Higher milk price won’t increase farmer earnings

In Summary

more impactful intervention lies with addressing the critical issue of cost of production.

An official from the Kenya Dairy Board tests milk in Murang'a town
STRUGGLING INDUSTRY: An official from the Kenya Dairy Board tests milk in Murang'a town
Image: FILE

As Kenya’s ranking on the ease of doing business improves, little impact of this is being felt by smallholder dairy farmers. Earnings per litre of milk have been decreasing over the years and there seems to be no respite in the near future unless the government heavily intervenes.

While many view the price milk processors pay to the farmers as the key to higher earnings, closer review of the industry will show that more impactful intervention lies with addressing the critical issue of cost of production.

This is not to say that purchase price is not important and milk processors like ourselves will continue to be challenged to do more. At Uplands Premium Dairies we offer farmers competitive prices consistently across all seasons as we stimulate demand of our products when there is oversupply.

However as earlier stated, the purchase price is just one of the many factors in the supply chain that affects the earnings in the dairy industry.

Top on the list of factors contributing to the low earnings is the ever increasing cost of feeds. Animal feeds make up about 65 per cent of the total cost of production. Unfortunately the cost of feeds has doubled in the last decade while the quality has deteriorated, compounding farmers' problems. Farmer-centred organisations such as UPDF incur additional cost of analysing quality to ensure farmers get the right quality feeds.

When you talk to feed manufacturers they blame the rising cost of doing business, including the cost of power, raw materials, taxation on inputs and unpredictable policies . It is obvious that an intervention on this factor that impacts over half of the total cost of production will significantly affect the bottom line for the farmer. Just like the government has done with the price of maize flour, it is time for interventions that will reduce the cost of animal feeds.

Besides feeds, veterinary services are another critical input for the dairy farmer. The death of the extension officers’ service of the past means farmers have to rely on expensive private practitioners. Without proper quality control, farmers often don’t get value for money

The cost of quality semen has risen over the years. A farmer looking for top breeds now pays an upwards of Sh5,000 while technologies such as Embryo transfer cost more than Sh100,000. This is a very high cost for our smallholder farmers. Without affordable and quality veterinary services, milk yields will continue to dwindle and so will farmers' earnings. 

Again the saving grace remains with the government. The reintroduction of the government-sponsored extension officers’ service is a key factor. The government should also empower government facilities to produce quality semen at relatively affordable cost.

For consistent high-quality and quantity production, our farmers need regular training on the latest practices in dairy production. The government should be supporting farmers on this.

Due to growing demand, we at Uplands Premium Dairies regularly organise such training for our farmers but we cannot satisfy the demand. 

All these add to the cost of production which is eventually passed on to the farmer, thereby reducing their earnings. 

To increase the earnings per litre of milk to the farmer the government will need to address the cost of production and provide a farmer-centric policy environment.

For a country that gets more than 30 per cent of its GDP from agriculture, there should be heavy investment in capacity building as well as agri-friendly policies to support sustainable growth.

Milk procurement manager, Uplands Premium Dairies