Milk prices have fallen by 45 percent in the past year as dairies cut producer prices citing a sharp increase in production.
A litre of milk is on average going at Sh20 across the processors from a high of Sh37 at similar time last year.
Consumers have emerged as the winners in the wake of the reduced prices with the cost of some brands of long-life milk dropping to Sh42 from previous Sh50.
However, this has hit producers who in essence say they are making a loss of Sh3 per litre given the cost of production determined by the Ministry of Agriculture stands at Sh23.
“We are now making losses based on the price at which we are selling our milk. There has been a huge drop in price between November last year and now,” said Joseph Murega, chairman of Nyandarua Dairy Farmers.
The Kenya Dairy Board (KDB) says there is a sharp increase in milk production, resulting to a glut, forcing processors to act on market forces.
“It is a case of demand and supply and high volume of milk in the market is what has prompted a decline in price,” said Margret Kibogy, managing director of KDB.
Ms Kibogy says the country’s monthly needs are 50 million litres but the sector has been witnessing in excess of more than 65 million litres since July.
The department of livestock is already seeking Sh2 billion from the Treasury for mopping up the excess milk in the market for reserves.
The funds will be used in converting surplus milk into long-term products such as UHT and powder milk, which can be reconstituted in times of shortages.
Dairy farmers have decried an influx of cheap products from Uganda, saying this has impacted negatively on their business and want the government to regulate the imports.
“The cost of production in Uganda is very low when compared with ours. If we continue allowing cheap imports from there then our farmers will suffer,” said Joseph Karuri, chairman of the Association of Kenya Animal Feeds Manufacturers.