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Economy

Ministry seeks Sh1bn raise in strategic milk powder reserve

Kenya’s cost of production per litre stood at
Kenya’s cost of production per litre stood at Sh24.80 per litre of raw milk in 2015. FILE PHOTO | NMG 

The Agriculture ministry wants the Strategic Food Reserve (SFR) to increase the budget for milk reserves to Sh2 billion to reverse declining milk prices and fight competition from Uganda.

Agriculture Secretary Mwangi Kiunjuri told Parliament a proposal has been submitted to the SFR board to top up the milk component of the SFR by Sh1 billion to Sh2 billion.

“This will facilitate milk processors to collect and process excess milk into long life products for the SFR or sale to the market during periods of deficiency and stabilise milk supply and demand, leading to improved prices for milk products,” said Mr Kiunjuri in submissions made on his behalf by Livestock PS Harry Kimtai.

New KCC is however finding it hard to sell off the Sh1 billion powdered milk that it is holding at the SFR as their price is higher compared the external markets.

Kenya’s cost of production per litre stood at Sh24.80 per litre of raw milk in 2015, much higher compared with other regional neighbours like Uganda where a farmer incurs about Sh12 for the same quantity, which has made it difficult for local dairy products to penetrate neighbouring countries.

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The ministry is proposing to introduce a new set of dairy regulations with the objective of organising the efficient supply and distribution of dairy produce while ensuring compliance to quality and safety requirements.

“The measure will enhance marketability of Kenyan dairy produce in the local and export markets and thus reward farmers with stable and better producer prices,” Mr Kimtai said.

He said Kenya is receiving 12 million litres of milk and 780,000 kilograms of powdered milk from Uganda every month.

The ministry said the amount of milk that is coming into the country from Uganda is approximately 30 per cent of the current average milk intake by Kenyan milk processors.

"This is a significant proportion of the milk market and therefore a source of concern and competition to the Kenyan farmer and dairy industry at large,” Mr Kimtai said.

He added that it is not possible for Kenya to prevent movement of milk and milk products from the EAC due to the East African Common Market Protocol.

The committee is inquiring into the reasons leading to the declining milk prices for milk and milk products in the country.

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