Kenyan dairy farmer Henry Mungai and his family have taken several loans through a microfinance bank and been able to invest in their farm. In doing so they are contributing to the development of Kenyan agriculture, which is a priority value chain for the country. Sida guarantees the bank loans as a risk sharing facility to encourage banks to venture into agriculture lending especially to farmers who do not have any of the usual collateral.
The working day starts at 3:30 am for Henry Mungai and his wife Lydia. They say the morning prayer, and then it's time to go out to the barn for milking. The family lives on the outskirts of a town called Thika to the East of Nairobi, where they keep high producing dairy cattlebreeds. The farmer has some land they use as source of fodder and food for the animals and the family respectively. Altogether there are 13 animals on the farm, including 6 dairy cows and one bull. After one and a half years the cows produce milk, while the bull calves are reared for meat. Henry inseminates the cows himself and has thus been able to increase the number of animals.
"We keep the cows here in the yard," says Henry. "If they were left to go out into the field they would be at risk of contracting diseases. Because they are purebreds we also give them concentrate feed that we buy at the factory."
The business is run as a small family business and Lydia is responsible for milk management. Up to 3 times a day she creeps through the low door to the cows and sits on the milking stool. Each day she handles 120 litres of milk, which is sold to customers in the neighbourhood straight after milking, an arrangement which has proved to be profitable. It is also a convenient arrangement because the farm does not have refrigeration facilities.
"We charge KES 60 for a litre of milk," Henry explains. "That is a good price, but our milk is of high quality and is not diluted with water, as is the case on some other farms."
Lydia also makes a type of yoghurt for the family from the milk, which means that the milk is safe to consume for longer. On the simple dairy table there are washed, recycled plastic bottles waiting to be filled.
"We know exactly how much to milk each cow. And every day we record the milk sales," explains Lydia. "The cows are like people to us, and they each have their own name."
The 30 hens also provide a good income and are of higher quality, with more yellow egg yolks thanks to the feed they are given. Faith, the couples daughter who is 8 years old, helps to collect the eggs. Faith's big brother, who has completed the 8th class in school, also helps when he is home and wants to be a farmer when he finishes school.
The farm also has some sheep and goats and a few geese, who ensure that no birds of prey venture close to the chickens among other things.
A savings model that pays off
Henry inherited the farm from his parents, but when he wanted to take out a loan to buy some animals he couldn't. No ordinary bank wanted to lend money to Henry, who had neither a bank account, security nor a guarantor. A good friend introduced him to a cooperative savings group connected to SMEP microfinance bank. To be granted a loan through them, the prospective borrowers have to be part of a savings group and prove that they are able to save 20 per cent of the amount they want to borrow. Once the loan is granted it is paid back at the same amount that the borrowers previously saved each month. The bank makes a credit assessment of each loan and the borrower must also be approved by the other members of the savings group, who vote on each person's ability to pay their loans back. Because the savings group is jointly responsible for all of the members loans, no one wants to be a burden to the others. Henry began to save and after a few months he was granted his first loan in 2007, of KES 20,000, and bought a cow with the money. Since then the family has been able to expand their farm business with more animals and more land by new loans from the microfinance bank.
Henry and the other small farmers who have borrowed money to invest in their farms can also take part in the training activities the bank offers. These include information on credit and financial management, as well as on modern livestock farming and milk handling.
"We have been told that we could take the manure from the animals and transform it into biogas. But additional investments would be necessary so it's not relevant for us right now but in planning," muses Henry.
High hopes for the future
Henry has built everything on the farm himself, and he has big plans for the future. The children go to a good school and the family live a happy life on their farm. The single room of the farmhouse is full of furniture. In the evenings when darkness comes, they turn on the electric light and sometimes the TV which stands on a shelf. Next year Henry plans to take a new loan and invest in more animals.
"We aim to have 20 cows. But when we do we won't be able to sell unpasteurised milk any more, we would need to get our own pasteurisation facility or sell the milk to a dairy. We can ask SMEP for advice about that," says Henry.
But first of all the family is going to celebrate Christmas. Henry and Lydia have been married for 15 years, and this year they are going to take a day off at Christmas and go back home to Lydia's village, where Henry is going to give a dowry and food to her family. Everyone gathers around the Christmas feast that usually consists of meat, such as goat. The future looks bright for Henry and his family.