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Milk price rises as production cost shoots up on drought

New KCC managing director Nixon Sigey. PHOTO | FILE
New KCC managing director Nixon Sigey. PHOTO | FILE 

Shelf price of milk has started rising as the ongoing drought continues to take a toll on the cost of production and raw material supply.

The price of milk across all the brands has registered an increase of between Sh3 and Sh5 depending on the variety.

A 500ml long life milk packet that has been selling at Sh50 is now going at Sh55 while fresh milk that used to retail at Sh43 is now selling at Sh48 across all the major supermarkets.

Increased cost of the commodity comes after processors raised producers’ price by Sh3 last week.

Processors said this was meant to cushion farmers against increased cost of feeding animals due to lack of pastures in the fields that has so far cut down on fodder. Maize, an important part of animal feeds, has also been in short supply.

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“The current weather has seen a drop in milk supplies of between 20 to 30 per cent and it will only be good that we increase the price to farmers to cushion their earnings,” New KCC managing director Nixon Sigey said.

On average, different brands of animal feeds have gone up by between Sh50 and Sh70 for a 70 kilo pack depending on the manufacturer.

Milk supply to the processors has been on the rise since September 2015, maintaining the same trend the whole of last year, helping maintain low consumer prices.

Mr Sigey said the processor is working with extension officers to train farmers on animal feeds preservation to maintain the current supplies.

The State has set aside Sh1.5 billion as loan for livestock traders for purchase of animals in 23 countries hit by drought. The cash will be disbursed via the Agricultural Finance Corporation (AFC) at a negotiated rate.

The scarcity of milk in the market is going to intensify competition for raw milk among the 25 processors in the country.

Processors have been wooing farmers by offering incentives to maintain their milk intake at a time factories are faced with stiff competition from informal players like vendors, who control a huge portion of the raw milk market.

According to Kenya Dairy Board, the formal market controls 30 per cent of the total milk production while the informal one commands the balance 70 per cent.

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