A milk price battle is looming after Kenya’s largest milk processor Brookside Dairies increased farm-gate prices to Sh37 from Sh26 a litre, matching that paid by rival New KCC.
Farmers are the biggest beneficiaries in the new price wars as both processors continue to lure farmers.
Brookside with a daily processing capacity of 1.5 million litres said the move more would attract farmers to sign delivery contracts, enabling Brookside to meet local and foreign demand for its dairy products.
Milk procurement director John Gethi said the dairy was now a vibrant enterprise that required farmers to adopt modern fodder production and silage methods to ensure adequate feed during the dry season.
“The new rate is an incentive to farmers to enable them cultivate fodder crops and pasture grasses to be used as animal feed during the dry season. We are urging all farmers to engage in sustainable dairy farming by reserving portions of their farms for cultivation of animal feeds,” said Mr Gethi.
The price strategy comes against the backdrop of emerging competition from farmer co-operatives investing in milk processing to cash in on the insatiable demand for dairy products and from county governments that have started investing in processing plants for local farmers.
Murang’a Creameries owned by Murang’a County is putting final touches to its newly imported milk plant that will process fresh milk as well as flavoured yoghurt for local sale and across East Africa.
The county has been paying Sh35 per litre whereby farmers deliver to 35 county government-funded coolers strewn across all wards.
New KCC head of corporate affairs Ms Stacy Too said her farm would maintain the price at Sh37 while reiterating that farmers must invest in fodder production and storage during the rainy season to secure ability to produce ample quantities of milk during the dry season.
KCC, which has 22 factories and 30 coolers is investing in new plants across the country that will redouble the processing capacity from current 750,000 litres per day.
Mr Gethi said despite the evidently rising milk deliveries their 55 cooling plants had capacity to receive all milk from all contracted farmers with plans afoot to continue farmers training activities to boost milk production and dairy herd health.
Brookside sources milk from 300 dairy co-operatives drawn from more than 27 milk producing counties.
Brookside Dairies is 50 per cent owned by Kenyatta’s family while French food group Danone holds a 40 per cent stake in East Africa’s top dairy producer. Dubai equity firm Abraaj Group, which is a long-time investor in Brookside, holds the remaining 10 per cent stake.