Opinion and Analysis
Set up strategic reserve to curb erratic milk supply
Milk processor Brookside’s move to cut retail milk prices by 22 per cent on a surge in production underlines the need to set up a strategic milk reserve.
Improved weather conditions have set the stage for a glut in milk production; egging milk processors to cut milk prices and it’s a matter of time before the processors start rejecting the commodity.
Every year the industry grapples with milk shortage during the dry season—which this year saw retail prices increase 80 per cent—and a glut that keeps prompting farmers to pour milk owing to lack of market for their produce.
This means that something needs to be done to eliminate the periodic uneven supply once for all.
We call on the government and the milk processors, especially New KCC that was revived in 2003, to cater for the interests of small-scale dairy farmers, to seriously re-consider setting up a strategic reserve of powder milk.
This will allow the processors to dry the milk and store it in powder form so as to be tapped during times of drought and famine and remove the industry from the cycle. This action will not only help stabilise milk prices and shore up the profitability of the milk processors. It will also cushion Kenya’s rural economy from collapse.
Countries like New Zealand have managed to remain global exporters because of such investments and Kenya too can play in this field. The upsurge in production is set to thaw the vicious price war, both at the retail and wholesale levels.
These wars had literally opened a window for farmers to make a killing by giving them control over the price at which they sell their produce—which currently range between Sh35 and 40 for every litre delivered compared to an average of Sh24 early last year.
These happy days appear to be fading to the delight of consumers settling in for a cheaper breakfast on the reduced retail milk prices.
In recent years, a huge fraction of the country’s rural economy, particularly in Central and Rift Valley provinces, has received a boost from the revitalised milk sub sector, especially with the narrowing profit margins from the tea and coffee industry—the hitherto bedrock of the countryside economy.