The minimum price set by the government on milk purchases from farmers and installation of new cooling plants pushed the formal intake of the commodity by 17.2 percent last year.
Data from Kenya National Bureau of Statistics (KNBS) shows the formal sector recorded an intake of 802 million litres of milk in 2021 compared to 684 million litres the year before.
Livestock Principal Secretary Harry Kimtai said the significant rise in volumes was occasioned by installation of 350 new cooling plants with a capacity of 3,000 litres each as well a minimum price set by the State, which attracted farmers to sell their produce through the formal channel.
“We have created capacity for farmers to store their milk for longer unlike before when there was not enough coolers for storage,” said Mr Kimtai.
“This, coupled with good prices offered by the processors has seen an increase of the commodity in the formal sector.”
The government through Kenya Dairy Board introduced a minimum price of Sh33 a litre payable to the farmers on milk delivered to processors.
The move was aimed at safeguarding farmers after the price of the produce dropped to an all-time low of Sh19 a litre in 2020, leading to outcry among farmers who protested the move.
The rise in formal intake has not played any role, however, in addressing the current high cost of milk in retail shops where a 500ml packet is trading at Sh55 from a low of Sh50 previously.
Processors have blamed the cost on the high price that they are paying farmers at the moment. The new KCC and Brookside are paying producers up to Sh40 per litre.
The informal milk market accounts for over 80 percent of the milk that is traded in the country, leaving processors with few quantities for processing.
KDB has been working on increasing the market share of the formal market as it seeks to grow exports beyond the East Africa market.