How digitising services saved milk cooperative

On a rainy morning at Mburugu Dairy Farmers Co-Operative Society, a bustling hive of activity unfolds. Motorbikes and vehicles arrive, laden with hundreds of milk cans collected from various farmers.

The milk undergoes meticulous testing to ensure its authenticity and quality.

Kennedy Njagi, the manager of the cooperative, who is supervising the offloading of milk stresses the importance of testing milk to ensure it's free from adulteration, debris and sediments, abnormal odour and chemicals.

“Good quality raw milk is very important as it determines the quality and safety of milk itself and its products. Here, we apply good hygiene practices throughout the dairy value chain,” begins Njagi during a visit to the cooperative located Ngandoni Ward, Manyatta Sub County, and Embu County. 

The cooperative, he shares, has graders who collect milk from farmers, weigh, test, grade then bulk into 50 litres container before transporting it to the cooperative, where it is subjected to further tests to ascertain its desired quality.

The cooperative, initiated in 2011 with nine farmers producing and supplying 34 litres of milk per day, has evolved significantly. After being registered as a cooperative in 2013, it has grown to encompass 4676 farmers. However, only 2700 are active members, collecting a total of 19,200 litres of milk per day.

Farmers protest

All has been well but operational challenges emerged two years ago, prompting farmers to protest due to issues like late payments and unreliable weighing scales. Farmers threatened to stop supplying milk to the cooperative.

Acknowledging the existence of operational issues that raised complaints from farmers, the Chairman however explains, that addressing these challenges requires expertise, time, and proper planning. 

"Farmers raised genuine concerns that needed expertise, time, and finances to address. We had plans to solve them, though some felt we were not doing anything to solve them, hence, threatening to cut the supply of milk," explains Njagi.

The Smart Harvest visited Justine Muchangi, one of the farmers supplying milk to the dairy cooperative, almost 2km away. With two cows, Muchangi currently supplies 18 litres of milk per day to the cooperative.

So, what was the issue with the cooperative? He begins, that late payment is one of the issues that created a rift between farmers and the cooperative.

“I am a dairy farmer who entirely depends on milk l deliver to the cooperative. I have bills to pay at the beginning of every month, yet, the earliest the cooperative was paying us was after the 10th of the month. It was frustrating,” he shares. However, he’s quick to add, that the issue was later solved and today, they get their money on the third of every month.

Another challenge highlighted by Muchangi was the oversight of grams during weighing, emphasising the financial impact of neglected grams over time.

“Officials used to weigh and record only kilogrammes and overlooked the grammes. Yet, if the overlooked grammes are totaled the whole month, they make several kilos, and that is some good money,” he adds. 

Another farmer James Maina could not understand why on several occasions, his money would be deducted to pay a loan of inputs he’d not taken. The farmer refers to the cooperative-owned agro vet shop, which gave members inputs on credit if they did not have cash.

Once in a while l took some inputs on credit. However, what was shocking is finding you have been credited for the inputs you did not take,” recounts Maina who supplies 25 litres of milk every day to the cooperative. He also recalls, the several times he received more money than the milk he had delivered and other times paid less.

Chairman attributed the issues to manual operations prone to errors, “The innumerable challenges such as slow operations and mix up of payments was caused by operations being done manually. And being done by humans, at times they ended up committing errors unknowingly.”

In a significant development, the cooperative received support from the National Agricultural and Rural Inclusive Growth Project (NARIGP), a government project with funding from the World Bank.

When they met, officials from NARIGP asked the Chairman and his team to first write a proposal highlighting critical areas they wanted assistance. "We wanted financial support to recruit more farmers, increase milk production, digitise, and streamline operations, thereby addressing the concerns affecting the smooth running of the cooperative," says the chairman. 

After submitting the proposal in 2021, the cooperative received an inclusion grant worth Sh 996,000 to expand its catchment area by recruiting more members. “So we went mobilizing for more farmers and doubled our milk intakes from 7000 litres to 14,000 litres per day,” he says, adding they also received training in dairy management.

Shortly thereafter, NARIGP released a second funding meant for digitizing operations, which the Chairman describes as a game changer worth Sh 3,534,000. The amount was to install a Management Information System (MIS).

He explains, “The MIS was meant to bring about efficiency in our operations and also help farmers get the best services from the cooperative. The money was used to procure MIS software, purchase of digital weighing scales, thermo-receipt printers, smartphones, procurement of a server and installation of network within the society premises. Others were procurement of milk cans, milk testing equipment, and training of the staff.”

Njagi reveals they sourced and identified an application developer whom they shared with challenges the cooperative was facing. The developer then brought a backbone structure, which Chairman and his team suggested and incorporated inputs before settling on a tailor-made device that fits their bill.

The installation of MIS brought a lot of efficiency, beginning with the use of digital recording of data. Initially, the graders who collected milk from farmers used pens to record data in milk collection journals only to discover several errors later. Today, they get accurate information.

Today, the cooperative pays farmers by the third day of the month. He explains, “Before digitization, farmers got their pay after the 10th because processing milk delivery data using Excel takes time. For instance, if there are deductions you have to do them one by one for every farmer, and also refunds you do the same. By the time you are through you have taken a lot of time. But, today with digital, by the end of the month all the information is ready.”

He explains that previously, they required several data clerks to key in data on milk deliveries in an Excel spreadsheet. This, was also a nightmare because, the so many entries they handled, ended up making errors. As a result, many farmers brought complaints of getting less money, while others were overpaid.

The cooperative also offers various credit services to members and recovers its money at the end month. The services include an agro vet, where farmers get supplements and dairy meals, hay that cushions farmers during drought, veterinary services, Artificial Insemination (AI), and training done at the village level.

In addition, the cooperative links farmers to other services it cannot provide such as the installation of biogas, bio digesters and energy-saving jikos.

Njagi explains digitization is helping the cooperative determine who qualifies for credit services. “Previously, we didn’t have ready data and some farmers would receive credit inputs, only to realize at the end of the month they did not qualify due to less milk they deliver, meaning we close the month with debts. This was a very big financial risk if we continued issuing huge volumes of inputs to those who don’t qualify,” he explains.

Today, he adds digitization system shows the creditworthiness of a farmer and if one doesn’t qualify for a bag of dairy meal worth Sh 3000, then he or she gets half of that, which is Sh 1500. This helps to control credit levels.

Chairman explains the MIS has helped build farmers’ loyalty and confidence because they know what they have delivered is what they will receive at the end of the month. All their milk weight including grams are totalled. He says, “There has been an increase in membership due to the loyalty and getting the best service, and that is due to NARIGP intervention.”

Farmers appreciate, “Weighing using digital scales, the quantity is exact, and record even the grams involved which adds up to several kilos of milk at end month. This is honesty and encouraging.”

Maina says the cooperative pays them Sh 47 per litre, the money he uses to buy food at home and pay school fees for his children. As a member of the cooperative, Maina reveals he has also benefitted a lot in training, upgrading his breeds and credit inputs.

The majority of farmers say commercial feeds are quite expensive, making the process of producing milk equally high.

Njagi reveals that NARIGP has also funded the cooperative with two milk coolers of 5,000 litres each, a bigger backup generator to sustain the energy requirement for the coolers, which helped handle all the milk delivered at the cooperative. Initially, the tanker would be on standby to take chilled milk to create space for other milk.

He reveals they have made a proposal to NARIGP on breed improvement, this involves the provision of sexed semen to not only members of the cooperative but the entire country. They plan to expand feed production to capture a wider market. Njagi explains they want to expand on yoghurt production which they have been producing on a small scale and also invest in pasteurization.

The transformative journey of Mburugu Dairy Farmers Co-Operative Society showcases the positive influence of technology and strategic support, marking a new era of efficiency and prosperity in dairy operations.