Markets & Finance

New KCC converts milk powder into liquid form as shortage bites


New KCC has cut production of long-life milk amid raw milk shortage. PHOTO | FILE

New KCC is converting its milk powder into liquid to meet the rising demand amid a shortage caused by a severe drought in production zones.

About 40 per cent of the processor’s daily production is currently coming from the reconstitution of powdered milk into liquid form as supplies from farms have drop by more than 30 per cent.

The raw milk shortage has sparked intensified competition as processors scramble for the little milk from farmers.

New KCC managing director Nixon Sigey said supplies have been adversely affected by dry weather since last October.

“We are reconstituting between 30 to 40 per cent of the powder milk to supplement the volumes that we are receiving from the farms,” said Mr Sigey.

Mr Sigey said central Kenya is currently the biggest producer of milk, offering up to 60 per cent of the total intake from farmers.

Rift Valley region normally produces about 70 per cent of the country’s entire milk production, but its share of the market has dropped amid pasture shortage and emergence of foot and mouth disease that killed animals.

The high volumes coming in from central Kenya have been attributed to zero-grazing.

“We are in the market today because of the huge volumes that we are getting from central Kenya where a good number of farmers have embraced zero-grazing,” said Mr Sigey, who is also the chairman of the Kenya Dairy Processors Association.

The MD said the processor has scaled down the production of long-life milk to concentrate on fresh products that are more popular in a majority of Kenyan households.

Long-life milk from almost all processors and low-fat products are now scarce in supermarket shelves.

Low fat products, normally referred to as skimmed milk, is made after the fats are removed from the milk in the process of making butter.

The shortage has seen New KCC increase its raw milk buying price by Sh6 a kilogramme to a record Sh41 while Brookside is buying the same at Sh38.

READ: New KCC takes on Brookside in raw milk price war

Milk prices in retail outlets have gone up to Sh48 per half a litre from Sh43 previously.

Last month, the State-owned milk processor said it had cut back production of ghee, cheese and butter by 20 per cent to concentrate on milk in order to satisfy its consumer market.

New KCC depends on the value-added products to boost its revenue, bringing in about Sh400 million a year from regional exports.

Mr Sigey said he was optimistic that the milk supplies would improve with the onset of March rains.

“We expect that the situation will come back to normal now that the rains have started,” he said.