Estimating public and private costs and benefits of implementing a milk quality assurance system in Kenya: A case study

Figures & data

Figure 1. Overview of private and public costs and benefits in the calculations (authors’ elaboration).

Table 1. Variation in costs and benefits for farmers involved in the QBMPS#.

	Unit	Additional costs and revenue for different milk grades, per kg of milk
		Grade A	Grade B	Grade C
Milk quantity considered	kg	1.00	1.00	1.00
QBMPS payment	KES	2.00	1.00	0.00
Revenue from forgone milk rejection	KES	1.86	1.09	0.00
Total additional revenue	KES	3.86	2.09	0.00
Additional feed costs (e.g. for mycotoxin binder)	KES	0.15	0.15	0.00
Milking equipment costs	KES	0.08	0.08	0.08
Water costs	KES	0.17	0.08	0.08
Improved housing costs	KES	0.53	0.53	0.00
Additional time for cleaning equipment and attending trainings	KES	0.62	0.33	0.04
Total additional cost	KES	1.55	1.17	0.20
PROFIT/LOSS (net additional cost)	KES	2.31	0.92	−0.20
PROFIT/LOSS if milk rejection is not considered (net additional cost)*	KES	0.45	−0.17	−0.20

^#Calculated using data from the survey of 90 farmers.

*Considering that farmers might sell rejected milk to less stringent buyers.

Figure 2. Estimates on additional costs for processor and cooperative.

Table 2. Summary of private costs and benefits (in KES per kg of milk).

Grade	A	B	C
Farmers
Costs	1.55	1.17	0.20
Benefits	3.86	2.09	0
Profit/loss	2.31	0.92	−0.20
Cooperatives
Costs	0.56	0.56	0.56
Benefits	0.32	0.19	0.00
Profit/loss	−0.24	−0.37	−0.56
Processor
Costs	3.09	3.05	3.02
Benefits	0.93	0.54	0.00
Profit/loss	−2.16	−2.51	−3.02

Table 3. Estimated annual costs of milk-related health hazards in Kenya.

Illness	Incidence (cases/year)*)	DALY (years)	Cost per case (million KES) *)	Total direct costs (million KES)	Total indirect costs (million KES)	Total costs (million KES)
Tuberculosis	3,392	16,045	0.0224	76.12	2,381.85	2,457.97
Brucellosis	28,107	19,259	1.2078	33,944.26	2,858.92	36,803.18
Listeriosis	8,238	3,521	43.0183	354,384.72	522.67	354,907.39
Salmonellosis	26,653	563	0.4355	11,608.45	83.59	11,692.03
E. coli infections	23,745	2,089	1.0009	23,766.99	310.17	24,077.16
Campylobacteriosis	2,423	10,694	0.1641	397.66	1,587.54	1,985.20
Q fever	1,890	922	0.0010	1.93	136.86	138.79
Antibiotics			-	4,346.51	-	4,346.51
Aflatoxins			-	8.73	2.49	11.22
Total		53,093		428,535.37	7,884.09	436,419.45

Exchange rate: 1 USD = 102 KES;

*)Source: KDB (2017) : The rest of the data is based on authors‘ calculations.

Table 4. Health cost-reduction under three scenarios (million KES).

	Current	7.5% reduction	15% reduction	30% reduction
Total direct costs	428,535	396,395.22	364,255.06	299,974.76
Total indirect costs	7,884	7,292.78	6,701.48	5,518.86
Total costs	436,419	403,687.99	370,957	305,494
Avoided costs	-	32,731	65,463	130,926
Avoided costs (KES per kg of milk produced)		6.55	13.09	26.19

Table

Test	Grade	QBMPS standard‡	KEBS^¢ standards	Premium/penalty Score^a
Total plate count(units in cfu/ml)	A	0–2,000,000	<200,000	50
	B	2,000,001–10,000,000	200,001–1,000,000	0
	C	>10,000,000	≤ 2,000,000	−50
Antibiotic residues	All	Negative	Negative	15*
Freezing point	All	−0.500	−0.525 to−0.565	20#
Total solids	All	>11%	>11.75%	15#

Note: ¢KEBS = Kenya Bureau of Standards.

^aPremium or penalty score given to milk of the corresponding QBMPS standard (column 3); *milk positive for antibiotic residues is discarded; ^#otherwise a 0 score; ‡Source: Happy Cow Ltd..

KDB. (2017). The Dairy industry regulations [2017] & regulatory impact assessment report. Kenya Dairy Board.

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