Kenya: Dairy Processor Ups Raw Milk Buying Price, Sparks Price War as Farmers Rejoice

Posted on :Friday , 17th March 2017

Brookside has upped the price war in the dairy market after the processor increased its raw milk buying price by 13 per cent to a record Sh42 to boost its intake amid a shortage.

The increase, starting Thursday, looks set to trigger a battle for raw milk with other processors like New KCC expected to follow suit in line with previous trends.

At Sh42, Brookside is now the highest paying processor for raw milk with rival firms offering between Sh37 and Sh40 per litre. Its main rival New KCC is paying Sh40 a litre.

The costly farm gate prices have increased retail milk prices with the half litre packet now retailing at Sh55, up from Sh50 at the start of the year.

"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 John Gethi, Brookside's general manager in charge of milk procurement.

"We call on our farmers to redouble their effort in milk production in order to further benefit from this opportunity with the new price adjustment," Mr Gethi added.

Processors say milk supply from farmers has dropped by 20 per cent over the past three months due to the current dry spell.

The government last month declared drought a national disaster, calling for aid to counter the dry weather that is posing a major risk to people, livestock and wildlife.

The Kenya Red Cross has estimated around 2.7 million people are in need of food aid after low rainfall in October and November.

The shortage of the commodity has seen consumer prices of milk go up for the first time in months.

Brookside, which commands a 44 per cent market share compared to New KCC's 20 per cent has in recent months set the market trends with its review of farm gate prices.

Last month, Brookside increased the price of buying raw milk by Sh2 a litre, meaning farmers a getting Sh7 more from their produce.

The shortage comes amid expansion plans by the processors, deepening price wars as firms seek to defend and grow their market shares.

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