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Your four keys to setting up a dairy cooperative

News By Smart Harvest | 28th Jul, 2020

Dear Daktari

We are 20 farmers who started dairy farming about two years ago. We market our milk together, taking turns to take it to the market and various supply points. Covid has affected us. Going forward, we plan to form a cooperative. Kindly advise us on how to go about it. [Mukoya Musanda, Kakamega County]

Thank you for your question Mr Mukoya and for also reading the Smart Harvest. Cooperative movement is not a new thing, it traces its roots to 1800s when dairy farmers in the US saw the benefit of collective bargaining. In Kenya, the Kenya Cooperative Creameries (KCC) established in 1925 is probably the oldest cooperative. Cooperatives in Kenya have been formed to collect and market coffee, tea, cotton, and pyrethrum, among others.

Cooperatives are built upon farmer numbers and subsequently collective bargaining power. 

Through cooperatives, farmers can save money from their daily deliveries, get loans to buy more cows and farm inputs. However, to achieve all these benefits the following needs to be set as foundational stones upon which to grow a cooperative.

1. Make it a separate legal entity

Mukoya and his team comprise 20 dairy farmers, but to form a cooperative they need more numbers and legal documents like Memorandum of Understanding. As a legal entity, the cooperative is recognised by law as a legal person that can enter into agreements with other institutions on behalf of members.

2. Operated on business principles

Mukoya’s group may be running as a business to make profits. As a cooperative, they also need to document the profits or losses made and why. Where profits are made, it must be stated clearly how much should be ploughed back into the business and how much is to be paid out to farmers as dividends. Without any document on rules of engagement, some members may feel over worked, left out or “conned.” Research has shown that some founder members of cooperatives develop an attachment and forget that a cooperative is an entity that is larger than them. This in turn leads to squabbles.

3. Professional extension services

Dairy cooperatives are built upon biological resources (cows) that produce an equally delicate product (milk). These two should never be handled casually. Professionalism in veterinary extension and dairy technology must be brought on board. I have observed dairy cooperatives collapse and when you do a root cause analysis, it boils down to inadequate supply of milk due to preventable diseases. Such cooperatives did not employ the professional advice of an animal health professional. The other challenge is quality of milk collected. The marketed milk is the brand of a dairy cooperative. 

4. Value Addition 

Mukoya’s group is only trading in raw milk. As he says, their market dwindled with the Covid-19 pandemic. Had they thought of making yoghurt or mala, they would not be negatively affected as they could change to making other milk products that have a longer shelf life and better prices. Value addition increases the worth of milk and therefore fetches more for the farmer.

 [The writer was the vet of the year in 2016 and works as a Veterinary Officer with the Ministry of Agriculture, Livestock, Fisheries and Cooperatives – [email protected]]

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