Drought threatens to push up milk prices

Consumers are staring at higher milk prices if the current dry spell that has hit parts of the country persists for another two weeks.

Processors say the supplies had slightly improved and that they have been using the increased volumes, together with the reconstituted powder milk to meet the demand.

Counties in the North Rift, which account for over 60 percent of the total milk production in the country have however been hit by a dry spell that has reduced fodder in the fields, thus cutting production.

“The volumes had started going up but if the current dry spell persists in the next two weeks, then it is bound to have a negative impact on supplies and hence prices,” said Nixon Sigey, chairperson of the Kenya Dairy Processors and the managing director of New KCC.

A majority of farmers rely on open field grazing and do not preserve fodder for their animals, which subjects them to losses when drought hits.

The shortage in milk supply is likely to trigger an increase in producer prices, which currently have hit a high of Sh44 per litre.

Consumers have been buying milk at Sh55 for a 500ml packet of long-life milk, an incresae from Sh50 after processors adjusted the cost last year in response to low volumes.

In January, the Kenya Dairy Board (KDB) said the current prices will prevail for some time because of higher producer cost that processors are paying farmers.

Processors had increased the producer price of raw milk by more than double since March last year, following a decline in supply.

Brookside is paying 17 percent more for a litre of raw milk, which pushed the cost to over Sh40 for a chilled commodity delivered at the firm in Ruiru. On the other hand, New KCC increased its price to Sh44 for the same quantity.

Milk production declined marginally in 2020 compared with the previous year, due to the lack of pastures in the field.

Data from KDB shows milk volumes declined by 0.95 percent last year to hit 679 million litres, down from 685 million litres in 2019.