- At between Sh100 and Sh110 a litre, processors have exaggerated the selling price by over 400 per cent to protect their profits.
- Kenya Dairy Farmers Federation chairman Stanley Ng’ombe blamed the current glut on inflows from neighbouring countries.
Milk processors have reduced purchase prices for a litre by over 40 per cent in the past two months to Sh25 and below, but continue selling the commodity for up to Sh110 to consumers.
This is four times more than the purchase price, a rip off that has made dairy farmers some of the most exploited in the region.
Though there are other costs associated with milk business, among them transport, storage, processing, packaging and distribution, the huge disparity between what they pay farmers and what the consumers are charged is unrivalled by any other food product processed locally.
A visit to a number of supermarkets across the country shows that a litre of milk is retailing at between Sh100 to Sh110, or Sh50 to Sh55 for half a litre.
Brookside is the most expensive brand in the market, with most retailers selling half-a-litre at Sh55. Other brands such as KCC, Tuzo and Fresha are selling at Sh50 for half-a-litre.
Daima and Lato are some of the cheapest brands, selling from Sh45-Sh47 for a half-litre packet. The 500ml packet is the most preferred size in the market.
At between Sh100 and Sh110 a litre, processors have exaggerated the selling price by over 400 per cent to protect their profits.
At the same time, they are denying consumers any benefits that have come from falling farm-gate prices.
In an ideal competitive market where forces of demand and supply work, a fall in price on the supply side usually translates to reduction of prices on the shelf.
But this is not happening in Kenya when it comes to milk. A few months ago, processors were buying the same commodity at Sh35.
But a glut caused by imports and improved weather has seen the processors quickly adjust their prices downwards, but kept the retail price at the same level.
What is worse, by the time the milk gets to the supermarket and the shops, processors would have squeezed out fat to make butter and other products, before packaging what is left to be sold to the end consumer.
The Kenya Dairy Board (KDB), which promised last year to regulate milk prices to protect farmers against exploitation by processors, refused to comment on this story.
Ms Margaret Kibogy, the managing director, asked us to call her after 10 minutes when we asked for her comment.
She later did not pick calls or reply to our text message.
The current affairs have outraged farmers across the country, as some processors further push down the price for a litre of milk to Sh21.