Agriculture Cabinet Secretary Peter Munya says the cost of milk production has dropped by 20 per cent in the last five years but remains high at Sh23 per litre.
He spoke at a Nairobi hotel while launching a report by the Kenya Dairy Board on the cost of production of milk. The report says labour and feed are the key drivers of costs.
Munya said the government is working with sector players to come up with ways to further reduce the production costs so that the farmers can earn more from their produce and prices can be stabilised.
He, however, said the dairy industry is still very profitable and urged investors to take advantage of the local and new and emerging markets such as Tanzania and the Democratic Republic of Congo.
The DRC is soon joining the East Africa Community and has a large market for milk as the country currently gets milk from Europe, which is farther away than Kenya, he said.
Kenya’s milk production has recorded impressive growth, with annual production increasing by 12 per cent, he said. Production in 2019 was about 11 per cent of the 49.9 billion litres of milk produced in Africa.
The industry employs 750,000 people directly, while another 500,000 are employed indirectly in service provision.
Munya said following the recent visit by Tanzanian President Samia Suluhu, Kenya has requested the neighbouring country to remove the veterinary fees of about Sh95 a kilogramme imposed on Kenyan milk exports. When implemented, this will facilitate the export of our milk products, especially UHT milk, which was hurt by the introduction of the fees.
The report has captured current data on dairy farm dynamics, the cost of producing milk under different systems and scales, the cost components, the trends between 2015 and 2020, and recommendations to manage the cost of milk production and improve productivity per cow.
Munya said from the findings of the study, dairy farming is profitable and on average, a farmer in 2019 earned milk profits of Sh12.20 per litre. This was higher than Sh4.20 profits a litre in 2014.
The profitability varied with the production system, highest for semi-zero grazers at Sh14.27 per litre and lowest for zero-grazers at Sh8.57 per litre.
The CS said average profitability per litre of milk produced rose to an average of Sh16.20 in 2019 when other farm revenues such as the sale of livestock and manure were considered.
“This should excite and motivate farmers and potential investors to increase investment in milk production,” he noted.
Munya said that while the cost of production remains high at an average total cost of Sh23.30 a litre for zero-grazers, Sh23 for semi-zero grazers and Sh17.24 for open grazers, the average cost declined by 20 per cent over the last five years.
“This shows that we are making headway in managing the cost of producing milk, although a lot more is still required to make our industry more competitive regionally and globally,” he said.
National productivity of milk per cow, which increased by 19 per cent from 6.4 litres in 2014 to 7.9 litres in 2019 is still relatively low, with average productivity per cow per day in advanced dairy nations such as Denmark and Israel having 34 and 39 litres respectively.
He said gross revenue from milk improved by three per cent over the last five years, suggesting an increase in producer prices. This is expected to be higher as it was done before interventions were undertaken by ministry in January last year to improve and stabilise producer prices.
However, it was noted that there is a declining herd population per farm over the last five years, with the average herd size per farm having declined from nine animals in 2014 to six in 2019, hence undermining the country’s capacity to be self-sufficient in milk and milk products.
Munya urged farmers to adopt labour-saving technologies such as chaff cutters and milking machines to manage operational costs.