Kenya MPs in fresh move to see State regulate milk prices

“How come a litre of milk, for which farmers are paid about Sh25, costs five times more?”

October 6th 2013, By ALPHONCE SHIUNDU



The House resolution demanding the government to regulate the price of milk at the farm-gate has been touted as a likely answer to the high cost of animal feeds.
The National Assembly approved the resolution, touching off a legislative process that will culminate in price controls for milk, in the same way the Energy Regulatory Commission regulates the price of petroleum.
The MPs are of the view that there should be a minimum price at which farmers sell their produce to the milk-processing firms. They said the current price of Sh27 per litre was too low more so after the enactment of the Value Added Tax ( VAT) Act.
“When VAT was introduced the other day, the price of milk went up. The same VAT was applied to animal feeds. The effect of that is the cost of production went up,” said James Bett (Kesses MP), who moved the motion approved five days ago.
Bett told The Standard that it was illogical for farmers to sell milk at throwaway prices at a time when the milk-processing firms were raising the price of the essential product.
“How come a litre of milk, for which farmers are paid about Sh25, costs five times more?” posed Bett.
He argued that because tea farmers had a similar scheme that prescribed the minimum price to make sure farmers break even, then there would be nothing wrong with the government setting up a similar scheme for dairy farmers.
“If you visit maize-growing areas like Trans Nzoia and Uasin Gishu, you will find that every other year, the National Cereals and Produce Board (NCPB) normally sets a minimum price below which you cannot sell the crop. We urge the government to set a minimum price for our small-scale dairy farmers,” said Bett.
In the liberalised imperfect market that Kenya is, the implementation of the resolution is likely to have a ripple effect on the price of milk and have consumers pay more.
Milk currently retails at between Sh60 and Sh100 per litre. The farm-gate price is between Sh25 and Sh35 per litre.