Board seeks higher milk producer price

Dairy workers sieve milk. Low milk prices offered to farmers by processors is to blame for the increase in milk hawking which, in turn, has led to a reduction of the amount of processed milk. File Photo.  

In Summary

• The proposal to introduce VAT on fresh milk, he added, could further exacerbate the problem of milk hawking.
• The amount of processed milk in the country declined last year despite a rise in the total milk production, pointing to an increase in sale of unprocessed milk particularly in urban areas.

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Low milk prices offered to farmers by processors is to blame for the increase in milk hawking which, in turn, has led to a reduction of the amount of processed milk.

To stem this cycle, the Kenya Dairy Board has initiated discussions with processors to increase producer prices to curb the rise in sale of unprocessed milk.

“We are concerned about the big difference between producer prices and the prices paid by consumers. Farmers get between Sh32 and Sh35 per litre of milk delivered to processors while the same amount of processed milk is retailing at Sh90,” KDB managing director Machira Gichohi said last week.

Mr Gichohi said the government is planning to enforce the law against sale of raw milk in order to make more milk available for the processors and guard against sale of contaminated milk.

Last year, the regulator floated the idea of introducing negotiated minimum producer prices to encourage farmers to increase milk production, borrowing from some of the successful milk producing states.

Suggestions have been made to borrow from countries like Korea, Israel and New Zealand where producers and the processors set up minimum guaranteed prices every season to ensure fair distribution of income along the chain.

The proposal to introduce VAT on fresh milk, he added, could further exacerbate the problem of milk hawking.

Some farmers’ organisations and experts in the country say low and unpredictable producer prices are some of the hiccups that have stifled fast investment in dairy farming.

Milk prices on the shelves have increased in the last two months to average at Sh45 per half litre packet from about Sh38 early in the year, as the processors are hard pressed to secure adequate amounts for processing. 

Mr Gichohi said better prices being offered by hawkers could explain the increased sale of unprocessed milk in towns.

“Discussions on how the huge gap between (the producer prices and the price paid by consumers for end-product) can be bridged are on-going,” he added.

He said they will meet with the processors on Thursday, adding that the Board will convene a similar meeting with farmers to chart the way forward.

The amount of processed milk in the country declined last year despite a rise in the total milk production, pointing to an increase in sale of unprocessed milk particularly in urban areas. Milk production increased by 12 per cent to 5.2 billion litres from 4.8 billion in 2011, the amount of milk processed fell to 498 million litres compared to 515 million litres in the previous year.

“The milk is transported over long distances, is often adulterated and some of the preservatives are not fit for human consumption,” he said.

He urged farmers to form groups to process their milk and add value to earn better prices.

He said it was unfortunate that some local milk companies have contracts to supply milk to neighbouring countries but low supply of milk to processors has been a major problem