In what now appears to be a remarkably accurate forecast, finance analyst Chris Muiga had previously warned that Kenya’s milk prices would rise not only due to climate-induced shortages but also because of the cumulative effects of government policy decisions that would reshape the country’s dairy economy.
Today, consumers across Kenya are paying significantly more for milk, and Muiga’s prediction is unfolding in real time. While public conversation has largely focused on the impact of prolonged drought and the soaring cost of animal feed, a closer look reveals that government interventions have played an equally critical role in pushing prices higher.
One of the core elements Muiga identified was the introduction of levies and deductions authorized by the Kenya Dairy Board. These deductions, which go toward covering operational costs such as milk transport and chilling, have reached up to KSh 3.40 per litre. As a result, farmers are taking home significantly less income per litre of milk produced, leaving them with little choice but to increase their prices to stay afloat. This cost pressure flows directly to processors, who then pass it on to consumers.
State involvement hasn’t ended there. In March 2024, New Kenya Co-operative Creameries (New KCC)—a state-owned processor—raised its farm-gate price from KSh 45 to KSh 50 per litre in a move meant to support farmers amid rising production costs. While this decision offered temporary relief to dairy producers, it contributed further to the retail price hike, signaling to private sector players that price increases were justified and perhaps even necessary. Muiga had pointed out that such shifts tend to have a ripple effect across the entire supply chain, pushing prices upward even when input costs stabilize.
Government policy on dairy imports has also had an unintended consequence. Kenya’s high tariffs and strict quality regulations on imported milk have created a rigid system that fails to respond flexibly during domestic supply shortages. This protectionist stance, Muiga argued, has limited the country’s ability to cushion itself during lean periods, amplifying the impact of local disruptions and making price spikes more likely.
Perhaps most critical to the current situation is the issue of subsidies—or lack thereof. Muiga had flagged the government’s slow and inconsistent subsidy programs for animal feeds and essential farm inputs as a ticking time bomb. Despite promises of financial support to the agricultural sector, many farmers have been left without timely assistance, forcing them to shoulder rising costs alone. This gap has made it harder for producers to maintain steady output, fueling the supply crunch that is now driving up retail prices.
As Kenya continues to endure a tough season for dairy production, Muiga’s insights stand out as a clear-eyed assessment of how intertwined economic policy and market behavior truly are. With milk now retailing at KSh 50 to KSh 55 for a 500ml packet, his predictions offer both a sobering explanation and a call to revisit the policy levers shaping the country’s food economy.