Farmers lose in new milk price shift

The dairy sector is estimated to provide a livelihood for more than one million small householders as well as direct employment to 500,000 people directly and 750,000 indirectly.

Price fluctuations

According to industry regulator Kenya Dairy Board (KDB), the daily intake now stands at 1.5 million litres, 25 per cent higher than the milk processors’ installed capacity of 1.2 million litres.

“Supply to the factories is still very high. Price fluctuations are due to market forces in a liberalised market. But we have asked processors to recheck the producer prices,” said KDB managing director, Mr Machira Gichohi.

Estimates show that raw milk in excess of half a million litres has been lost due to the glut, which has been blamed on poor planning and failure to foresee an upsurge in production.

KDB statistics show that only 30 per cent of Kenya’s milk produce is processed in factories, with the rest being sold raw to vendors, who have also cut their prices.

A State-driven project to set up a Sh600 million strategic milk reserve of 2,000 tonnes of powdered milk is yet to begin, four years after it was spelt out.

Under the programme, the government was to buy milk for the strategic reserve to counter deficits incase of drought.

The reserve was to be set up in mid 2007, but has been constrained by low milk supply.

The Livestock ministry has now floated a proposal to Treasury to set aside Sh300 million to buy excess milk from farmers.