Kenya Dairy Board unveils 2024 milk production cost report and profitability

The Kenya Dairy Board has launched the 2024 Study Report on the Cost and Profitability of Milk Production, offering crucial insights into the country’s dairy sector. Spearheaded by Agriculture and Livestock Production Cabinet Secretary, Dr. Andrew Karanja, the report sheds light on the sustainability of dairy farming and provides data to guide policy and industry interventions.

Speaking at the launch, Dr. Karanja emphasized the importance of better milk prices to safeguard farmers against escalating costs, particularly for animal feeds, which account for 48 percent to 58 percent of production expenses. He outlined government measures to address challenges such as cooling infrastructure and tax barriers, noting that reducing feed costs is critical to making dairy farming more profitable.

The report reveals that milk yields have improved significantly, with cooperative prices averaging between Ksh. 38 and Ksh. 48 per liter, and an overall mean price of Ksh. 43 per liter. It further confirms that dairy enterprises remain profitable, with farmers earning Ksh. 10 to Ksh. 14 per liter after factoring in total production costs.

Kenya produces about 5.2 billion liters of milk annually, representing 10 percent of Africa’s and 35 percent of the East African Community’s output. In 2023, milk intake by the formal market rose by 7.4 percent to 811 million kilograms, while its value increased by 13 percent to Ksh. 40.5 billion, compared to Ksh. 35.7 billion in 2022.

However, despite the growth, Dr. Karanja acknowledged the industry still faces hurdles, including high production costs and insufficient supply to meet domestic demand and export goals.

Under the Bottom-Up Economic Transformation Agenda, the government has set ambitious targets to double milk production to 10 billion liters annually and increase dairy exports to 1 billion liters per year. The share of formally marketed milk is also expected to grow from 30 percent to 50 percent, with small-scale farmers’ monthly incomes projected to reach Ksh. 56,000.

To achieve these targets, the Ministry is working with stakeholders to enhance productivity, improve milk bulking and cooling systems, and reduce tax barriers. Key legal reforms, including the Livestock Bill 2024 and the Dairy Industry Bill 2024, aim to create a supportive framework for the sector.

Dr. Karanja also highlighted the establishment of a national dairy regulatory laboratory, now ISO 17025 certified, to ensure reliable testing of milk and dairy products, boosting both domestic and export markets.

The report identifies animal feed costs as the major driver of production expenses. Dr. Karanja called for improved feeding strategies and large-scale production of quality fodder through the government’s public land leasing program. He urged stakeholders to adopt quality-based payment systems to incentivize better milk quality and support industry growth.

While milk productivity per cow has risen from 7.9 liters in 2020 to 9.3 liters in 2023, Kenya still lags behind global benchmarks like Israel’s 40 liters per cow per day. Nevertheless, Dr. Karanja expressed optimism, citing ongoing interventions to improve genetics, feeding, and infrastructure.

CS Karanja praised stakeholders for their efforts and reaffirmed the government’s commitment to transforming the dairy sector. He officially launched the report for dissemination and implementation, encouraging all players to adopt its recommendations to ensure growthand sustainability.