Brookside Dairy plans to re-enter Tanzania to fuel growth

By Njiraini Muchira

 Erratic supply of raw milk has prompted Brookside Dairy to reconsider the possibilities of sourcing for the commodity from Tanzania to sustain an ambitious growth plan.

 Four years after the company was forced to exit Tanzania where it used to source for raw milk supply from farmers, the processor is rethinking its strategy buoyed by a visit by Tanzanian President Jakaya Kikwete to its Ruiru-based plant last month.

John Gethi, Brookside Dairy general manager in charge of milk procurement and extension services, said the visit was a show of confidence in the company’s business. It has given Brookside the impetus to explore strategies to re-enter the Tanzanian market.

“We want to relook at the Tanzania market because we might be going back to buying milk in Tanzania soon,” he said.

Milk processsor

He added the ultimate plan for the processor is to put up a plant in the country, which depends largely on imports to meet domestic demand due to low investments in the sub-sector.

Though Tanzania has over 20 milk processors, daily production stands at less 200,000 litres.  This has translated to Tanzania having one of the lowest per capita milk consumption at 41 litres per annum compared to 85 litres per annum in Kenya and 200 litres per annum recommended by the World Health Organisation.

 Processors have repeatedly blamed cheap imports and high taxes for crippling the sector. Brookside, which is engaging in an aggressive expansion targeted at increasing capacity and venturing into new markets, was forced to stop buying raw milk from Tanzanian farmers four years ago after authorities demanded the milk to be processed locally.

According to Gethi, securing stable supply of raw milk is a critical component in the company’s growth plan considering that Kenya has been experiencing unpredictable milk supply due to changing weather patterns.

Besides, competition in Kenya is extremely stiff with over 45 processors fighting for the 20 per cent formal milk supply chain. In 2010, the country witnessed an unprecedented increase in milk production by farmers that overwhelmed processors leading to wastage. And last year a devastating frost caused a major decline in production.

 The inconsistencies in milk supply have prompted Brookside to seek ways of doubling the number of contracted farmers from the current 145,000 by targeting farmers in arid and semi-arid areas.  “Entering into contracts with farmers is a new strategy in the industry and it helps us in planning,” he explained.

To ensure that farmers are guaranteed of a ready market, Brookside is investing Sh3 billion in a powder milk plant that will have a capacity of 1.2 million litres.

When commissioned towards the end of the year, the plant will enable the company buy more milk from farmers, which it can store in powder form and convert to milk during dry seasons.

Cooling plants

 The company also intends to continue investing in cooling plants at close proximity to farmers.  Brookside has 30 cooling plants and plans to invest in at least seven every year.

This forms part of the company’s efforts to empower farmers considering it pays Sh800 million to farmers for milk supply every month.

 “The economic impact to milk producing areas are significant because farmers are assured of good and timely payments,” reckoned Gethi. Recently Brookside increased the lowest farm-gate amount paid to farmers for milk delivery from Sh24 to Sh27.

 Though the processor is already present in the East Africa markets where it exports 20 per cent of its products, the company intends to increase its market share and also explore new markets like Somalia, which is slowly returning to stability.

“We are hoping to venture into Somalia if the country achieves lasting peace,” said Gethi. Others markets that Brookside is looking to exploit include the Middle East and South East Asia. The company exports high end products like gee and butter.