Retail milk prices drop by Sh5 after supply improves
Retail prices of milk have dropped by about five shillings in Nairobi and its environs on improved production as the rainy season starts across the country. Photo/Joseph Kanyi
What you need to know:
Fall in prices attributed to improved supply from dairy farmers following the start of the rainy season.
Dairy Traders Association said dairy farmers’ selling prices could fall if production goes up in the next few weeks with the onset of the rains.
There has been a struggle between milk processors and informal milk traders in the past few months over the control of the dairy market.
Milk price has fallen by five shillings for a half-litre packet as supplies improve, reversing increases seen in December and January.
A half-litre packet is retailing at Sh40 in supermarkets in Nairobi, down from Sh45, which has prevailed since mid January.
Processors had attributed the price increase to low supply, meaning they were buying milk from farmers at steeper prices as they competed for the commodity with informal milk traders.
Industry regulator, the Kenya Dairy Board, at one point banned milk hawking to stem the trend.
Data from the Kenya National Bureau of Statistics last month showed that the average price of packaged milk went up by 7.2 per cent in February over the January price. Year-on-year it was up 34 per cent compared to the price in February, 2012.
The price of unprocessed milk went up by 3.4 per cent in February compared to January. It was lower by 19.7 per cent in February, 2012.
New KCC managing director Kipkirui Langat attributed the fall in prices to improved supply from dairy farmers following the start of the rainy season.
He said there could soon be a further drop depending on how the supply and demand plays out in the coming few weeks.
“We are however yet to reduce the amount we are paying farmers who supply us with milk. We have not reached that stage yet,” said Mr Kipkirui.
The chairman of Githunguri Dairy Farmers Co-operative Society—which packages Fresha Milk—Charles Mukora, also said the company had reduced prices, adding that they had not raised their prices to Sh45 in the first place.
John Wachira, the Dairy Traders Association national secretary, said dairy farmers’ selling prices could fall if production goes up in the next few weeks with the onset of the rains.
“When the retail prices went up from Sh35 to Sh45 farmers got an increase of two shillings per litre setting the average price at Sh32. Now that the retail price has gone down by five shillings, the price may soon drop to around Sh28 per litre delivered,” said Mr Wachira.
He accused milk processors of controlling prices at will, saying the per-litre price changes have not corresponded with the reality on the ground.
There has been a struggle between milk processors and informal milk traders in the past few months over the control of the dairy market.
While the traders pay cash for the raw milk, the processors take time before paying the farmers, giving the competition the upper hand.
The regulator had imposed the ban on milk hawking in January, citing concerns over quality and safety of the hawked product and the need to protect the investment made by processors.
Since the Narc regime begun reviving the industry in 2003, the growth in both processing and animal numbers have been phenomenal.
A section of dairy farmers and traders in February responded to the ban by threatening to move to court to seek orders for the directive to be overturned.
The farmers, under the umbrella of the Dairies Association, said the government should seek ways to improve milk production through better agricultural practices instead of blaming informal milk traders for the industry woes.
The fall in milk prices however could be stemmed as farmers clear plots for planting especially in the Rift Valley where zero-grazing has not caught on.
