Dairy farmers will be paid within 30 days by milk processors if a law proposed by the Agriculture Ministry is passed.
The proposal in the Dairy Industry Bill, 2024 seeks to enable farmers to be paid faster by processors to reduce the headache of mounting arrears that sometimes see farmers ging without pay for months.
“A dairy business operator shall promptly pay primary producers for milk delivered within 30 days after the end of the month in which the milk supply is made,” says the Bill.
The Bill also introduces a guaranteed minimum price for raw milk in a move to reduce exploitation of farmers by processors especially during periods of a glut in the market.
This minimum price will vary depending on the animal producing the milk.
“The guaranteed minimum producer price for raw milk shall be as prescribed, and shall be on the basis of different animal species,” it says.
The Bill also introduces quality-based pricing, where the Kenya Dairy Authority, which replaces the Kenya Dairy Board (KDB), will set minimum prices for milk depending on its quality.
This is aimed at incentivising farmers to produce high-quality milk that will fetch better prices.
“The Authority shall promote quality-based pricing of dairy produce (and) in consultation with relevant stakeholders, prescribe different grades of raw milk for the purpose of quality-based pricing,” it says.
If the Bill is passed, the KDB will also cede the role of licensing milk producers to counties. The law currently vests the role of licensing primary milk producers, that is persons who produce milk for sale.
The Bill however seeks to hive this role off the parastatal and give it to devolved units.
This comes as despite agriculture being a devolved function under the current Constitution, the national government is largely still controlling many agriculture sub-sectors, including dairy.
Handing counties the role of licensing milk producers is a step towards devolving the sub-sector in line with the new Constitution.
“A person who intends to produce milk for sale shall apply in the prescribed form to the relevant county government to be registered as a primary producer,” says the Bill.
However, farmers who produce milk for their own use will not be required to have a license.
However, the Board, which will now be changed to KDA, will retain the mandate of registering dairy business operators, dairy equipment suppliers and dairy processing aids suppliers.
“A regulatory permit shall be valid for a period of twelve months from the date of issue,” says the Bill.
The Bill also introduces traceability and recall of milk from the market by processors in case of a defect.
This is to ensure that it is easy to trace the source of defective milk for corrective actions to be taken.
“A dairy business operator shall withdraw, or order the withdrawal or recall of dairy produce from the supply chain if there is evidence that the dairy produce poses, or is likely pose, a health risk to consumers,” it says.
The KDA will also be able to recall and penalize processors found liable of distributing defective milk.
Milk processors have also been barred from buying milk from any farmer without a contract between the two parties.
The Bill comes at a time when the government is keen to reform the agriculture sector which remains a pillar of the country’s economy, employing millions of Kenyans directly and indirectly.
President William Ruto has placed his deputy Rigathi Gachagua to spearhead reforms in the tea, coffee, and dairy sub-sectors. The President is also eyeing reforms in the sugar sub-sector, where he has mulled over the possibility of introducing a bonus for cane farmers as it happens in the tea sector.
