Milk prices rise as cold season dampens output

Consumer milk prices have gone up again as processors rush to attract more deliveries to their factories as the cold season dampens milk output.

New KCC is now paying farmers between Sh30 and Sh35 per litre, depending on quality. Chilled milk, from which more premium products can be made, attracts higher prices.

“We are paying up to Sh35 per litre. We have increased consumer prices slightly to cater for farmers,” said Matu Wamae, New KCC chairman.
The new producer prices reflect a Sh4 increase per litre.

Last month Brookside Dairies increased the producer price to between Sh35 and Sh40 per litre for contracted farmers for a period of six months.

Joseph Ng’era, a Nakuru-based large scale farmer who is also an official of the Kenya National Federation of Agricultural Producers (Kenfap) said the new prices were good because the cost of production was about Sh20 per litre.

Consumers had in recent weeks emerged as the highest beneficiaries from a price war that saw processors slash prices by up to Sh10 for a half-litre packet to boost consumption and manage increased supplies.

The consumers prices have now gone up to an average of Sh40 per 500ml pouch, up from Sh35, following the producer price review.

Milk supply has been depressed since January because of drought that reduced production by 45 per cent. Although deliveries improved between April and May, they have been dampened by the cold spell that set in last month and is expected to run till September.

Every year, the industry grapples with milk shortage during the dry season and a glut that leads to losses when rains resume. Plans to build a strategic milk reserve are yet to be realised.

zsambu@ke.nationmedia.com