Milk Shortage: Government in a muddle amid claims of cartel behaviour

Concern is mounting over a milk shortage that has persisted for the last two weeks, with retail stores in major towns around the country stocked out of most popular brands.

The onset of the shortage was so swift that it caught the market unawares, with consumers forced to change their breakfast menu on the supermarket floor.

The government says it had foreseen the deficit, but still seems rattled by the depth of the deficit, even as claims that the shortage is artificial created more uncertainty in the market. 

“We anticipated this. This is not a shocker to us,” Lee Kinyanjui, the Cabinet Secretary for Trade said in reference to the worsening milk shortage.

The shortage, Kinyanjui told reporters last week, was primarily due to drought that has impaired production, coupled with high demand.

Agriculture Cabinet Secretary Mutahi Kagwe also attributed the crisis to drought-induced shortage of pasture, and an intensifying price war between brokers and milk processors.

He said on Friday that brokers are offering cooperatives better prices, diverting significant volumes of milk away from processing plants, and that the government will push processors to offer better prices to farmers.

In many villages, he notes, milk is still available but is being sold directly in small bottles, leaving supermarkets with limited supplies.

Now the country is looking to import the commodity from neighbouring Uganda and Tanzania.

“One of the areas we will be considering is to allow imports, especially from Uganda which has a surplus,” Kinyanjui said.

But Kagwe said Uganda and Tanzania are experiencing the same problem.

“Even the neighbouring countries that we can import from, Tanzania and Uganda, are also experiencing problems because of unpredictable climate changes,” he said.

Kagwe said the government plans to import duty-free yellow maize “which is going to be mainly for making cattle feed to reduce cost of feeds and make it available”.

The move comes despite government reports that indicate that Kenya has grown to become the leading producer of raw milk on the continent, dislodging Egypt.

In 2025, according to the government, Kenya produced 5.5 billion litres while Egypt is estimated to have produced five billion litres.

Economic experts aver that it is not surprising that the talk of importing milk comes around the electioneering period. In fact, it is alleged that the milk shortage crisis is a formal business opportunity for cartels to reap huge profits.

Development economist Patrick Muinde says the milk crisis exposes the government’s failure over the years. “The government has failed and refused to address this crisis because this is not the only time that we are seeing a crisis in milk.

“Crisis in Kenya is used as big business for some people and that's why you're hearing the talk of now importing milk from Uganda,” Muinde said.

In the past, Kenya has been at a crossroads with Uganda, repeatedly blocking and restricting milk imports from the neighbouring country.

“This offers a formal opportunity for cartels that thrive in crises within the country,” Muinde said, adding that the crises are good business for elites in government to plunder or import things at subsidised prices. “Ultimately, it is the citizens and the consumers who end up paying the heavy price,” he said.

According to the economist, cartels elevate problems to levels where they can get tax waivers to afford their substandard products from other places within the region.

“It is not surprising. We have seen this before and I think high moving consumer goods provide a perfect opportunity for these cartels to mobilize resources for elections,” Muinde blamed.

He projects that the government or cartels are likely to seek subsidies in the near future to import milk.

According to Muinde, because the crisis makes business sense to them, they are unlikely to solve the problem and get a sustainable solution.

Milk processor New KCC disagrees that the milk shortage is artificial. “We are engaging with our cooperatives, and they don't have milk. There is a dip in the levels of milk that they have,” New KCC managing director Joseph Choge told Sunday Standard.

He said that brands of milk from Uganda are still available in stores because fodder in Uganda is cheap.

“Almost 90 to 95 per cent of their cattle graze, unlike us where we have smallholder farmers who are doing zero grazing. There is a bit more fertile land in Uganda, and this in itself brings down cost of feed, ensuring continuous milk supply."

He explains that naturally, when there is a vacuum in Kenya, Uganda takes advantage of it due to its surplus.

And while the government says it anticipated the milk shortage due to drought, Choge said they anticipated a glut from heavy rains.

“We have been preparing for a glut, not drought. We have been preparing for heavy rains, and it kept moving. So it's probably a meteorological mishap that probably confused the whole situation."

According to Choge, he was thinking of what to do with excess milk. “I was thinking, do we have to do powder?” he posed

In Kenya, smallholder farmers who depend on grazing contribute a chunk of milk production in the country. So while large scale farmers can weather through the droughts because they store silage, small farmers cannot afford feeds, on top drying grazing land

As such, Choge welcomes the intention to import yellow maize to help subsidise the cost of feed.

“Because the shelves are empty, importing milk is just a stopgap measure, but that is not a long-term solution,

“What we need to do is to make feed available so that the existing herds of cattle can actually continue producing without us being dependent on imports,” he said, adding that a shortage brings chaos in the market.

Muinde said even though drought has affected supply, the current situation is a manifestation of a bigger problem within the sector.

In Kenya, majority of the milk that is produced in the country is sold not through the milk processors but through informal channels within the villages where neighbours sell among themselves.

Additionally, most farmers only supply the surplus of their production to processors. This is in efforts to maximize profits, as processors collect milk at low prices.

“The current drought has just rebalanced through the informal channels. It is a competition between the informal channels and what farmers have to supply to their milk processors,” Muinde said.

A small-scale farmer, who is also a local processor in Nyeri, and sought to remain anonymous, agrees that he is not part of the bigger supply chain, as his milk is sold locally around his neighbourhood and across neighbouring towns.

Muinde reckons that brokers are too powerful, have access to markets and control markets, further making small scale farmers shy away from supplying to processors.

As the milk scarcity persists, Muinde projects that this shortage will have a direct impact on household incomes, further pushing consumers to informal channels.

For weeks running, major retailers across the country have reported stockouts, noting they have not been receiving daily stock from processors.

According to a store supervisor in Nairobi, Joshua Rono, there is a shortage of milk in their stores and customers are complaining.

He adds that milk is out of stock and it has affected the business due to low supply, “many customers are not getting milk”.

“This shortage is affecting consumer spend also. If a customer was buying 5 packets of milk, now they buy just 3 or 4,” Rono, the store supervisor at Jaza chain of stores said, adding that sales have also gone down.

He said while the store has some gluten-free milk in stock, many people cannot afford to purchase it because it costs more.

As the crisis persists, stores in Kiambu have hiked milk prices by as much as Sh15, as farmers hold back supply to processors. And Like Muinde said, consumers have resorted to buying from informal vendors as shelves dry up in stores.

“We have increased our prices because milk supply has dropped from 42,000 liters to 32,000 per day,” an employee of a Processing firm said.

He adds the strain cannot be ignored because unlike other commodities milk cannot be supplemented.

“I used to take up to 50 kilograms of milk for processing in the morning. For weeks, this has reduced to between 38 and 45 kilos,”  James Kihiu a dairy farmer in Limuru said, noting that if droughts persist, they may not be able to sustain demand.

[Additional reporting by George Njunge and Jay Mghendi]