Policy failure puts farmers on the receiving end again

Dairy farmers are in the news again for another wrong reason.

They are being asked to pay for the government’s policy failure by accepting lower producer prices for every litre of milk delivered.

A story we carried on Monday revealed that major processors are now paying farmers between Sh14 and 17 per litre of milk delivered, a drop of at least Sh7 from the February price levels.

The downward price adjustment, blamed on the current milk glut, has paid no attention at all to the farmers who complain that the cost of animal feed, and other inputs, has climbed significantly.

Yet the same processors have been quick to increase the price of every half-litre packet of milk bought by the consumer, citing the need to capture the increasing cost of doing business.

As the country awaits a cogent explanation of an earlier case where frustrated Nyandarua farmers were forced to dispose of their milk, the government must move with speed to crack the whip in the country’s dairy industry.

The argument by the industry regulator – the Kenya Dairy Board (KDB) – that its hands are tied in a liberalised economy does not hold any water.

Trade liberalisation does not imply that the government should abdicate its regulatory and consumer protection roles.

As a regulator, KDB must serve all stakeholders dispassionately.

Also wanting are the comments attributed to Co-operatives minister Joseph Nyaga that the crisis in the industry was caused by saboteurs.

Just what happened to the grandiose plan of building a strategic reserve for excess milk harvested during rainy seasons?

The evolution of man-eat-man culture within the dairy industry does not augur well for a government that is grappling with an unmanageable level of unemployment.

Like other segments of agriculture, the milk farmer is yet to recoup the heavy losses occasioned by two consecutive years of drought that ravaged the country from 2008.

Milk is a highly perishable commodity and farmers cannot be expected to hold onto their produce as a way of forcing processors and the government to the negotiating table the way cereal farmers have done successfully in the past.

We commend dairy farmers for the rare display of civility in handling this unfortunate matter so far. But in this gracious display of voicelessness, there is an urgent call for action and the government must rise to the occasion.

The best starting point would be to cut down the oligopoly tendrils that have slowly found a new home in the poorly regulated dairy industry.

If we permit a situation where two or three processors sit down to decide what the industry should pay farmers for their milk, then it is only a matter of time before farmers abandon dairy farming altogether.

Interestingly, the current crisis reveals the short memory among those who run the dairy sector.

Hardly a year ago, processors who are now underpaying farmers for their deliveries called a Press conference to warn that they risked closing down their factories if farmers were not prevailed upon to increase milk supply.

At that time, there was limited supply of milk in the country and the witty processors even had the temerity of using the regulatory arm of the KDB to force farmers to scale down the quantity of the product which was sold to informal outlets.

The current glut presents a fertile ground for industry regulators to craft a policy to address - not only the milk saga – but also the seasonal variations in demand and supply of all agro-based products in the country.