The scramble for raw milk is set to intensify as leading processors increase prices.
The increase on prices will be a boom to farmers who will now be torn between supplying their produce to two leading processors in the county.
SH33 PER LITRE
President Kenyatta last month ordered the Treasury to release Sh500 million to New Kenya Cooperative Creameries to buy milk from farmers at Sh33 per litre.
In a bid to maintain its grip in the local market, Brookside Dairy has increased its producer prices of milk by Sh7 per litre.
The new rates will see the firm’s raw milk suppliers earn up to Sh35 for every litre of milk delivered as the firm seeks to consolidate its 40 per cent leadership in the country’s milk market.
“The new price is an incentive to our farmers to invest in climate smart dairy practices, such as establishment of fodder crops and pastures during the extended rainy season,” Mr John Gethi, Brookside’s director of milk procurement and manufacturing said in a statement on Tuesday.
He said investment in fodder production would address the challenge of seasonality by ensuring consistency in milk production across all seasons.
“With the enhanced producer prices, we are urging all farmers to redouble their efforts towards sustainable farming by planning for the cheaper option of farm produced animal feeds,” he added.
The new rate gives Brookside an edge in pricing as they are now the highest paying processor in Kenya.
The price increase signals a tough fight for the control of Kenya’s raw milk market. Kenya produces at least 5 billion litres of milk per annum. Smaller processors are expected to react as they seek to guard their own turf.
Mr Gethi said the firm would continue to procure all milk supplied by its contracted suppliers in spite of anticipated rise in production following the ongoing rains that that improved fodder availability.
Brookside, who have an installed processing capacity of 1.5 million litres of milk per day, operates over 60 raw milk cooling stations in 27 counties.
“We call on our farmers to increase milk production to benefit from this opportunity with the new price adjustments, which will also enhance their annual reward payout,” said Mr Gethi.
He said the increased producer prices were a show of commitment by the company to strengthen its relationship with the dairy farmers.