Animal feed production ranged from less than 1000 tons to over 100,000 tons per annum for the small and big firms respectively. The larger millers used computerised technology of high output comprising imported continuous flow mixers, while the small millers employed low investment, labour intensive production technology. The total installed capacity was about 843,000 tons, of which only 44.5 percent was utilized meaning there was underutilization. The underutilization (and at times closures of some mills) was occasioned by lack of reliable quality raw materials/feed ingredients, and in some cases, farmers’ inability to purchase the feeds (preferring to grow their own fodder on their farms). ‘The Kenya Bureau of Standards was responsible for ensuring quality outputs were achieved and the feed manufacturers were subjected to a rigorous certification and standardization process before they could be permitted to sell their feeds. The manufacturers were re- certified every three years to ensure they maintained the quality, but the Standards body could conduct a feed quality audit at any time. Ukulima Bora Feeds was mainly manufacturing poultry and dairy feeds. The following section provides an overview of the poultry and dairy farming in Kenya. POULTRY FARMING IN KENYA? Poultry contributes about 1.7 percent of the agricultural Gross Domestic Product (GDP) According to the Ministry of Livestock Development 2007 report, the following were the estimated outputs of poultry products: * 21,000 tones of poultry meat, valued at Kshs.3.52 billion (€35.2million)* * 1.22 billion eggs (53 percent from hybrids and 47 percent from indigenous stock) valued at Kshs.9.7billion (€97million) Achieving optimal genetic potential of chickens depended on three main factors: * Management to provide a comfortable environment. The environment should be managed to provide birds with proper ventilation, good air quality, comfortable temperatures and adequate space. * A dietary regimen which supplies nutrients in appropriate profile. Poultry get nutrient requirements through compounding of appropriate feed ingredients, plus proper management of provision of feed and water. * Effective sanitation and disease prevention programmes. Farm procedures should be able to prevent disease incursion. However, if there is disease, then early detection, accurate diagnosis and treatment of ill health is crucial UPpSTREAM-/DOWNSTREAM MARKET (EGGS AND FEEDS) EGG PRODUCTION PROCESS Poultry farming is labour intensive and requires a lot of attention to detail. The process is as demonstrated in Figure 1 below: © At the time of writing this case study, 1€ was equivalent to Kshs.100. 2Strathmore UNIVERSITY ‘tla Su-2010-15 REVISED: 31 MAY 2012 RUTH KIRAKA UKULIMA BORA FEEDS LIMITED (A) INTRODUCTION Mr. Samwel Kimani, the CEO of Ukulima Bora Feeds had just settled down in his new offices after relocating the head office from the coastal town of Mombasa to Thika town in the central region of the country. He was sure that the company’s infrastructure was in place and was thinking of rolling out more branches throughout the country but he was conscious of the fact that great organizations are built on scalable systems and structures. Up to this time, Ukulima Bora Feeds had been manufacturing animal feeds, mainly dairy and poultry feeds, and serving the coastal and central regions of Kenya. In 2009, the Kenya Government, through the Economic Stimulus Programme (ESP) introduced fish farming, in most parts of the country, as a way of revamping the economy. Mr. Kimani was contemplating on ways of getting a share of this new market, to manufacture fish pellets. However, he knew that he needed to install a new plant capable of producing the recommended floating fish pellets. Mr. Kimani therefore needed to make two decisions, first to expand Ukulima Bora Feeds business to other parts of the country (besides the coast and central regions of Kenya he was currently serving), and second to introduce a new line of business - manufacturing of fish pellets, which required different equipment from what he had. ANIMAL FEEDS MANUFACTURING IN KENYA! Most animal feeds manufacturers in Kenya practiced what was known as mixed feed production. This means that they produced feeds for dairy cattle, poultry and pigs in one establishment. The first firm to produce mixed feeds was established in Kenya in the 1950s. Since then the feed industry had grown not only in terms of the volume of feed produced but also by having in place arrangements to ensure quality feed production. In 1976, the Kenya Bureau of Standards (KEBS) was established by the government and by the end of the decade, specification for poultry, dairy and pig feeds had been formulated. By 2010 there were 94 mixed feed manufacturing firms in Kenya, most of which were wholly locally owned. This case was written by Prof. Ruth Kiraka, In all instances, names have been changed to protect the rights of individuals. The case is intended for classroom discussion only and the author does not intend to demonstrate effective or ineffective handling of a situation. © 2012. Strathmore University, Nairobi, Kenya. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means ~ electronic, mechanical, photocopying, recording or otherwise - without the permission of Strathmore University.Figure 1: Egg Production Process 1 2 3 Pre-placement Chicks (weeks 1-7) Layers development period *| Feeding on Chick Mash [— >] (weeks 8 - 15) Feeding on Growers Mash 6 5 I. Culling of birds |, Post-peak egg production |, Peak egg production (from week 70) (Weeks 36 - 70) period (weeks 16 - 35) Feeding on Layers Mash Pre-placement period: Before chicks are placed on a farm the house is cleaned spread with good quality litter. Chicks are transported during the cool hours of the day as they cannot regulate their body temperature until after two weeks. Feeding: Feed contributes about 70 percent of total production costs. As such, it is important to purchase feed from a reputable miller. From week 1 to week 7, the birds are fed on chick mash. From week 8 to week 15, the feed is gradually changed to growers mash. From week 16, they are fed on layers mash. From chick placement (day-old chick) through to week 16 the birds are fed according to body weight gain and/or age. The goal is to raise a strong and healthy bird that can support egg production to about 95 percent. Production phase: The birds first enter egg production at 18 - 22 weeks and reach peak production at around week 35 (95 percent production). Post-peak production continually decreases to approximately 30 percent at around week 70. The 50 percent production is the approximate “break-even” point (when cost of inputs is approximately equal to the market price of the eggs). When production is less than 50 percent, an economic decision has to be made by the farmer whether to continue with production or cull the birds. Dairy FARMING IN KENYA* Kenya has one of the largest dairy industries in sub-Saharan Africa. Developments in the industry span over a period of over 90 years and have undergone various evolutionary stages. In the first 60 years it was dominated by the large-scale farmers, while in the last 30 years smallholder farmers have increasingly dominated the sector, contributing over 80 percent of the total milk production. Secondly, it had evolved through three market periods: «for the period up to 1969 it operated as an open market with various independent dairies being active market players; between 1969 and 1992 and primarily due to the rationalization of the dairy industry by the Government, a monopolistic market situation was created; ¢ from 1992 the Government liberalized the industry. Up to 1992, the dairy industry in Kenya was under government control, which gave the policy guidelines, set prices, determined the players in the industry and set the market rules among other things. The dairy industry was regulated by the Kenya Dairy Board. Kenya has been largely self sufficient in milk production. The production stood at 3.1 billion litres per annum. Though this was sufficient for domestic consumption, a lot more was required for the export market. Kenya had an estimated 3.3 million dairy cattle. The Kenyan dairy 3