Dairy sector regulator has proposed an increase in levies charged on dairy processors, setting the stage for an increase in milk prices.
The proposal, made through Miscellaneous Amendments Bill (2017), proposes the scrapping of levies that processors and producers pay to the Kenya Diary Board in favour of a one per cent charge on the factory price of a kilogramme of processed milk and other dairy products.
Though each processor negotiates unique contracts with retailers, an informal poll by the Business Daily found that the average ex-factory price for a half a litre sachet of fresh milk currently stands at Sh45.
This means that a litre of fresh milk, roughly one kilogramme, costs Sh90. Based on the proposed levies, a processor would pay 90 cents to the regulator for this amount of milk.
The new levy will more than double the amount of money that the Kenya Dairy Board (KDB) has been collecting in levies and cesses.
The processor levy currently stands at 20 cents on the ex-factory price of a kilogramme of dairy products while producers pay a similar amount on the farm gate price of raw milk — totaling 40 cents.