Dairy farmers feel the heat as milk prices dip
Mr James Macharia is an unhappy dairy farmer. Though Macharia has been at it for the last 30 years, there is nothing to write home about. He wants to quit.
“I cannot go on like this. I feed my cows well, they give me sufficient milk but when I sell it, I get peanuts. I have a family to take care of and bills to pay,” he laments.
Macharia is among the many dairy farmers in Mt Kenya region toying with the idea of quitting the venture owing to the low prices milk fetches.
“Yes we have had good and bad times but in the past two years, the prices have been so erratic, you cannot plan your life. I cannot go on like this,” says Macharia who has a dairy farm in Wiyumiririe, Laikipia County.
Two years ago, Macharia could make a decent living from the business but not anymore. The reason? High production costs and thin profit margins.
“I intend to sell my cows because I cannot continue making losses. I plan to fatten them and sell them for meat so that I can get capital for other beneficial businesses,” Macharia says who owns 10 cows.
Like Macharia, Mr Robert Murimi from Mathira, Nyeri County, is also a dejected man. Murimi is a dairy farmer and a milk collector.
Murimi says cheap imports from Uganda and Tanzania are to blame for their woes. Murimi would have loved if the government stepped in to stop importation of cheap milk which has flooded the market.
Three years ago, farmers were selling milk for not less than Sh39 per litre but a spot check by Smart Harvest shows the prices have dropped to as low as Sh17 per litre. The most affected areas according to our survey are Murang’a, Nyeri, Nyandarua, Laikipia, Kirinyaga, Meru where a number of large scale farmers run dairy farms.
“Just walk around everywhere you go you will meet a dairy farmer who is fed up. We are facing so many challenges from cost of feeds, to high labour costs and market issues; the business is unsustainable. What is the point in keeping dairy cows if they cannot help me pay my bills?” says Macharia.
Macharia supplies 30 litres of milk per day to Brookside Dairy Company with a litre fetching Sh21.
Because of oversupply, in some areas, farmers are being turned away by processors and the milk ends up spoiling or is sold at throw away prices. The farmers are now calling on the State to step in.
“Why should we import what we can produce locally? Why are our leaders not protecting the local farmers from these cheap imports? Kenya is an agricultural country and we can satisfy the local demand but there are selfish individuals importing the product and messing up the value chain,“ he says.
Kenya Dairy Board Managing Director Margaret Kibogy says the fluctuations are a as a result of market forces beyond their control.
“The problem of reduced milk prices is only felt in this season since the long rains have extended. The average has been favourable but currently, we are producing more than we can consume,” said Kibogy.
She refutes claims of importation of cheap milk from neighbouring countries saying imports are strictly regulated by East African Community Trade policies and guidelines. Other than low prices, another problem farmers are grappling with is high cost of feeds.
Cost of feeds
Macharia says a 70 kilogram bag of feeds is sold at between Sh2,000 and Sh2,500.
“The cost of feeds is another big headache for us. We cannot afford to buy feeds to maintain high milk supply,” says Macharia.
A number of leaders have weighed in on the matter. Kieni MP Kanini Kega, who chairs the Parliamentary Committee on Trade and Industrialisation, says the New Kenya Creameries Commission should be properly funded so that it can buy excess milk from farmers and convert it into powder.
He also points out that milk should be considered in the Strategic Food Reserves so that farmers can get value for money. Some leaders have pointed out that the State should stop campaigns that give an impression that there is ‘high milk demand for milk.’
A few years ago, there was a campaign to encourage farmers in Murang’a to take up dairy farming to meet the ‘high demand’. Governor Mwangi wa Iria launched a campaign dubbed ‘one household, one cow’ where farmers were getting pedigree cows to start.
“Leaders created a false impression that there was a high demand for milk. That is a fallacy,” says Murimi.
Mr Daniel Ngare, a marketing manager at Wakulima Dairy processing company, agrees that the problem of low prices is as a result of cheap milk imports.
“Our supermarkets are flooded with raw and powdered milk from neigbouriing countries. That is the reason for the glut,” says Ngare who adds that the company has reduced milk prices from Sh35 to Sh30 per litre.
Ngare warns that the prices could drop further because of oversupply.
“We have stored milk worth Sh40 million and we have hired more halls to keep the skimmed packets. If nothing changes prices could dip even further,” he warns. To survive the harsh times, farmers are being encouraged to embrace value addition to stay in business.