Dairy farmers have received a huge boost in the midst of a prolonged drought following an increase in producer prices by the largest regional milk processor.
Brookside Dairy has announced a 25 per cent price increase on raw milk for its 150,000 affiliated farmers. Farmers will earn up to Sh42 for every litre of milk delivered to the company.
Brookside director of milk procurement John Gethi said the company raised the price by Sh5, one month after it revised the prices upward from Sh35 to Sh37.
“Brookside will pay up to Sh42 per litre for all fixed-price contracts beginning March 16, 2017, the highest in the industry in six years,” said Gethi
The increment Gethi is aimed at cushioning farmers from the effects of prolonged dry weather, which has substantially contributed to reduced production.
Yesterday’s change makes Brookside the highest-paying dairy processor as other firms are paying farmers between Sh35 and Sh40 per litre.
“Brookside will pay up to Sh42 per litre for all fixed-price contracts beginning Thursday, the highest in the industry in six years,” said Gethi. He also attributed the new incentive to increased demand for the company’s products, which has pushed up shelf prices.
“The current business environment has pushed up the shelf prices of our products. We have decided to pass on the benefits of these increases to our farmers during this exceptionally dry period,” said Gethi in a statement issued in Nakuru.
The new rate is expected to intensify the fight for control of the raw milk market, with other major processors such as New KCC likely to react as they move to guard their market share.
Farmers in Kenya produce over 5.2 billion litres of milk annually, out of which half is consumed at the household level while the rest is taken to the market. Only 600 million litres is processed by local firms with Brookside taking almost 50 per cent.
Dairy farming has been facing numerous challenges including high cost of production, obsolete technology, diseases and competition from other beverages.
Currently, cost of commercial feeds has increased due to decline in production of maize and wheat which provide key ingredient for the animal food.
“We call on our farmers to redouble their effort in milk production to further benefit from this opportunity with the new price adjustment,” said Gethi, adding that the increased producer prices was a show of commitment by the company to the strong partnership with its farmers.
Brookside has an installed capacity of over 1.5 million litres of raw milk per day, and partners with more than 300 dairy co-operatives from more than 27 milk-producing counties.
Retail prices of milk have hit an all-time high over the past fortnight, with a 500ml packet of fresh milk selling at Sh55 in some outlets and Sh60 in shops around residential estates. A similar quantity of long-life milk is retailing at Sh75 in major supermarkets.