Dairy farmers contracted by Brookside will earn 16 per cent more per litre after the processor increased producer prices to Sh36.
The Sh5 increment, the firm said, is meant to cushion farmers against effects of the prolonged dry weather, which has suppressed production across major milk sheds over the past three months across the country.
The increase for deliveries made from yesterday, will benefit 160,000 farmers and 300 dairy groups, Brookside said.
The increase in farmgate price comes weeks after the processor increased its retail prices by a similar margin.
Brookside's director of milk procurement and manufacturing John Gethi said: "The current business environment has occasioned an increase in consumer prices of our products. We have decided to pass on the benefits of these increases to our farmers during this exceptionally dry period." He was speaking from the firm's offices in Ruiru.
This will be a relief to the farmers who have seen the cost of animal feeds rise steeply over recent weeks.
For instance a spot check last week showed that the price of dairy meal had hit Sh4,500, up from Sh4,200 the previous week.
Last week, industry regulator, the Kenya Dairy Board, announced that intakes by processors had plummeted five percent over the first quarter of the year with most raising the shelf price. This has seen the cost of long-life milk hit a two-year high of Sh55 for the half-a litre packet.
Brookside's biggest rival, New KCC, has however, opted to go slow on increasing the retail price, instead turning to powder milk to boost its supplies. It said its stocks can keep up its production up to end of next month.
"We call on our farmers to redouble their effort in milk production in order to further benefit from this opportunity with the new price adjustment," Mr Gethi added.
Mr Gethi said Brookside was keen to continue partnering with farmers to make dairy a consistent generator of family income.
"We are currently on an aggressive empowerment programme for our farmers, a majority of whom are smallholders. We are targeting improved production through investment in feed preparation. When we invest in smallholder dairy farmers and equip them with the tools to become successful, we are also investing in communities and building lasting foundations for the industry," Mr Gethi said.