Relationships of ration formulation objectives among feed millers, dairy farmers, and feed policy regulators in Nakuru district-Kenya

S M Mutua, A Y Guliye*, B O Bebe* and A K Kahi*

Ministry of Livestock Development, Dairy Training Institute, P. O. Box 449-20117 Naivasha-Kenya
smutuah@yahoo.com
* Egerton University Department of Animal Sciences P O Box 536-20115 Njoro-Kenya

Abstract

A purposive random sampling survey of 78 respondents was conducted in Nakuru district between September 2009 and April 2010 to determine the linkages in ration formulation goals. Specifically the study examined least cost of ingredients (LCI), maximum milk profit margins (MPM)  and minimum Phosphorous (P)-excretion (MPE); representing economic, production and environmental goals respectively, as perceived by actors in the feed milling industry. Interview schedules were conducted to solicit data from the feed industry actors on a 5-point Likert scale. Data were analysed for correlation and mean difference (One-way ANOVA) using SPSS for windows, Release 10.01 (1999). A post-hoc analysis (Tukey's HSD), calculated specific mean pair differences.

Rank correlations were moderate and significant between (LCI and MPM); p < 0.05 and (MPM and MPE); p < 0.05, within feed millers, between (MPM and MPE); p <0.05 within dairy farmers and between (LCI and MPM); p < 0.05 within KEBS. There were no significant correlations between LCI, MPM, and MPE within NEMA. Correlations between ingredients cost and nutrient excretion did not exist for the entire stakeholder groups. Mean differences for economic, production, and environmental formulation goals between the industry actors were significantly different (p = 0.00). Results revealed a lack of strong associations between the three critical ration formulation goals among industry stakeholders; representing an underlying limitation in dairy feed manufacturing decision-making process. Solutions to this limitation will include innovations towards the development of broad-based multiple ration formulation approaches that attempt to collectively optimise stakeholder needs step-wise.

Determination of such relationships is important to livestock development partners in their effort to formulate policies in feed milling for the benefit of sustainable dairy entrepreneurship.  

Note:  The following terms are herein used interchangeably through the study:

            Ration and diet to mean cow feed; Needs, interests, and objectives to mean formulation goals; and Actors, key players to mean industry stakeholders.

Keywords: feed industry, least cost formulation, ingredient cost, milk profits, nutrient excretion

Introduction

Animal feed manufacturing influences farm business economic growth, livestock productivity, and environmental management ((Muriuki et al 2003; Technical team 2003; Muriuki 2006; MoLD and F 2007; EC-DG 2008). Domain stakeholders in the feed industry include feed millers, dairy farmers, and government feed policy regulators; Kenya Bureau of Standards (KEBS) and National Environment Management Authority (NEMA)-whose critical ration formulation objectives; (least cost of ingredients, maximum profit margins, and minimum nutrient excretion respectively) are diverse and conflicting. The growing demands for quality feeds  by dairy farmers intending to exploit the full production potentials of their cows, in addition to emerging environmental pollution concerns from dairy production enterprises through excessive pollutant nutrients in manure (such as P) is exerting new challenges on animal feed millers. Critical ration formulation objectives of feed industry stakeholder groups need be significantly strong and positively correlated (r ≥ 0.70; p < 0.05); if they are to be optimised during ration formulation in practice (Knowlton et al 2004). Such a correlation can best be entrenched in the dairy feed manufacturing process and manifested in a formulation approach that meets overall industry expectations. Feed industry actors are firmly holding on to their enterprise as well as organizational needs and mandate without due regard to formulation objectives and expectations of the other industry players. Consequently, there is little information regarding the association between ration formulation objectives of feed millers, dairy farmers, and feed policy regulators, mainly because such a research undertaking has not been performed in Kenya as yet.

To effectively address emerging economic, production, as well as environmental challenges in the feed milling industry, determination of the relationship between critical dairy ration formulation objectives becomes important. The possible association between dairy feed manufacturing and economic, production, and environmental goals has not been quantified in earlier surveys on production and use of concentrates, policy environment and lessons on dairy development in the smallholder dairy sub-sector (Mbugua 1999; Muriuki et al 2003; Muriuki 2006). In order to better understand the associations between critical dairy feed formulation goals, this study was conducted with the objective of determining the relationships of ration formulation goals among feed millers, dairy farmers, and government feed policy regulators; representing stakeholder linkage levels in dairy feed manufacturing.

Materials and methods 

Study area and dairy feed manufacturing

Nakuru district is a prominent dairy producing area in Kenya with the highest number of dairy cattle estimated at over 251, 000 heads (MoLF and D 2006a and MoLF and D 2007). The district is home to 26 operational feed mills (23% of total feed mills in Kenya). Only one feed miller is large scale and fairly automated. The rest range from small to medium scale capacity and are either manual and/or semi-automated. About 80% of the dairy farmers in Nakuru are smallholders (MoLF and D 2006b), representing a potentially sizeable consumer population for commercial dairy feeds, since they do not practice on-farm concentrate feed manufacturing. Commonly used ingredients in dairy feed manufacturing include cereals and cereal-by products, oil-seed cake meals, mineral concentrates, and dairy premix concentrates (mineral + vitamins). Key players in the feed industry comprise feed millers, dairy farmers, and government feed policy regulatory agencies (KEBS and NEMA). While KEBS is the national government agency regulating dairy feed quality specifications, NEMA oversees environmental health issues by regulating the amount of pollutant nutrients from livestock enterprises practicing concentrate feeding. Feed millers implement these regulatory requirements by employing the singular objective approach to dairy ration formulation.

Survey methodology

A purposive random sampling of 78 respondents: 19 feed millers, 37 smallholder dairy farmers, and 22 feed policy officials (10 from KEBS and 12 from NEMA) was conducted in Nakuru district between September 2009  and April 2010. As a non-probability sampling method, it was judged to be representative of the most active, experienced and certified feed millers and relevant government feed regulatory agencies to the dairy feed industry. In addition, each feed miller was asked to identify two reliable dairy farmers and/or stockists customers depending on their monthly feed purchase volumes; an appropriate criterion that was used to recruit the most progressive dairy farmers into the survey. Dairy farmer respondents were recruited from the intensive dairy farming zones of Nakuru district including; Lanet, Kambi-Ya-Moto, Rongai, Nakuru Municipality and Ngata who were already clustered into Common Interest Groups (CIGs) under the Smallholder Dairy Commercialisation Programme (SDCP) of IFAD-Kenya Project.

Data collection

Data collection was conducted using a pre-tested, structured questionnaire which was administered to each stakeholder group on separate months and asked to respond independently within 8-10 weeks from: September 2009 (feed millers), December 2009 (dairy farmers), January 2010 (NEMA and KEBS). While survey instruments were delivered to the premises of feed millers and feed policy regulators, participating dairy farmers were provided with questionnaires during scheduled CIGs meetings. Those who experienced difficulties were assisted by trained dairy extension workers. Completed questionnaires were collected promptly. Since the study goal was to determine the relationship of conflicting ration formulation goals among domain feed industry stakeholder groups, the study instrument was divided into three parts of dependent variables:
 

·                    Least cost of ingredients (LCI) issue consisting of 9 items.

·                    Maximum profit margins (MPM) issue consisting of 9 items.

·                    Minimum P-levels (MPE) in manure issue consisting of 9 items.

Data collected from each respondent on least cost group items included familiarity with dairy feed formulation, cost and quality consideration during feed formulation, and ingredient cost and availability as challenges in feed manufacturing. Group items for maximum milk production and profits issue comprised prioritisation of milk production and profits in dairy feed manufacturing, complains about high feed prices and low milk production, and comparison of dairy feed prices, quality levels and guarantee for profitability. Minimum nutrient excretion in manure issue was based on adherence to feed quality specifications and observance of regulatory requirements for manure waste disposal for a healthy environment. Stakeholders’ opinion score of perceived relative importance of the three dependent variables were solicited on a 5-point Likert scale of descriptive: strongly disagree (1), fairly disagree (2), undecided (3), agree (4), and strongly agree (5).

Scoring and analyses of survey responses

Opinion scores on variable items for each group of respondents were recorded and descriptive statistics (mean, standard deviation, and standard error) of each variable item (LCI, MPM, and MPE) calculated as shown in Table 1. Whereas questionnaire response ratings from feed millers presented the highest mean values, dairy farmer responses for all the ration formulation objectives were the lowest mean values; across the stakeholder groups, for LCI, MPM, and MPE respectively.

The KEBS showed a stronger agreement than NEMA. Summative response scores (mean) for variable questionnaire items were used as raw data in the determination of spearman’s rank correlations coefficient (r) within groups and also calculation of mean differences between groups for the three formulation goals as shown in Tables 2 and 3.

Statistical analyses

Correlation between dependent variable items: (least cost of ingredients, maximum profit margins, and minimum nutrient excretion) within each feed industry stakeholder group (feed millers, dairy farmers, KEBS and NEMA) were determined using the spearman’s rank correlation coefficient (r) method thus:

where d denotes the difference between ranks of corresponding pairs of each feed formulation objective (LCI and MPM, LCI and MPE, and MPM and MPE) and n represents the number of respondents within the stakeholder groups.

The statistical significance of differences in opinion responses between pairs of feed industry actors for the relative importance of economic, production and environmental goals; were determined using one way analysis of variance (ANOVA) at 95% confidence interval (CI) using SPSS for windows, Release 10.01 (1999), by fitting the ANOVA model thus;

where:

Y_{ij =} observation

 = mean response,
_i = effect of _ith formulation goal and
_ij = error component.

A post-hoc analysis (Tukey's HSD) calculated the specific mean pair differences.

Results 

Rank correlations between least cost of ingredients, maximum profit margin and minimum nutrient excretion.

Spearman’s rank correlation coefficients (r) of least cost of ingredients, maximum profit margin and minimum nutrient excretion within feed millers, dairy farmers, and government regulatory agencies (KEBS and NEMA) are shown in Table 2.

Rank correlations coefficient (r) within feed millers were significant between LCI and MPM (r = 0.54; p < 0.05) and between MPM and MPE (r = 0.46; p < 0.05). The dairy farmers showed significant correlations (0.61; p < 0.05) between MPM and MPE only. Correlation between LCI and MPM (r = 0.64; p< 0.05) within KEBS was significant. The correlations between MPM and MPE within KEBS and NEMA were not significant. The LCI and MPE were not significantly correlated for all the stakeholder groups. The NEMA did not show any significant relationship for any pair of the three formulation objectives.

Linkages in economic, production and environmental goals among feed industry actors

Table 3 displays the effect of economic, production and environmental formulation goals on feed industry actors. A one-way (ANOVA) was calculated to determine the relative importance attached to the goals.

The analysis was significant for economic, F (1, 74) = 52.5, p = 0.00, production, F (1, 74) = 14.6, p = 0.00, and environmental, F (1, 74) = 21.5, p = 0.00, goals. While feed millers showed (Table 1) the highest importance to economic (M = 4.42, SD = 0.37), production (M = 3.81, SD = 0.48) and environmental goals (M = 4.18, SD = 0.49), dairy farmers displayed the lowest scores (M = 2.77, SD = 0.501; (M = 2.66, SD = 0.64); and (M = 2.96, SD = 0.58) respectively. The KEBS and NEMA attached modest importance to economic (M =3.54, SD =0.52; M =3.21, SD =0.48), production (M =3.47, SD = 0.86; M =3.01, SD =0.66), and environmental (M =3.68, SD =0.69; M =3.41, SD =0.42), goals respectively.

Table 4 presents the multiple comparisons of mean differences of formulation goals between feed industry actors.

Discussion  

Relative importance of ration formulation goals in feed manufacturing within industry actors

Feed millers, dairy farmers, KEBS, and NEMA attached varying importance to the three ration formulation goals, as shown in Table 1. In agreement with Knowlton et al 2004, the goals were conflicting and therefore had differing implications to each stakeholder group. The moderate correlation between ingredients cost and milk profit margins (Table 2) only demonstrated the opinion expressed by feed millers that they were fully aware of and adequately addressed all formulation considerations; including optimising feed cost and quality for maximum milk production. However, this was not the case for dairy farmers and NEMA who felt that ingredients cost did not match dairy feeds quality specifications for optimal milk profit maximisation; casting doubt on the quality status of available market dairy feeds.  Feed millers are increasingly interested in low ingredient costs with the desire of manufacturing quality feeds that guarantee high income over feed costs (IOFC) (Mbugua 1999; Muriuki 2006); for the benefit of dairy farmers as well as adhere to regulatory specifications (KEBS 1990). But they are often limited by the formulation approaches (Knowlton et al 2004), currently available in the market since they are designed to optimise only one goal, least cost.

Association between ingredient costs and milk profit maximisation within dairy farmers did not exist, perhaps supporting the common dairy extension observations that commercial dairy concentrates in Kenya, are characteristically expensive and of variable nutritional quality (MoL &FD 2006b). Feed is the major cost to milk production, accounting for about 50 to 70% of total cost (Jones et al 1980; MoLD-NDDP 1995; Muriuki 2006; MoL&FD 2007). Reduced feed costs or quality feeds guaranteeing increased milk production, while maintaining minimum nutrient pollution (Dave 2004; Muriuki 2006), present an opportunity to increase farm net returns. Unfortunately, this remains a rare scenario under tropical dairy farming conditions where ingredient costs and availability throughout the year are erratic. The moderate correlation between milk profit margins and nutrient excretion within dairy farmers only represented a growing need for quality feeds adjusted to standard dairy cow nutrient requirements (NRC 2001) for minimum nutrient excretion, such as P.

Dairy farmers continue to view dairy farming as a business and hence their expectations following purchase and supplementation of dairy concentrates to lactating cows are high and immediate; hence the none-existent association between ingredient costs and milk profits within dairy farmers. While this could be attributed to excessive concentrate feeding especially when forage availability is limited during the dry spell (Mbugua 1999; Thorne and Dijkman 2001; Muriuki et al 2003), the concentrate feed may as well not be adjusted to meet nutritional requirements (Andkinson et al 1993; Varela Alverez and Church 1998; Knowlton et al 2004); pointing to the assumption that dairy farmers do not realise immediate satisfactory returns from milk sales to offset the feed costs.

Unstable milk pricing schemes are likely to impact concentrate dairy feed manufacturing negatively. Consequently, milk yields and feed costs remain the two most important areas of management for increasing IOFC for the individual dairy farmer. In most cases, milk price is dictated by market supply and demand (Muriuki et al 2003; Muriuki 2006; MoL&FD 2006b), and to some extent by government pricing thus exposing dairy farmers to marginal profits which fluctuate seasonally. Although on-farm trials with pasture-oriented farms in Louisiana and Ireland (Andkinson et al 1993; McEvoy et al 2008) and concentrate feeding in Kenya (Mbugua 1999; Muriuki 2006), have reported that increased dietary concentrates is associated with increased milk yields (MY), they all realised lower IOFC in general. So the illustrated none existent relationship between ingredient costs and milk profitability within farmers was not new; however, efforts to provide sustainable solutions remains a challenge.

The KEBS deal with feed millers on a day to day basis on matters regarding feed quality and standardization. However, they do not have a mechanism to monitor how the quality guidelines are transferred to the dairy farms. They may have assumed that adherence to feed quality specifications had a reflection on cost-benefits that were directly transferred to the dairy farmers; as demonstrated by the moderate correlation between ingredients costs and milk profit margins. Dairy farmers are thus expected to increase nutrient intake for guaranteed improved milk production and profits by supplementing their lactating cows with commercial concentrates (Mbugua 1999). However, KEBS was seemingly unaware of the possible harms to environmental health from excessive pollutant nutrients as shown from the lack of real relationship between milk profit margins and nutrient excretion within KEBS (Table 2).

Emissions from the dairy farming sector have an important impact on the environment at local, regional and global levels. New research suggests that dairy farming may have an important impact on the environment and human health (EU-Environmental-DG 2008) with Phosphates, which cause aquatic eutrophication, being some of the most pollutants. On the contrary, study findings showed a lack of association between formulation goals within the feed policy regulatory agencies; an indication that they most likely did not exist. The fact that NEMA was least involved in feed manufacturing (Table 2) suggested that feed regulators have a culture of enforcing government policy regulations with total disregard of other stakeholder concerns. Additionally, regional dairy and feed associations have the mandate to provide a platform to transmit government policies to dairy farmers and feed millers via regulatory agencies (Goyder and Many’ang’a 2009). Therefore, KEBS and NEMA have a bigger role to play in bringing harmony in the dairy feed manufacturing process.

Effects of ration formulation goals on dairy feed manufacturing between industry actors

Economic considerations

Feed millers have a responsibility to remain in economically gainful business and as such they attached higher relative importance (Table 4) to economic consideration in feed manufacturing of (1.67 more scores) than dairy farmers and of (0.89 more scores) than KEBS. They were familiar with dairy feed formulation and manufacturing process including; inherent constraints of ingredient availability and cost, which occasionally presents challenges in their attempts to balance feed  cost (KEBS 1990; Muriuki 2006) with regulatory specifications. The probability that KEBS and NEMA showed a stronger economic perception than feed millers of (1.21 less scores) and dairy farmers of (0.77 and 0.45 less scores) demonstrated the common tendency of regulatory agencies  to enforce guidelines without due considerations of business economic implications of affected entrepreneurs. It can also be deduced that KEBS and NEMA held different views of the same economic considerations on the basis of organizational mandate hence their perceptions were not related.

Production considerations

Although milk yields and feed costs are the two most important areas of production management for increasing IOFC for the individual dairy farmer, compared with production goals, feed millers attached more importance (0.51 more scores) to economic goals than dairy farmers. This supports the common field observations that commercial dairy concentrates in Kenya, are characteristically expensive and of variable nutritional quality (MoL&FD 2006b). While feed millers are interested in low ingredient costs for the benefit of their manufacturing business economics, dairy farmers are mainly concerned with quality feeds that guarantee high IOFC (Mbugua 1999; Muriuki 2006). Low ingredient costs often correspond to low feed quality which is likely to violate KEBS regulatory specifications. Consequently, perception on production goals between feed millers and KEBS were divergent; implying an existing dissatisfaction with quality levels of commercial dairy concentrates. The KEBS and NEMA are bound by differing regulatory mandates and therefore valued the production goal differently, yet they regulate a common industry.

Environmental considerations

The national feed regulatory agencies are responsible for feed quality standardisation (KEBS) and environmental health (NEMA) on pollutant nutrients from dairy enterprises practising concentrate feeding. Quality feeds adjusted to standard dairy cow nutrient requirements (NRC 2001), guarantees minimum excretion of pollutant nutrients into the environment. Unfortunately, the regulatory agencies expressed divergent views for the environmental goal depending on organisational mandate and level of involvement in feed manufacturing process. The fact that feed millers attached higher importance to environmental consideration than farmers of (1.22 more scores), NEMA of (0.77 more scores), confirmed the ever-growing speculation that feed millers are entirely controlling the feed manufacturing process. Dairy farmers may have paid less attention (-0.72 less scores) to the environmental goal unaware since they did not consider manure (Dave 2004) as a major environmental pollutant.

Implications of ration formulation approaches in dairy feed manufacturing

In common with other developing countries, the production of cereal grain crops in Kenya is destined for human consumption. Consequently, only the milling-by-products such as maize bran, wheat bran, rice bran and oil-seed cake meals (MoLD&FD 2006a) are available for livestock production. Poor ingredient availability planning alone (Thorne and Dijkman 2001) could not contribute to the illustrated disagreement among actors in dairy feed manufacturing, since it is seasonal. The dairy feed manufacturing process-including the use of singular goal ration formulation programs based on least cost approach to ration composition is probably the major contributor. Stakeholders in dairy feed manufacturing have multidimensional objectives which need to be addressed collectively by optimising them in feed manufacturing stepwise (Tozer and Stokes 2001; Knowlton et al (2004).

Feed formulation, dairy feed manufacturing, dairy farming and feed regulation represents; people, process, product, consumer, and policy actor-linkages within the dairy feed industry stakeholder groups. Available commercial dairy feed in the Kenyan market are compounded based on the singular objective formulation approach; which considers ingredient costs as the only determinant to ration composition. Unfortunately, this formulation approach does not impose minimum nutrient excretion in manure (CAST 2002; Dave 2004) as a critical formulation goal. Therefore, the continued utilization of commercial dairy feeds could slowly but cumulatively be polluting aquatic life through excess P-excretions in manure unnoticed. The fact that the correlation between the three formulation objectives within NEMA was not significant confirmed how least the agency was involved in dairy feed manufacturing process; and yet its mandate is to regulate water quality and waste disposal into the environment.

Feed millers have the interest of dairy farmers at heart when manufacturing concentrate feeds as demonstrated by the participation of some large feed mills in training seminars for livestock farmers pointing out the benefits of feeding balanced nutritious diets (Technical Working Group 2006); and would wish to adhere to feed regulatory specifications (KEBS 1990). However, they are constrained by available ration formulation programs which are based on linear programming (LP) approach (Black and Hlubik 1980; Walder 2003); which is characterized by a generalised inability to optimise the three critical formulation goals (least-cost of ingredients, maximum milk profit margins, and minimum P-excretion in manure). Rehman and Romero (1984), Lara (1993), Varela-Alverez and Church (1998) and Tozer and Stokes (2001) have critized typical LP approach for rigidly imposing the singular function because of the many limitations experienced when formulating rations in practice.

Conclusion  

•  Feed millers’ opinion that available commercial feeds meet dairy farmer needs as well as satisfy government feed policy regulatory requirements is misleading; since the economic, production, as well as environmental goals were perceived differently by the feed industry actors; representing a state of dissatisfaction among actors in dairy feed manufacturing.

  
  

• Relationships between the ration formulation objectives were generally weak. Pointing to the conclusion that the current singular objective formulation approach is limited in dairy feed manufacturing. Sustained feed manufacturing will depend upon finding solutions to such limitations. Solutions to this limitation will include innovations towards the development of broad-based multiple formulation approaches that attempt to collectively optimise stakeholder needs step-wise.

Acknowledgements 

The authors are grateful to all feed millers, dairy farmers from Nakuru district, the Kenya Bureau of Standards and the National Environmental Management Authority agencies for volunteering to participate in the study. We particularly wish to acknowledge dairy extension workers under the Smallholder Dairy Commercialisation Programme (IFAD-Project) in collaboration with the Ministry of Livestock Development-Nakuru office for their assistance in administering dairy farmer survey instruments. Special thanks also go to the Principal for Dairy Training Institute-Naivasha, Kenya, Mr. Isaac Kiplagat for logistical support.

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Received 19 May 2010; Accepted 23 July 2010; Published 9 December 2010

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