Farmers supplying milk to the New KCC have a reason to smile after the processor increased its prices from Sh35 per litre to Sh43.
New KCC will become the highest paying milk processor surpassing Brookside Dairies, a private company offering Sh42 per litre.
The company’s managing director Nixon Sigey said the firm had made the decision to cushion farmers from high cost of production due to the ongoing drought.
"Currently, milk farmers are facing feeds shortage and the board has made decision to increase the milk prices from Monday to cushion farmers," he said at Eldoret New KCC factory on Friday when Deputy Presdient William Ruto visited to present cheques to farmers for decades-old debts owed by the firm.
This is the second increase in a month as the company goes toe-to-toe with the private companies for the milk.
Last month, the firm increased the prices to Sh35 for individual farmers and Sh40 per litre for farmers’ groups.
New KCC chairman Matu Wamae said they were ready to compete with other processors in the dairy sector.
This week, its main rival, Brookside firm announced that they had increased prices to Sh42 per litre from Sh35.
At Sh42, Brookside was the highest paying processor for raw milk with rival firms offering between Sh37 and Sh40 per litre.
Mr Ruto welcomed the move to adjust the milk prices noting that it will cushion farmers against high cost of production due to feed scarcity.
“Yesterday (Thursday), I asked farmers if they wanted better prices and am happy that the management of New KCC has announced better prices,” said the DP who was in Nyahururu to distribute similar cheques on Thursday.
He said that the government had allocated Sh700 million towards Strategic Foods Reserves to absorb excess milk and ensure milk producers are cushioned against effects of the commodity glut in the future.
“We want farmers to be assured of the milk prices and New KCC has requested Sh500 million. And by July this year we will factor in the funds . . . this will also ensure milk will not end up with the middlemen,” said Mr Ruto.
Mr Ruto said the country currently has a shortage of 500,000 litres of milk every day despite the fact that dairy farming remains the most profitable within the agricultural sector.
He said the government was aware of the challenges facing dairy farmers that has led to low output of milk and that it was committed to solving them.
Additional reporting by DPPS.