PROBLEM HALF SOLVED

New KCC allocated Sh1.07 billion to boost diary farmers' earnings

High local production and increased imports of milk have resulted in low farm level prices

In Summary

Farmers say milk prices have dropped to as low as Sh15 per litre in most areas as a result of high production locally and increased imports of milk

The President yesterday directed Sh1.07 billion be allocated to New KCC in the immediate run to boost the milk industry 

Workers pour milk delivered by farmers at Olkalou Dairy cooling plant due to oversupply.
Workers pour milk delivered by farmers at Olkalou Dairy cooling plant due to oversupply.
Image: FILE

The President’s directive to allocate Sh500 million to the New KCC for conversion of excess milk from farmers into powder is only a quarter of the funds required by the state body.

President Uhuru Kenyatta on Tuesday said the funds would be used to purchase surplus milk from dairy farmers, to be converted into powder form for future use.

Last November, then Agriculture CAS Andrew Tuimur said the ministry had requested Sh2 billion through the Strategic Food Reserve (SFR) to cater for processing of excess milk into powder.

The Public Finance Management Act, 2015 states that the SFR includes maize, beans, rice, fish, powdered milk and canned beef. 

This as milk production has grown more than three-fold owing to conducive weather conditions from a monthly average of 15 million litres to 62 million litres produced per month.

“Farmers have continued to get high milk yields, however due to the excess supply they are receiving very low prices for their milk,” the President said.

According to Tuimur, excess milk production has seen the price of a litre of milk at the farm level drop to range between Sh23-Sh28 compared to Sh30-Sh32 early last year.

Farmers, however, say prices of milk have dropped to as low as Sh15 per litre in most areas as a result of high production locally and increased imports of milk.

The President also directed the National Treasury to further release Sh575 million to go towards setting up of two additional milk plants in Nyeri and Nyahururu to enhance the firm’s processing capacity.

Kenya Dairy Board managing director Margaret Kibogy earlier told the Star that the producer price of milk has gone down due to the demand and supply factors.

“When supply is up, demand goes down hence the decrease at the farm level,” she said

She confirmed that farmers have been complaining about an influx of cheap milk from Uganda owing to the free market within the East African Community. 

To deal with this, the President yesterday ordered that the National Treasury impose 16 per cent Value Added Tax (VAT) on milk products originating from the EAC to protect local diary farmers.

“I have further directed KEBS, Customs and the DCI to impound any powdered milk or milk products that does not meet Kenyan standards,” he said.

Dairy farmers said controls on milk imports would help revive dairy farming adding that they hoped New KCC would absorb the excess milk that has been going to waste.

“We had very high production due to the heavy rains and importation of milk had worsened the situation pushing milk prices too low. The new measures will save the dairy sector”, said a dairy farmer in Trans Nzoia, Thomas Kibet.