Kenya: Processors avoid duty-free milk import window

The high cost of powdered milk in the international market has seen processors stay away from importation even after a duty waiver, forcing the government to extend the window by two months.

Agriculture Cabinet Secretary Willy Bett says the extension is to allow processors seek competitive prices in alternative markets and ship in the 9,000 tonnes of powdered milk.

“By last week none of the processors had imported powdered milk as they cited high cost of the commodity in the markets they were targeting; for this reason we have had to extend the window,” said Mr Bett.

A special gazette notice extended the window from July 31 to September 30.

Processors had also raised concern with the government that the duration given to import the milk was too short for the process.

Treasury Cabinet Secretary Henry Rotich in May removed the duty on imported milk to ease the shortage that had resulted in a sharp rise in consumer prices.

Milk production has since April increased by 10 per cent following the onset of rains, but the dairy regulator says production will normalise in September after the current cold season saw volumes stagnate.

Milk prices had shot up to an all-time high of Sh65 a half litre packet following prolonged drought that lasted from December 2016 to May 2017—one of the longest dry spells recorded in the recent past.

Processors reduced the price in May following a marginal increase in production.

The drop saw the price of a half-litre packet of Ilara reduce to Sh55 from Sh65, Tuzo Fresh to Sh52 from Sh62 and Molo fresh to Sh50 from Sh60 with KCC fresh selling at Sh50 down from Sh60 at major retail outlets.

The volume of milk collected by processors fell by 36 per cent from 56.44 million litres in October 2016 to 36.11 million litres in February.

Credit: Business Daily

Published on 27 July 2017 | 9:38 am at Source