President William Ruto has placed dairy processors in a critical position by issuing a directive that mandates them to pay farmers Ksh50 per liter at a time when they are grappling with a glut in the market.

Dr Ruto said they have agreed with the processors to review milk prices upward in the coming days, all aimed at benefiting the farmers.

This development coincides with a surge in milk supply, driven by favourable weather conditions that have bolstered production.

“This is a topic we have already discussed with the processors, and we have agreed that they increase the price per liter to Ksh50,” said President Ruto.

Currently, processors are remitting up to Ksh40 per liter of milk delivered by farmers through various cooperative societies.

One of the leading dairy processors disclosed that they currently hold surplus milk stocks in their storage facilities due to the increased supply from farms.

However, this processor expressed concerns about raising the price to Ksh50, fearing potential repercussions.

“We are getting more supplies now from farmers because of the good rains that the country has witnessed. Increasing the price to Ksh50 may not augur well for processors,” said one of the processors who did not want to be named because of the gravity of the matter.

He said they might have to increase the consumer price of the commodity on the shelf should the review be effected, which he observed may lead to low volumes in sales given the consumers diminishing purchasing power.

“Increasing the consumer price of the product on the shelves may not align well with their current situation and could impact sales volumes, given the reduced purchasing power of consumers,” he said.

Dr Ruto convened a meeting of dairy stakeholders last month to address various challenges confronting the sector.

President Ruto is determined to explore opportunities for reducing the cost of animal feed, focusing on strategies for bulk feed production and ensuring that incentives, such as the removal of duties on yellow maize, primarily benefit farmers rather than just feed manufacturers.

He has highlighted his commitment to investing in the dairy sector, recognising its potential to enhance the country’s income, facilitate exports, and create employment opportunities for young people across the entire dairy value chain.

gandae@businessdayafrica.org