Retail fresh milk prices have crossed the Sh60 mark for a half litre packet as the volume of supplies to processors fell by half, according to the sector regulator.
Brookside whole milk is selling at Sh63, and Ilara Fresh and KCC Fresh whole Sh60 in nearly all the retail shops in Nairobi.
The price of sour milk is also significantly up, with the 500ml KCC Mala and Brookside Lala retailing at Sh75 from Sh65 last month.
Processors blamed the steep price increase on dwindling supplies in the wake of a prolonged drought that has halved output.
“Processors are currently operating below their installed capacity as the acute shortage of raw milk deepens and demand for the commodity rises, pushing up the price,” said Kenya Dairy Board (KDB) managing director Margaret Kibogy.
Ms Kibogy said she expects the situation to normalise next month with the onset of rains.
“Most of our farmers are practising free range system and depend on rains for fodder but with the anticipated onset of long rains, we expect an increase in grass cover and ultimately in milk production,” she said.
New Kenya Cooperative Creameries (New KCC) managing director Nixon Sigey said the company had increased retail price of the half litre packet by Sh3 in line with the Sh3 increase in producer price.
Mr Sigey, however, said he expects the pricing to remain at the same level and normalcy to resume within a month.
“What we are paying farmers is the highest price we have ever offered producers and we had to reflect that on the retail prices as well,” he said.
Processors are currently reconstituting powder milk estimated to be worth Sh2 billion into fresh milk to maintain supply.
New KCC and Brookside had in excess of over 1.2 million kilogrammes of powdered milk, which has helped supplement limited stocks from farmers.
New KCC recently raised the price of raw milk from Sh40 to Sh43 per litre as competition for the commodity intensified with declining output.
This makes the firm the highest paying processor in the market followed by Brookside, which is offering Sh42 per litre.