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Economy

Kenya resists bid to curb farm gate milk prices

The State has opposed a bid to regulate farm gate milk prices saying it will make the local industry uncompetitive.

The National Assembly passed a resolution in September 2013 to review farm gate prices to Sh45 a litre while the Kenya dairy Board (KDB) is mulling over controlling milk costs and offer farmers a minimum price for their produce.

But the Ministry of Agriculture reckons that price control is not the best route and is instead working on reducing production costs to bridge the gap between producer and consumer milk prices.

Acting Agriculture secretary Adan Mohamed said setting a price might not be a sustainable way of ensuring farmers reap descent returns for their produce.

“Rather than imposing that milk is bought at Sh45 we have decided as government to ease pressure on farmers,” Mr Mohamed told the National Assembly Implementation committee Tuesday.

To achieve this, the State is engaged in promotion of fodder production, quality based milk payment and provision of more cooling facilities to cut on milk delivery costs.

This comes as the regulator- KDB works with Egerton University think-tank, Tegemeo Institute, to establish the cost of milk processing, setting the stage for price controls.

“The study will inform the cost of distribution along the dairy value chain and determine whether there is equitable sharing of returns between the value chain actors,” said Mr Mohamed.

Milk prices in the country fluctuate between Sh40 and Sh26 per litre depending on the weather and availability of forage.

“We want to establish this law to create a ceiling on the minimum price that a processor can pay to farmers in times of a milk glut,” KDB acting managing director Humphrey Maina said an earlier interview.

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