Kenya tries to save its meat commission — again. Why it won’t work this time either

Established in 1950, the Kenya Meat Commission is a public institution that was intended to provide a ready market for local livestock producers and provide high quality meat and meat products to consumers. It also has the crucial functions of protecting domestic markets and expanding exports.

There are about 14.3 million beef cattle in Kenya, contributing about US$1.6 billion to the Kenyan economy. Most of this cattle is found in arid and semi-arid lands. This constitutes 89% of Kenya’s land area and is home to 36% of the population. This is the main constituency that looks to the Commission for service.

The commission’s functions are related to livestock supply and meat processing. This includes buying livestock, operation of slaughterhouses and the processing and packaging of meat products. It initially targeted both domestic and export markets.

The Kenyan government has now announced that the Commission is being transferred from the Ministry of Agriculture, Livestock, Fisheries and Cooperatives to the Ministry of Defence. This move has come as a surprise to many, though it probably shouldn’t have. The Commission has struggled for decades.

In its 70-year history, the Commission only made a profit shortly after it was set up, sometime in the 1950s. It has a huge amount of debt, incurring loses of Ksh296 million, or US$2.7 million, in 2017 alone. It’s continued on this losing streak and risks collapse which would leave many livestock producers with significant losses.

The recent relocation of the Kenya Meat Commission to the Kenya Defence Forces, specifically, has raised many questions. The current government claims that military-run outfits are generally more efficient. And that procurement processes under the military are more transparent, less constrained and consequently faster.

There is evidence of this. Most recently the military expanded the operations of its manufacturing wing into farm produce, an indication of the Forces’ intention to get more involved in commercial operations deemed beneficial to the military.

However the Commission has already been shut down, and brought back to life by government, twice. The government is dedicated to reviving it because all major national livestock policies emphasise agricultural transformation – this includes increasing the value of livestock and spreading wealth to pastoralists. But the Commission is incapable of delivering on them because of how it’s structured. This is why it’s had a loss-making history and over-dependence on the public purse.

Deficiencies

The Commission was set up with some advantages. It had a legal monopoly that prevented any slaughterhouse from setting up within a radius of 20kms its processing plants. This provision guaranteed it a ready market and eliminated competition.

It also had exclusive rights to sell meat to government institutions including schools, colleges, hospitals and the military. This provision guaranteed a captive market in the form of large public institutions. But this later haunted the Commission when the very institutions meant to prop it up became major defaulters, denting its cash flow. As of 2017, domestic debtors owed it Ksh347.7 million (US$3.3million).

There were other deficiencies embedded from the start.

The Commission has a “buyer of last resort” function whereby it’s obligated to buy all animals that cannot be absorbed by the market, for instance during drought.

The Commission wasn’t allowed to engage in the retail market and was restricted to wholesale supply. In addition, fresh meat constituted just 20% of its operations. The rest went to processed meat, a large proportion of which was exported in the initial years. This was problematic because it put a high dependency on the export market.

The Commission was also not given any meat industry development functions, such as supporting livestock keepers in production activities. It’s only interaction with them was for purchase. This means it couldn’t contribute to the quality of the animals.

Finally, the Commission has a huge slaughter capacity of 1000 cattle and 1250 small stock per day. This means it has to freeze a lot of produce which is at odds with the domestic market’s preference for fresh meat, as its easier to verify freshness.

Downfall

But these weren’t the only challenges the Commission faced. Additional problems cropped up over time.

The Commission thrived in its early years and became a major supplier to the domestic market because of its monopoly provisions. But this monopoly was taken away from it in 1972.

The Commission also defined its niche in the export market. In the 1970s, it dominated the European meat market and eventually earned a supply quota in the process. However, the export market made use of animals that were obtained from pastoralists as part of its last resort obligation. The issue was that the meat needed to be free of trade sensitive diseases, such as Rift Valley Fever. Unfortunately, the veterinary services weren’t able to keep the meat to an acceptable disease free status due to the inability of enforcing quarantines and the unwillingness of large scale ranchers to respect such edicts. This led to Kenya being barred from exporting to Europe in 1980.

The critical blow came to the Commission in the form of increasing drought episodes and the unsustainable financial burden imposed by the buyer of last resort function. This had major implications on its cash flow and created over-dependence on government bailout. This eventually resulted in late or incomplete payments to livestock producers.

Due to debts, many of its machines aren’t working and need urgent repair. For a facility with a capacity of slaughtering 1,000 head of cattle per day, it now only manages 200 a week.

What needs to change

There will still be challenges ahead, even after the Commission’s transfer.

The Kenya Meat Commission is a huge operation with a lot of political interest that’s used by politicians as leverage, particularly around elections. It’s also not clear what the new operational framework will look like and certain key players in the livestock industry – including some producers and veterinary practitioners are already claiming that they were excluded from the decision making process. This is a cause for concern.

For the Commission to be commercially viable, there needs to be an overhaul and restructuring plan. The buyer of last resort function is an inherent public responsibility and must be detached from it or the government takes it on as a component of the strategic food reserve.

Meat livestock producers and other stakeholders must be involved in developing a sustainable, quality livestock supply. It’s critical that the government sustains Livestock Export Zones, and other measures, to help contain diseases.

Finally, the government must make proper investment in the areas where the Kenya Meat Commission is most deficient such as the rehabilitation or replacement of equipment.

by : Paul Gamba, Lecturer, Faculty of Agriculture, Egerton University

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