Milk prices soar even as output rises 7.5 per cent
A worker at New Kenya Co-operative Creameries, Eldoret depot. Dairies have invested in equipment to handle erratic supplies by farmers. Photo/File
The volume of milk delivered to processors rose by 7.5 per cent last year, falling short of rising demand that has seen retails prices increase by nearly 40 per cent in four months.
Data from the Kenya Dairy Board shows that farmers delivered 470.8 million litres of milk last year compared to 437.8 million litres in 2010.
Brookside Dairies cemented its position as Kenya’s leading processor, taking up 37.5 per cent of the total supplies equivalent to 177 million litres up from 156.9 million litres in 2010.
This year, the country has had an acute shortage of milk with most of the processors turning to New KCC for supply of powdered milk for re-packaging.
Industry players have blamed the current shortage, which has resulted in a half litre packet retailing at between Sh46 and Sh50, on inadequate fodder.
“The shortage was from those farmers who could not get feed for their animals. The rains have now come and we have started seeing milk intake coming up,” said Matu Wamae, the New KCC chairman.
The month of July had the highest delivery of 43.7 million litres, while March recorded the lowest, 31.9 million.
Brookside Dairy, associated with deputy Prime Minister Uhuru Kenyatta’s family, surpassed New KCC as the top processor in 2010 and widened the gap last year as deliveries to New KCC declined.
“It has been a case of expansion of our market with a lot of it being sales driven. We not only serve the local market but we are exporting, creating a huge demand,” said John Gethi, general manager of milk supply and procurement at Brookside.
The government-owned processor received 140.1 million litres of milk last year, compared to 152.9 million litres a year earlier, lowering its market share to 30 per cent from 34 per cent.
Entry of new investors and growth of small players to nationwide milk collectors has eaten into the New KCC’s market share, even as the government contemplates its privatisation.
“We now have too many players in the market so competition is high,” said Mr Wamae. Githunguri Dairies retained its position as the third biggest processor handling 64.7 million litres up from 55.7 million in 2010. Githunguri Dairies restricts itself to collecting milk from farmers in the surrounding areas. Buzeki Dairies displaced New Sameer in the fourth position following investment in equipment with the capacity to preserve 210,000 litres of milk per day, compared to the previous 50,000.
Their milk intake more than doubled last year to 19.2 million litres from 7.6 million. Following the milk glut in 2010, most milk companies upgraded equipment and installed new long-life milk processors to accommodate farmers’ erratic production.
“We have additional capacity following an upgrade of our equipment and modernisation of our processes so we can accommodate much more,” said Mr Wamae.
Stakeholders in the sector have been pushing for subsidies for farmers involved in zero grazing and a drop in number of barriers of trade in the East Africa region.
In a forum last year, the stakeholders said that a easier trade would open fresh opportunities for countries to share technologies and smoothen fluctuations as excesses when processed would still have a market and collections during shortages would be diversified.
