19 March 2017

Kenya: State Takes Measures to Stabilise Milk Prices

The government has announced new measures to stabilise milk prices. Under the new plan, farmers will avoid middlemen and deliver their produce directly to processors.

The plan is also meant to guarantee farmers good returns and stable supply to consumers during wet and dry seasons.

Currently, milk producers are reeling from heavy production overheads, thanks to dwindling supply of raw materials such as maize used to manufacture feeds.

At the same time, milk prices in both formal and informal markets have gone up, retailing at between Sh48 to Sh70 per litre. Some vendors are taking advantage of the situation to sell at between Sh60 and Sh70 a litre in parts of the North Rift.

Cost of production

Shelf prices of milk have continued to shoot up as the ongoing drought continues to push up the cost of production amid shortage of raw material.

Provision of coolers and affordable artificial insemination services by county and national government have, however, contributed to rise in the number of milk cooperatives.

Last week, Deputy President William Ruto said the national government had allocated Sh700 million in the current financial year towards strategic food reserves to absorb excess milk when there is oversupply.

The money will be used to convert the raw milk to powder and reconstituting the same whenever there is deficit, to cushion dairy farmers against milk price fluctuations.

"We don't want farmers to lack markets due to glut. We want farmers to have constant prices and guaranteed market so that they can plan their livelihood," he said.

Mr Ruto said the government would also set aside an additional Sh500 million by July in a bid to ensure milk producers earn constant income.

"We want farmers to be assured of the milk prices and New KCC has requested Sh500 million and by July the government will factor in the money. This will also ensure milk will not end up in the hands of middlemen because hawking is not a good business," said Mr Ruto.

Recent data from the Ministry of Agriculture shows that the government's commitment to drive the dairy sector's growth had contributed to rise in the amount of milk delivered to processors from 541 million litres in 2015 to 600 million litres last year.

About 30 per cent of the milk produced in the country was delivered to processors with the rest going to milk hawkers. The country produced an estimated 5.2 billion litres that year.

Mr Ruto spoke during the issuance of cheques to farmers from North Rift who supplied milk to the KCC before the firm went under in 1999.

Kenya

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