Kenya ponders duty waiver on imported powder milk

Kenya will remove duty on imported powder milk to allow shipping in of the commodity at a lower price following a decline in production across the country.

Livestock principal secretary Andrew Tuimur said they are monitoring the situation keenly following a 20 per cent decline in production since the beginning of the year as this has the potential to trigger high prices for consumers. Dr Tuimur said the ongoing drought has impacted negatively on major producing zones with cattle struggling to get feeds and water.

“We are monitoring the situation before we finally open the window for duty-free imports to allow importation of powdered milk in order to tame high consumer prices,” said Dr Tuimur.

Milk imports attract a 60 per cent duty plus an additional seven per cent Kenya Dairy Board levy, making importation a costly affair.

Last year, the Treasury scrapped duty on imported powdered milk to curb rising prices, allowing processors to import 9,000 tonnes of the commodity.

However, the firms only managed to ship in about 4,500 tonnes by the time the window expired last December.

Processors cited high international prices as the reason they could not import their required volumes.

Data from Global Dairy Trade indicates the international price of powdered milk has risen from $3,226 per tonne in the first week of February to $3,246 last week. Dr Tuimur said this time round they will allow even traders to import the products to enable the country get enough to supplement farmers’ deliveries.
Kenya has an annual processing capacity of 1.4 billion litres, which translates to 3.9 million litres a day.

However, processors do not operate optimally due to a lot of milk being diverted to the informal sector.

“Informal market is taking over the chunk of milk that is produced in the country, this leaves processors with very little of the commodity to process, as regulator, we are working to increase the intake to factories,” said KDB managing director Margaret Kibogy.

Ms Kibogy said they are working with other stakeholders in training farmers to embrace formal market for their milk, a move that is also aimed at raising safety standards.

KDB has been educating consumers on importance of consuming processed milk as opposed to the raw one, but households have been constraint by high cost of the processed commodity.