CASE 4: ANOLEI CAMEL MILK COOPERATIVE

ISIOLO COUNTY, KENYA

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Table of Contents

1.0 Introduction..........................................................................................31.1 Back ground.....................................................................................................................4

1.2 Context – Isiolo County.....................................................................................................4

Box 1: Map of Kenya showing Isiolo County...................................................5

1.3 Anolei Camel Milk Cooperative - structure and objectives............................6

Box 2: Organization levels at Anolei...............................................................7Box 3: Anolei’s Objectives..............................................................................7

1.4. Partnership Arrangements.............................................................................................7

1.4.1 Map of actors.........................................................................................8

1.5. Activities of Anolei............................................................................................................8

2.0 The Innovation...........................................................................92.1 The innovation as a cash spinning enterprise..........................................................9

2.2 Learning points from the experience and innovation.........................................10

Box 4. What do we learn from this case?......................................................10

3.0 Transport and other challenges around the innovation..........113.1 Coping with the transport challenge.........................................................................11

Box 5: Calculations on the scenario of a 7 toner truck.................................12

3.2 The future............................................................................................................................12

4.0 Additional reading and references.....................................................13

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1.0 Introduction

This case write up is about Case 5 in the “Learning Route: Innovative Livestock Marketing from Northern to Eastern Africa” and features the Anolei Camel Milk Cooperative in Isiolo County, eastern Kenya.

The camel and its products have been described by some pundits as a “sleeping giant”. This summarizes the potential that the camel has especially in the face of the now regular droughts; effects of climate change and the unexploited nutritional value of the camel products.

Unfortunately, it seems that this potential has not been fully utilized due to various factors that include; lack of effective coordination among the actors at various levels; inadequate capacity in production and marketing; lack of awareness on the nutritional value of the camel and its products; poor infrastructure etc.

In this case, the focus is on camel milk in the Greater Isiolo and what various actors are undertaking to make the chain more effective; market oriented and consequently contribute immensely to people’s livelihoods. It’s estimated that the Greater Isiolo has about 40,300 camels with a daily milk production of about 40,000 litters. Out of the 50,000 litters only about 5,000 litres ( 12.5%) is supplied to the main market in Eastleigh, Nairobi. The rest of the milk is consumed in Isiolo town or subsistently at the household level.

The camel is a hardy animal and perhaps the hardiest in the drought-ravaged northern Kenya – but for one of its lesser known benefits, its milk. The camel is able produce milk all year round and to endure conditions that would halt the milk production of, or even kill, other livestock. It is therefore being touted as a drought-resistant alternative to traditional livestock in the Horn of Africa.

With help from SNV and partners, the Anolei women of Isiolo in northern Kenya have clearly demonstrated that camel milk has the potential not just to help feed families, but to build businesses. With more than 60 members, the Anolei women’s cooperative now purchases and markets milk from local herders, enabling them not only to meet local demand, but to send up to 5,000 litres of milk to Nairobi each day. Many Anolei women are now earning up to 60,000 Kshs (about €560) per month from camel milk, with traders in Isiolo county bringing in more than 19 million Kshs (€176,000 euros) annually from the trade.

However, there are more than just financial benefits to this unusual product. The UN Food and Agriculture Organization rates camel milk as rich in iron, unsaturated fatty acids and B vitamins, while containing

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The focus has been to strategically enhance market efficiency of camel milk; support the camel

three times as much vitamin C as cow’s milk.

producers and traders improve the hygiene of the milk and lastly facilitate opening of new markets for camel milk to increase supply.

In this regard various development partners including Kenya Camel Association; SNV Netherlands Development Organization; VSF – Suisse; KARI-KASAL etc have been implementing projects to ensure that the above strategic areas are responded to. The partners have creatively divided responsibility such that VSF- Suisse; KARI etc support improvement of camel milk hygiene and handling while SNV supports improving business efficiency and marketing in the chain

There is evidence that from this initial work; demand for camel milk is gradually increasing but there is need for further linkage of the market to increase supply; women traders are now using Mpesa as a means of cash transactions; bank accounts have been opened; gross margin analysis undertaken has encouraged the camel milk traders to try accessing financial services to improve on their transport services; aluminium cans are now being used as a means to improve hygiene etc However, there is need to further invest in this sector to ensure that efficiency is attained while shifting from subsistent to commercial orientation.

1.1 Back groundThe Food and Agriculture Organization (FAO) estimates the total population of camels in the world today to be 22 million, of which 89% are one-humped dromedary (Camelus dromedarius) camels and the remaining 11% are the two-humped Bactrian (Camelus bactrianus) generally found in the cold deserts of Asia. Although historical records show that the domestication of camels first took place in the Arabian peninsula about 3000 years ago from where they spread to other parts of the world, over 80% of the world’s camel population is today found in Africa with the highest concentration in North East Africa which accounts for 63% of the world camel population. Kenya is estimated to have the fifth largest camel herd in the world after Somalia, Sudan, Ethiopia and Mauritania, in that order. All camels found in Kenya, estimated to number 1.06 million in 2007 are of the dromedary (one-humped) type.

In Kenya, the camel is traditionally, a Northern Districts animal kept mainly by people of Cushitic ethnicity largely the Somali, Rendille and the Gabra. The Turkana are also traditionally an important camel keeping

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community. Kenya has three main sub-categories or breeds of camels. These are associated with the ethnic groups which traditionally kept camels - the Somalis of North-Eastern Province; the Oromo Gabra and the Rendille sub-tribes of Marsabit and Moyale Districts; and the Turkana of Rift Valley. Camels which originate from among the Somalis are referred as Somali breeds and are generally much larger than other breeds in the country with adult females weighing between 500 – 600 kg and males 600 – 800 kg respectively.

Historically, Somalis have primarily drunk camel milk, as camel herding is part of their traditional lifestyle. For this reason the majority of current customers are relocated Somalis in Kenya and Kenyans of Somali descent. These communities are concentrated in the Garissa area, the Dadaab refugee camp and the Eastleigh district of Nairobi.

There is a growing interest in the nutritional and therapeutic properties of camel milk so there is a small but growing market for higher quality camel milk among non-Somali populations. Recent research in camel milk has proven that it has properties applicable to treating several ailments including autoimmune diseases, allergies, and juvenile diabetes among others (Ulrich Wernery, Central Veterinary Research Laboratory, UAE;

1.2 Context – Isiolo County Isiolo County is located in the upper Eastern part of Kenya. It borders Garissa and Samburu to the East, Meru to the South West, Kitui and Tana River Counties to the South east and Marsabit  to the North West and Wajir to the North east. The local topography of Isiolo is arid or semi-arid low plains. Ewaso Nyiro River flows through the district and partly bounds it.

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Box 1: Map of Kenya showing Isiolo County

Isiolo County (formerly Isiolo District) is administrative region in Eastern Province of Kenya. Its population is 143,294, and its capital is Isiolo town. Isiolo District is to be the first district to be developed as part of the Kenya Vision 2030 program.

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The local topography is arid or semi-arid low plains. Ewaso Nyiro River flows through the district and partly bounds it. Isiolo district has only one local authority, Isiolo county council. The district has two constituencies: Isiolo North Constituency and Isiolo South Constituency. The main features of Isiolo include pastoralism, livestock production, Buffalo Springs and Bisanadi Games reserves.

1.3 Anolei Camel Milk Cooperative - structure and objectives

Anolei Women group is registered with the ministry of culture and social services, and to date has 33 members with a Co-ordinator. The main purpose of the group is to collect milk and send it to Nairobi’s Eastleigh Area.

The group owns two freezers, each with a capacity of 360 litres. The group recently received equipment for a milk bar from Kenya Livestock Marketing Council (KLMC). The group receives milk collected from: Gibsing, Mlango and Kulamawe, a distance of 40 km from Isiolo town.

Camel milking is done three times a day with an average of 4000 litres a day during dry season and approximately 6500 litres during rainy season. The milk is brought to Isiolo by 4 land cruisers but in some tough terrains, donkeys are used to get the milk to the main roads. However in the rainy season the supply of camel milk is high yet the demand is low. The Eastleigh market is also supplied by Garissa town. It should be noted that the group members carry out business as individuals. Part of the group’s profits goes to the group for social welfare (e.g. sickness, school fees)

Due to the hygienic issues, the group has been advised to use aluminium containers, but the investment is so high. However, with the support of VSF Suisse, about 80 of the producer groups have received aluminium cans. For the future, Anolei is keen to expand their supply to target new non-traditional markets, and prefer to sell fresh milk in large volumes. The group has joined a lobbying

and advocacy organization- the Kenya Camel Association.

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Box 2: Organization levels at Anolei

The objectives of Anolei are illustrated in Box 4 below:

Box 3: Anolei’s Objectives

These are: To enhance business efficiency of the producer- bulker; and Isiolo-

Nairobi (Eastleigh) camel milk chain To penetrate and retain new markets in other markets within

Nairobi and other towns To support the camel producers and traders improve the hygiene of

camel milk To facilitate opening of new camel milk markets to increase supply

of camel milk To enhance coordination of stakeholders in the camel milk chain

The cooperative is today 1 year old but had operated for 15 years as producer self help group selling milk to relatives in Nairobi- through an effort of 5 women.

The following is a quick time line of Anolei1997 5 women started marketing milk to their relatives in Nairobi,

by November of the same year, the number had increased to 18

2005 Registered with the Ministry of Social Services as a self help group and started providing social assistance to members – school fees, health etc

2010 The membership had reached 33 and now registered as a cooperative

Chairperson

Secretary Treasurer

Coordinator

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2008- 2010 Started making linkages for development support from partners like SNV, KLMC, VSF Suisse, MoLD

2012 Membership is now 64

1.4. Partnership Arrangements The following have been the most important partners for Anolei:

1) Kenya Camel Association- advocacy, lobbying and research

2) SNV Netherlands Development Organization- business capacity and efficiency of business processes, value chain upgrading and marketing

3) VSF – Suisse- hygiene related support and advise

4) UN Food Agriculture Organisation (FAO) – improved herd management

5) KARI- research hand camel milk hygiene

1.4.1 Map of actors The following are the actors who play part in the value chain:

a) Public sector MoLD, NGOs (SNV, VSF Suisse)b) Producers, Bulkers, Transporters, Traders, Consumers c) Local, regional and international customers

1.5. Activities of AnoleiThe following are the core activities performed by Anolei:

a) Out reaching new members b) Treatment and camel husbandry c) Tradingd) Milk pasteurization e) Transactions managementf) Cooling milk g) Retailingh) Transport i) Marketing j) Milk hygiene

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2.0 The Innovation The innovation is aimed at alleviating poverty and improving the living standards of women from erstwhile conservative cultures- though the provision of financial independence. The innovation is specific to commercialisation of camel milk as a cash cow for Anolei. This is achieved through producer organization and capacity building through partner support, building and cooling facilities, coordinated input supply (drugs, food etc), quality assurance, pooled transport, increasing market outlets and efficient (risk-free) transaction systems. This innovation has been enabled by:

a) The growing demand for camel milk, especially within the Somali community in Nairobi’s Eastleigh area. Anolei- quite an enterprising outfit has taken advantage of this demand by bulking milk from individual camel owners and setting up a supply and distribution network across Kenya

b) Financial projects to high returns on the product  Camel-owning culture traditionally places the man as the owner of the camel, which has given men a route to high earnings through selling camels to neighbouring Ethiopia, where they are shipped to more lucrative Middle Eastern markets. But the milk belongs to the woman, and is itself now fuelling an avenue of commerce that has seen some of the women out-earning their men. The Anolei Women’s’ Group hires a Land Rover, which moves through the unforgiving terrain collecting the milk from farmers, which it then delivers to the group in Isiolo. The milk is put in a freezer until the following day, when it is put in buses and transported to Nairobi.

2.1 The innovation as a cash spinning enterpriseThe women sell the camel milk by the litre, for Sh60 in Isiolo and Sh100 in Nairobi.The venture has been so lucrative that the members of the group, who have mobilized farmers to sell their milk, themselves earn up to Sh60, 000 a month, which has meant a complete change in lifestyles.

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Some, like Sophia, now own rental houses in Isiolo town built from the proceeds of the milk enterprise.

Safia Kulow, the Chairlady of the group is in firm control of her economy after her and other traditional Anolei women made big business of camel milk. Now they consider which investments to make to increase revenues from their industry.

2.2 Learning points from the experience and innovation

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Box 4. What do we learn from this case?

The camel and its products, mainly milk, are gradually claiming a strong spot in the face of climate change and the now ever changing drought and severe rainfall patterns in the Horn of Africa.

a) Despite the ravaging drought situation in Northern Kenya, the Anolei women in Isiolo have clearly demonstrated that camel milk as a business can provide incomes that sustains pastoralist livelihoods.

b) Camel milk value chain has a spiral advantage since the women are major chain actors and therefore well positioned to benefit i.e. women traders earning up to 60,000 Kshs (about 560 euros) a month and Isiolo county earning about 19 million Kshs (176,000 euros) annually from this trade.

c) Support from partners if well targeted can be very transformational. i.e. SNV Kenya; VSF Suisse; FAO Kenya; the Kenyan government among others

d) Camel science, hygiene and marketing are linked

e) Marketing camels milk and meat to non-traditional camel areas is a business opportunity

f) Efficient and cheap systems of reaching far away urban consumers can be achieved through pooled transport arrangements

g) Modern money transfer and risk free mechanisms like Mpesa that guarantee speed in buyer- seller transactions

h) Identify tools and other mechanisms for minimizing transactions delays, risks and inefficiencies

i) Organize producers in producer groups brings in advantageous collective bargaining

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3.0 Transport and other challenges around the innovation

It is estimated that the county produces up to 40,000 liters of milk a day earning Sh19m annually.However, the cost of transport to Nairobi for Anolei and other producer and bulker groups, has limited financial returns.

Major challenges in commercializing camel milk by Anolei include;a) The cooperative is still lat a nascent stage that vulnerable with

associated “teething” challengesb) The value and attributes of camel milk not known to many i.e. can

treat juvenile diabetes; low cholesterol etcc) Transportation is a great obstacle d) Security e) Pasture scarcityf) Market access g) Informal l dynamics of the camel milk sectorh) Uncoordinated approaches of various partnersi) Poor infrastructure especially interior roads; no dairies and cooling

plants etc

Anolei women group transports between 5,000 – 6,000 litres of camel milk daily from Isiolo to Eastleigh Nairobi. The buses charge a transport fee of Kshs 100 per a 20litre can. This therefore means that the buses charge Kshs 5 per litre. In essence therefore, 33-35 women will jointly pay Kshs 25,000 to Kshs 30,000 per day for transport. This will translate to about Kshs 750,000 and Kshs 900,000 a month.

Anolei currently spends some Sh450,000 a month in low season and Sh750,000 a month in high season on hiring trucks to ferry the milk to markets.

To tackle this challenge Anolei has put in place the following strategies:a) Organized trading with producers mainly through field logistical

support and arranged transport b) Establishing a bulking and refrigeration at Isiolo town, a few

meters from the Nairobi-bound bus terminusc) Establishing pooled transport arrangements with regular (daily

commuter) buses plying the Isiolo- Nairobi route d) Initiated talks with financiers to assist them in owning their own

truck.

3.1 Coping with the transport challenge

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Looking at the gross margin, an exciting scenario would be Anolei buying a 7 toner truck to transport the milk. The calculations are as per the Box 2 below.

This scenario creates a high level of efficiency and a number of risks as well. Assuming that they plan to offset the loan in 3 years, they will therefore be required to pay about Kshs 150,000 per month. Apart from these they will also be paying approximately Kshs 350,000 operational cost.

Therefore the total cost of the truck (loan repayment and operational cost) per month will be about 500,000. In this case, in the period that they are transporting about 5,000litres (low), they can save up to Kshs 250,000 a month while they could save up to Kshs 400,000 in a month they will be transporting about 6,000 litres. (Note that, when the truck is coming back, apart from ferrying back the milk cans, they can as well ferry other goods for an extra cost which means it can increase their profit margins)

The risk elements relate to a) unity of the group ( to ensure they remain united; agree to pay together the loan; ensure the management structure of the group and the truck are working etc), b) trust dynamics among members and truck breakdowns.

Box 5: Calculations on the scenario of a 7 toner truckCost of a truck 7 toner:Truck: 5,500,000Insurance (4% of the value): 220,000Total: 5,720,000Other costs for operation will include;Fuel: 10,000*30 = 300,000Employment: 10,000*2 = 20,000 + 30,000 (500*30*2 allowances) = 50,000Total monthly cost of operation: Kshs 350,000Maintenance/Servicing:

What would be the full operational costs of a truck on a daily basis i.e. fuel; employment of a driver and tout; wear and tear?

Payment of the loan:The group must make a 20% contribution of the value i.e. Kshs 1,100,000The remaining amount for monthly contribution will be 4, 400,000 plus 12% profit rate i.e. 5,280,000 (according to First Community bank)Payment in 2 -3 years scenarios:2 years: 220,000 per month2 years: 146,700 per month

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3.2 The futureThe following is the way forward for ANOLEI:

Develop a cooling plant, pack and sell milk to supermarkets Take advantage of the Isiolo airstrip as a marketing facility to

Nairobi and beyond Take advantage of the Great North Road- that opens up the

Ethiopian market Utilize the local abattoir that will be commissioned in May as

facility for meat processing. Continue to foster relationships with partners Raise shares through equity participation

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4.0 Additional reading and references

http://www.snvworld.org/en/Documents/Camel%20Milk%20Industry%20in%20Kenya.pdf

http://www.snvworld.org/en/makingadifference/Pages/camel_milk_kenya.aspx

http://www.snvworld.org/en/Documents/Case%20study%20-

http://articles.cnn.com/2011-08-05/world/kenya.camel.milk_1_camel-milk-milk-supply-kenya?_s=PM:WORLD

http://webarazafarmer.com/index.php?option=com_content&task=view&id=304&Itemid=29

http://www.disasterriskreduction.net/fileadmin/user_upload/drought/docs/REGLAP%20NEWSLETTER%202011c.pdf

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