Kenyans forced to make tough choices as milk prices skyrocket

Milk inside a supermarket. Some retail outlets are selling a half-litre pouch of milk at Sh65, up from about Sh43 in December. [PHOTO:FILE/STANDARD]

Kenya: Milk prices shot to record levels this week on declining production following months of drought, but for one dairy farmer, the situation consumers are currently finding themselves in is 'pure exploitation'. Some retail outlets are selling a half-litre pouch of milk at Sh65, up from about Sh43 in December, a spot check by The Standard showed.

A top manager at one of the biggest processing firms has termed the current milk pricing as an unprecedented crisis in the industry.

Most visible brands were selling at between Sh50 and Sh55 at the main supermarket outlets in the city, with fears the price could rise even further as processing firms claim competition for the commodity from farmers had raised their buying prices.

But for Flora Njoora, a dairy producer with a farm in Gatundu and milk bars in Thika town, there is no justification for such high prices.

"It is really unfair for consumers to pay so much for milk. I call this exploitation," said Mrs Njoora, whose farm produces about 800 litres of milk a day. The milk produced at her farm is sold through her two milk bars, while a smaller portion is distributed to restaurants in the town.

Throughout the past year, her retail price has remained unchanged at Sh50 per litre because the costs have not changed significantly. Her fellow farmers who have been contracted by formal sector milk processing firms are now paid Sh38 per litre, about a third of the Sh105 for a similar amount at the supermarket shelves.

"I have not seen a nearly commensurate increase in the price paid to the farmer," she told The Standard from her farm, adding that she buys commercial feeds to discount the notion that soaring feeding expenses were behind the price spike.

dairy meal

Njoora's 60 cows consume three bags of dairy meal a day, at about Sh5,000, which is nearly the same price as October last year, she said, adding that to the dozens of bales of fodder and labour, "I may not have been doing my math every day, but my costs have not spiralled."

Her sentiments on exorbitant retail prices on milk are shared by a majority of households across the country that could by now have dropped the basic foodstuff from their budgets. But New Kenya Co-operative Creameries Managing Director Nixon Sigey says the current spike in milk prices has everything to do with a sharp drop in production by farmers. "Production at the farm level had dropped by half and so we now have to compete for the little available," he said in an interview.

"We have not witnessed such a supply shortfall in over a decade; it is an unprecedented situation we are in," he explained.

New KCC are paying farmers Sh41 per litre, the highest in the market, according to Mr Sigey. "Processing costs a 10 to 15 per cent profit margin for the companies and a Sh2 retailers' margin, all adding up to the current prices," he added, expressing optimism that the rains will soon come and improve dairy production at the farm," he added.

Before October last year, milk processing firms were paying farmers Sh32 for a litre, while most other costs had remained flat - perhaps even lower with the drop in energy prices.

Earlier, Brookside Dairies Marketing Manager Peter Wasonga explained that the retail prices for milk had risen because farmers were now paid an enhanced price, after the current drought cut their production levels.

producer prices

"We have increased our producer prices because of the shortage of milk due to drought and frosty weather conditions at Nanyuki," said Mr Wasonga, who admitted that the situation is worse for small-scale farmers who rely on rain-fed agriculture. His company has raised the farm gate prices by another Sh2 to Sh40 in recent weeks.

As a result, the price of packed milk price in supermarkets had risen by between Sh4 to Sh5 per 500ml packet. Unpackaged milk, sold within supermarket outlets and dispensed through ATMs, has seen little change in pricing with a litre selling at about Sh70 currently.

The in-house milk brands packaged for the respective supermarkets are also selling at a bargain price of between Sh42 and Sh44 per half-litre pouch of mik.

At Muindi Mweusi supermarket in Nairobi's Mukuru Kwa Njenga slums, for instance, three of the biggest brands were selling at Sh65 per half litre while it's in-house milk is retailing at Sh40.