Milk deficit shifts producers’ focus away from export
Photo/Diana Ngila
Mr Gichohi addresses the press on milk shortage in the country in Nairobi on Wednesday. With him is Dr Lang’at.
An acute shortage of raw milk has forced local dairy firms to shift focus from production for export at a time when demand for long life milk is growing in the international market.
Processors said the supply shortfall, which worsened from six million litres in January to 11 million last month, had forced them to concentrate on fresh milk for domestic consumers.
“The bulk of what is coming out of local factories at the moment is fresh milk,” said Daniel Langat, the New KCC managing director and also chairman of the Kenya Dairy Processors Association.
The lobby represents 21 local processors who together account for 92 per cent of milk processed in Kenya.
“At New KCC, fresh milk for the domestic market now constitutes 70 per cent of our daily output,” Dr Lang’at said at a press briefing in Nairobi on Wednesday evening.
While the prolonged dry spell and frost in parts of Rift Valley and Central have cut supply of raw milk by 33 per cent, domestic demand for fresh milk has reached an all-time high, driven by new markets in northern Kenya.
Demand in the region has grown sharply since Kenyan Defence Forces (KDF) crossed into Somalia to flush out Al-Shabaab militants.
“We suspect the phenomenal rise in demand is because KDF has cut all illegal supply lines,” Machira Gichohi, the managing director of Kenya Dairy Board (KDB), said.
Some of the milk supplied to the region might also be finding its way into Somalia.
This means that buyers in Kenya’s traditional markets such as Comesa and the East African bloc will have to contend with supply disruption until the long rains begin.
New KCC, for instance, grew its earnings from exports to 58 per cent, from Sh111 million in 2009 to Sh192 million in 2010.
“We have had a ready export market for long life milk in the region and this is slowly extending to West Africa after Nigeria became our latest market,” Mr Gichohi said.
At Brookside Dairy, the raw milk shortage is set to slow down expansion into African and Middle East markets.
The company has set sights on Southern and North Africa with its management saying enquiries have lately come in from Botswana and Egypt.
Consumers have had to shoulder higher prices after producers raised processed milk prices by up to Sh6 per half litre packet.
The processors warned that rise in shelf prices would continue if the long rains fail to come in time.
“In the coming months, prices of milk products will continue to be shaped by demand and supply on one hand, and collection cost on the other,” said John Gethi, the Brookside Dairy general manager in charge of milk procurement and extension services.
Among the country’s top three processors, Brookside has a capacity of about 310,000 litres a day, followed by New KCC’s 220,000 litres, and Githunguri Dairy’s 180,000 litres.
Glut and loss
Mr Machira said the industry might be forced to lobby for duty-free importation of milk powder if the shortage continues for several weeks.
Every year, the industry grapples with milk shortage during the dry season and a glut that leads to loss when rains resume.
Mr Machira said that plans to build a strategic reserve will take several years to realise as the proposal, currently before the Finance and Agriculture ministries, will have to be turned into policy and passed by the Cabinet first.
It is only after this that Parliament may pass a law allowing the National Cereals and Produce Board to expand its mandate beyond grain to include a strategic milk reserve.
