Ministry of Livestock and Fisheries to help dairy farmers, mobile milk traders and operators of small milk bars to become more market-oriented. Over the next six years, the programme, targeting the Nakuru central area and eight other districts in the west of the country, is expected to lead to an increase in milk production, traded products and income. Farmers and traders will get a better understanding of enterprise skills and key technical services such as feeding, artificial insemination, disease control or quality assurance.

“This programme has many ‘firsts’ in the Kenyan context”, IFAD president Lennart Båge said during the signing ceremony. “A special targeting study using the Government’s detailed poverty data has been carried out to identify the geographical areas where we will operate and the type of smallholder dairy farmer to be targeted.”

“Furthermore, about 65 per cent of those who benefit will be women,” Båge said. “The programme also aims to integrate smallholder dairy producers into the national milk marketing chain and has an exit strategy so that they rapidly become self-sustainable.”

This is also the first programme in Kenya to benefit from an IFAD country grant aimed at supporting the national policy dialogue and reform process. It is in line with the Government Strategy for Revitalizing Agriculture, initiated in 2003, which assigns the agricultural sector a central role in generating poverty-reducing economic growth.

This programme will ultimately aim at improving the nutritional status and food security of the 24,000 households that will participate.

With this loan IFAD will have financed 13 investments in Kenya for a total of US$158 million in loan and grants.

IFAD is a specialized agency of the United Nations dedicated to eradicating poverty and hunger in rural areas of developing countries. Through low-interest loans and grants, it develops and finances projects that enable rural poor people to overcome poverty themselves. There are 185 ongoing IFAD-supported rural poverty eradication programmes and projects, totalling US$6.1 billion. IFAD has invested nearly US$2.9 billion in these initiatives. Cofinancing has been provided by governments, beneficiaries, multilateral and bilateral donors and other partners. At full development, these programmes will help nearly 80 million rural poor women and men to achieve better lives for themselves and their families. Since starting operations in 1978, IFAD has invested almost US$9.0 billion in 707 programmes and projects that have helped nearly 300 million poor rural men and women achieve better lives for themselves and their families. Governments and other financing sources in the recipient countries, including project participants, have contributed almost US$8.8 billion, and multilateral, bilateral and other donors have provided another US$7.0 billion in cofinancing.