Milk intake in the formal sector grew seven per cent last year to register the second best performance for the dairy industry in 18 years.
Data from the Kenya Dairy Board (KDB) shows the volumes bought by five major processors hit 634 million litres up from 591 million realised in the previous year.
The five leading processors--Brookside, New KCC, Githunguri, Meru and Kinangop--account for more than 80 per cent of all the formal milk intake.
"The quantity of raw milk handled by this sector has been growing with 634 million litres received for processing in 2018," said KDB managing director Margret Kibogy.
Ms Kibogy says the growth in intake by the processors has been occasioned by high level of sensitisation to farmers and competitive prices offered by milk factories to the producers.
Until last year, processors were offering the highest price per litre of milk to have been recorded in the dairy sector. They have been buying a litre of the commodity at between Sh38 and Sh40 per litre before it was revised downwards early this month, with the dairies citing a market glut.
Processors have cut the price of raw milk by Sh3 per litre as the market responds to a sharp increase in production. This is the first time in two years that processors have cut the price by a significant margin, after it remained constant for the whole of last year.
KDB says the month of January has the highest milk intake in the formal sector. This results from the short rains experienced towards the last months of every year.
"High intakes of raw milk are normally associated with decline in producer prices as is happening now. However, as intakes dip towards March and May, the prices gradually improve," said Ms Kibogy.
Informal traders, commonly referred to as hawkers, control a huge chunk of milk production in the country, bringing stiff competition in the raw commodity market.
Processors have over the years urged the government to tame informal milk trading as it puts the processors at the danger of running out of business in times of severe scarcity.