Kenya Unveils Sh1.4 Billion Dairy Upgrade as Government Tackles Milk Costs and Sugar Reforms

The government is investing Sh1.428 billion in dairy infrastructure while subsidising improved cattle genetics and advancing reforms in the sugar industry as it seeks to lower production costs and improve farmer incomes.

Agriculture Cabinet Secretary Sen. Mutahi Kagwe said the measures are part of broader efforts to strengthen agricultural value chains and address challenges facing farmers.

The largest investment in the dairy sector will finance 230 bulk milk coolers, including 200 solar-powered units. The equipment is expected to improve milk aggregation, reduce post-production losses and lower electricity expenses for dairy cooperatives.

According to the Ministry, the solar-powered coolers are projected to save cooperatives about Sh73 million annually in electricity costs. The programme is expected to support more than 115,000 farmers across 41 counties and facilitate aggregation of about 475,000 litres of milk each day.

The government is also reducing the cost of sexed semen to make improved dairy genetics more accessible to farmers. The subsidised price has fallen from Sh2,900 to Sh1,000 per dose, representing a reduction of nearly 65 per cent.

The intervention is aimed at increasing access to genetics that can improve herd productivity and accelerate the development of higher-performing dairy animals.

Feed costs remain another major concern for dairy farmers. The government has launched the National Animal Feeds Development Strategy and is establishing a National Strategic Feeds Reserve as part of efforts to improve the availability and affordability of livestock feed.

Under the Land Commercialisation Initiative, underutilised government land is also being opened for commercial fodder production. The programme includes land associated with the Agricultural Development Corporation and the Kenya Agricultural and Livestock Research Organization.

The government is also pursuing private-sector partnerships to expand feed manufacturing and secure fodder supplies. Among the investments is a Sh300 million feed mill by De Heus in Athi River.

Another partnership with UAE-based Al-Dahra is expected to facilitate agricultural production on up to 200,000 acres at Galana-Kulalu, potentially providing additional land for feed and other agricultural production.

Tax measures have also been introduced to reduce costs for feed manufacturers. These include duty waivers and VAT exemptions on selected raw materials used in animal-feed production.

The Ministry said regular cost-of-production studies are being used to guide dairy policy and producer pricing. Current studies put the average cost of producing a litre of milk at Sh36.20 across different production systems.

At the same time, the government is implementing institutional reforms in the sugar industry under the Sugar Act, 2024.

The Sugar Board is in the process of being constituted, with appointments already made for several positions, including the chairperson, a National Treasury representative, a Council of Governors nominee and a representative from the State Department for Agriculture.

The appointment of grower representatives has faced delays following court injunctions and petitions challenging election procedures and the definition of sugar catchment areas.

The Ministry said the outstanding legal issues are being addressed through the courts, after which the process of electing grower representatives is expected to resume.

Until the Board is fully constituted, the Ministry will continue performing necessary administrative functions to maintain operations and implement the statutory framework governing the sugar industry.

The dairy and sugar measures form part of wider government efforts to reduce input costs, expand agricultural infrastructure, raise farm productivity and strengthen governance in key agricultural value chains.