The Kenya Dairy Board (KDB) has capped the amount that co-operative societies can deduct from farmers at Sh2 per litre as the agency moves to protect producers’ earnings.
The move, which is likely to put the dairy regulator and the co-operatives at loggerheads, will see the administrative cost capped at Sh2, denying them the monopoly of setting the cost at will.
KDB managing director Margret Kibogy said the move is aimed at ensuring farmers earn at least Sh30 for a litre after deductions are made.
“We have just issued the circular that will guide on deductions as we want to ensure farmers benefit from their hard work,” said Ms Kibogy in an interview with the Business Daily yesterday.
The move is a joint initiative between the board and the Commissioner of Co-operatives under the ministry of Agriculture.
Milk co-operatives are currently charging up to Sh3 a litre as administrative cost to the dairy farmers.
Some of the cooperatives have already raised concerns over the move, arguing that they were not consulted.
“We are going to protest this move because we were not consulted before the decision was made,” said Stanley Ngombe, the chairman of the Kenya Federation of Dairy Farmers.
But the regulator and the commission of co-operatives said they are empowered by the law to make adjustments on pricing.
Other deductions that milk farmers incur include the transport cost, chilling cost and Kenya Dairy Board levy.
A deduction of Sh1 is made to meet the chilling cost per litre, Sh2 for transport and Sh0.40 as the regulator levy.
The Dairy board levy is shared between the farmer and the processors with each party paying Sh0.20 to the regulator, bringing it to a total of Sh0.40.
Ms Kibogy said they had sent out inspectors to different parts of the country to ensure compliance on the new directive.
Processors have recently increased the price at which they buy milk from farmers with most now paying at least Sh35 a litre.
Higher prices were initiated by the government’s move to release Sh500 million to mop up excess milk from producers.