Markets & Finance

Milk prices rise for second time as shortage bites


A customer picks a packet of milk at Kasturi Supermarket in Nyeri Town on Sunday. The price of the commodity has gone up as shortage looms due to the dry spell. Photo/Joseph Kanyi

Milk prices have risen for the second time in less than one month, with processors warning that more increases could be on the cards if a biting shortage persists.

The prices went up by an average five shillings for a half-litre packet over the weekend, hitting low-income households hardest.

Milk prices have risen to an average of Sh45 for a 500ml packet up from Sh35 in December, as milk processors said they have been forced to increase farmers’ pay to secure raw supplies.

“Milk from the farmers has reduced and to ensure they do not divert delivery to hawkers we agreed to increase prices,” said James Karanja, a director at Kenya Dairy Board.

Githunguri Dairy Farmers, which was yet to increase prices for its Fresha brand, said it was in the process of implementing the price change.

“We are going to increase; even the letter is already out. There is no milk,” said Charles Mukora, the dairy chairman.

Failure to implement modern methods of preservation has made milk supply erratic, resulting in sharp price movements of the staple commodity, especially during the first quarter of the year.

READ: Milk prices go up after supply dips despite heavy rainfall

Last year prices had risen to a high of Sh50 per 500ml pouch when there was a similar shortage. Retailers also rationed the commodity, limiting consumers to three packets.

Laban Mwangi, a dairy farmer at Uthiru, said farmers had been promised higher prices by the dairies for deliveries made during the month of January.

“Last month we were paid Sh27 per kilo but the dairy said they would increase the price for this month,” said Mr Mwangi. Dairies usually set the price at which to pay farmers after factoring in processing costs.

“Our farmers are on signed contracts, which means our prices are stable and predictable,” said John Gethi, general manager of Brookside Dairies, which is the country’s largest processor with a capacity of 17 million litres a month.

Brookside has started processing milk powder, which is expected to raise the processors’ uptake capacity, averting wastage seen in previous years when milk has been poured during high produce seasons. Only New KCC previously had the capacity to process milk powder.

Brookside said it is also working together with Kenya Rural Roads Authority to improve feeder roads as a means of extending its reach to farmers.

Data from the Kenya National Bureau of Statistics (KNBS) shows that milk intake in the formal sector had dropped last year compared to the previous years.
Processors say that production stagnated after the slump recorded early last year. The North Rift region is said to be the most affected area.

As at October last year, 397.2 million litres of milk had been absorbed by the processors, which was a 12.7 per cent drop compared to a similar period a year earlier. The most affected months were those of February, March and April.

It is estimated that 90 to 92 per cent of Kenya’s dairy farming is done by small scale farmers who rely on rain-fed agriculture.

Short rains during the month of December had raised hopes of increased production. The meteorological department is yet to release the forecast for the first three months of the year.

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