The Kenyan government is set to review milk prices as part of an ongoing effort to support dairy farmers who have voiced concerns about the government’s recommended retail price of Ksh 50 per litre. Agriculture and Livestock Development Cabinet Secretary Dr. Andrew Karanja confirmed that the government is revisiting its pricing strategy following the release of the newly launched Cost of Milk Production Report 2024 by the Kenya Dairy Board (KDB). The review comes after dairy production reached a significant milestone, hitting 75.68 million litres in December 2023 the highest volume in 29 months, attributed to favorable weather conditions and sufficient rainfall.
Despite this surge in milk production, many farmers continue to struggle with low earnings, as the average price offered by cooperatives is still well below the government’s recommended retail price. According to the KDB report, the average price that cooperatives are offering farmers ranges from Ksh 38 to Ksh 48 per litre, with a mean price of Ksh 43. These prices are considerably lower than the benchmark of Ksh 50 per litre that the government has been striving to establish in the dairy market. The discrepancy between the government-set price and the prices offered to farmers has led to widespread dissatisfaction within the sector, with many producers complaining that the price they receive does not sufficiently cover the rising costs of production, particularly animal feed.
Dr. Karanja acknowledged that the pricing issue is a matter of significant concern for farmers. He emphasized that while the government’s recommended price was meant to offer a stable income for farmers, external factors, such as inflationary pressures on feed costs and a lack of adequate cooling infrastructure, are hindering the expected benefits. Dairy farmers have repeatedly raised concerns that despite the increased production, they are not seeing a proportional improvement in earnings. The cost of producing milk has escalated, with the report noting that animal feeds account for between 48% and 58% of the total cost of milk production. This highlights the pressing need for government intervention to address the high cost of animal feeds, which remains one of the main challenges affecting the profitability of dairy farming in Kenya.
In response, Dr. Karanja assured farmers that the government is working on additional interventions to improve the dairy sector’s sustainability. These include investments in cooling infrastructure to reduce post-harvest losses and tax reforms aimed at reducing the financial burden on milk producers. As milk production costs continue to climb, particularly due to feed prices, these interventions are seen as vital to ensuring the profitability of dairy farming and helping farmers navigate the challenges they face.
The Cost of Milk Production Report 2024 also presents an optimistic view of the sector’s profitability, with an average profit margin of Ksh 28 per litre for dairy enterprises. However, when factoring in the total costs of milk production, the net profit drops to about Ksh 10 to Ksh 14 per litre, depending on the system of production used. While this indicates that dairy farming remains a profitable venture, the profitability is often marginal, making it difficult for small-scale farmers to sustain their operations amid rising costs.
The report’s findings underline the importance of addressing cost drivers such as feed prices, which continue to consume a substantial portion of the resources allocated to milk production. The government’s commitment to tackling these issues through strategic interventions, including improved infrastructure and policy adjustments, will be crucial in ensuring that dairy farmers can receive fair compensation for their hard work while also maintaining the competitiveness of the sector in the global market.
As the government reviews milk prices and considers the new findings in the report, dairy farmers across Kenya are hopeful that the necessary steps will be taken to ensure that the sector remains both profitable and sustainable in the long term. The coming months will likely be critical in determining whether these interventions can effectively address the challenges faced by farmers and help stabilize milk prices across the country.
