The Kenyan dairy sector plays a pivotal role in the country's socio-economic landscape, accounting for approximately 44% of the livestock subsector and 12% of the agriculture sector. Additionally, it contributes significantly, making up 4% of the national GDP. This subsector provides livelihoods for around 1.8 million smallholder households, each owning one to three cows, responsible for about 80% of the total milk production. Furthermore, it offers direct employment to over 700,000 people and indirectly supports another 500,000 (SDL, 2020). The subsector involves a diverse range of stakeholders, including dairy farmers, milk traders, processors, service providers, and consumers.

The dairy cattle and crossbreeds' population in Kenya is estimated at 5.01 million (Livestock Sector Report 2021). In 2022, the annual milk production was estimated at 5.28 billion litres, valued at Kshs. 230 billion. A substantial 80% of this milk comes from smallholder dairy farmers, with cattle contributing 76% while camels and goats make up the remaining portion (KDB Report 2022).

Milk production is expected to grow at an annual rate of 4.5% to 5%, with a projected annual production of around 12 billion litres by 2030. Approximately 80% of the milk is sold directly to consumers through informal channels in both rural and urban areas, while the remaining 20% is processed into various dairy products. The processing capacity has increased from 702 million litres in 2020 to 801 million litres in 2021, marking a 14% increase.

Kenya has a substantial camel population of about 1.06 million, with their milk production exceeding 340 million litres, valued at over Kshs. 8 billion at the farm level. Value-added camel milk products include packaged and branded whole milk (both fresh and fermented), yogurt, and are available in retail outlets.

The Kenyan government's Bottom-up Economic Transformation Agenda (BETA) has recognized the dairy sector as a priority. BETA's goals for the dairy sector include:

• Doubling milk production from 5 billion litres to 10 billion litres.
• Expanding dairy exports to 1 billion litres.
• Increasing the formal marketing of milk from 30% to 50%.
• Raising the monthly income of small-scale dairy farmers to KShs. 56,000.

Kenya has identified various dairy products with export potential, such as long-life liquid milk, condensed milk, butter oil or ghee, ice cream, powder, butter, cheese, yogurt, and infant formula products. These products are poised for export to regions including the East Africa Community, the Common Market for East and Southern Africa, West Africa with a focus on Nigeria and Ghana, and the Gulf Cooperation Council countries, including Saudi Arabia, the United Arab Emirates, Qatar, Bahrain, and Kuwait.