Shot in the arm for farmers as Munya sets minimum milk price

BUSINESS NEWS
By Dr Paul Kangethe and Macharia Kamau | March 19th 2021
Agriculture CS Peter Munya receives report of taskforce on food crops. [picture, Standard]

The Agriculture ministry has set the minimum price that milk processing firms can pay dairy farmers, cushioning the producers against price fluctuations.

In new regulations, the ministry has fixed the minimum price of unchilled raw milk at Sh33 per litre. Buyers will pay a farm gate price of Sh35 per litre of chilled milk and Sh37 for a litre of pasteurised milk.

The new prices are under the Dairy Industry (Pricing of Dairy Produce) Regulations, 2021, which the ministry said would ensure a guaranteed minimum price on milk sales. The prices will be reviewed twice every year.

“Concerns over low and fluctuating producer prices have made investments in the sector to be unprofitable, unstable and uncompetitive,” said Agriculture Cabinet Secretary Peter Munya.

“The regulations will ensure a guaranteed minimum price on milk sales which will ensure that their investment in dairy farming gives favourable returns throughout the year.”

He said going forward, the ministry through the Kenya Dairy Board will conduct frequent studies and consultations on the cost of milk production to inform biannual pricing reviews.

“Producer groups and entities shall further disclose monthly payout prices and deductions made to determine farm gate prices. I urge all producer groups not to introduce extra costs that may diminish the profit margins for farmers,” the CS said.

SIGNIFICANT BOOST

The new prices are a significant boost for dairy farmers, who have all along had to endure uncertainty in pricing of the commodity that placed them at the mercy of processing companies.

 

Dr Paul Kangethe and Macharia Kamau

Shot in the arm for farmers as Munya sets minimum milk price

 

The Sh33 is a significant increase from the Sh19 that milk processing firms have been paying for a litre when supply is high, especially during the rainy seasons.

The drier seasons, however, bring fortunes for farmers who get as much as Sh40 per litre - though sustaining production is harder.

Also among the new regulations is the Dairy Industry (Milk Sales Contract) Regulations, 2021, which set out minimum requirements that farmers get into with milk buyers including dairy processors.

Mr Munya said this will protect farmers from skewed contracts they have in the past signed with other players in the value chain.

“Dairy farmers and producer groups have in the past entered into weak and inadequate contracts with buyers,” he said.

“The dairy regulations will therefore give minimum requirements for contracts and further ensure that the terms of contracts entered between the parties are strictly adhered to for proper planning.”

In all, there are eight new regulations that cover different areas including licensing, produce traceability and recall, export and import and safety of dairy products. The CS noted poor regulation has limited the industry’s growth.

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