Lower milk prices expected in August as supply improves

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Milk production has increased 10 per cent following the onset of rains but consumers may have to wait until end of July for the prices to drop significantly according to the industry regulator.

Kenya Dairy Board (KDB) managing director Margret Kibogy says the rains have not been sufficient to enhance pastures.

“Rains have been erratic and this is the reason milk production has just increased marginally since it started raining; normally at this time of the year supplies are supposed to have normalised,” said Ms Kibogy in an interview with the Business Daily.

The KDB says milk volumes will stabilise at the beginning of August and the prices could go back to Sh45 for fresh brand and Sh50 for the long life type.

Ms Kibogy said the cold season in July will cut production but added the impact on production, however, will not be big.

Most farmers practise free-range grazing and depend on rains for pasture, meaning the drought hits them hard.

The price of the commodity has hit a new high as the shortfall in production bit following low supply of animal feeds.

The prices of fresh milk have increased from an average of Sh45 in January to Sh65, marking the sharpest rise in the prices recorded in Kenya’s history.

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The price increase has been precipitated by low volumes of the commodity, having dropped by more than 50 per cent in the last three months.

Statistics from the board indicate the volumes of milk collected by processors fell by 36 per cent from 56.44 million litres in October 2016 to 36.11 million litres in February this year.

The shortage has compelled the government to abolish tax on imported milk to boost supplies and curb further rises in price.

Treasury Cabinet Secretary Henry Rotich last week allowed the importation of 9,000 tonnes of powder milk duty-free.

Processors have been reconstituting powder milk estimated at Sh2 billion into fresh milk to maintain supply but the stocks seem to have run out.

New KCC and Brookside had in excess of more than 1.2 million kilogrammes of the product as at February, which has been significant in supplementing the limited stocks from farmers.

Farmers are yet to get cheap feeds despite the State’s promise.

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