For once a milk processor, New KCC, reduces the price of milk from shs 55 to shs 50
There is a law of supply that states, “ceteris paribus – the supply of goods and services are directly related to each other” meaning supply increases with increase in price of commodities and decreases with decrease in price of commodities. But there are instances where supply just increases due to natural factors, like conducive weather that helps farmers to grow more of a product, a product like milk. When such happens, the price of the commodity is expected to decrease, but this is not always common in Kenya. New KCC has however decided to not be greedy as usual hence have announced a reduction in the price of 500 ml packaged milk from shs 55 to shs 50.
The reduction in milk prices come after the processors increased the same prices two months ago. The increase was occasioned by delay of rains. Due to climate change which the Acting Deputy Director of the Meteorological Department Mr. Bernard Chanzu pointed out, Kenya was not able to experience heavy rainfall until the end of June. Since June till now the country has been experiencing heavy rainfall, which again led to overproduction of milk leading to increased milk supply, occasioning the New KCC to reduce their milk prices. The New KCC managing director Nixon Sigey said that what prompted the move was the 25% rise in volumes from farmers, and they wanted to pass the benefit of increased volumes to consumers. Many Milk processors wouldn’t advocate for the move made by the New KCC even if what New KCC wants to do is to relieve its customers from high milk prices.
With only New KCC reducing its prices, the other players in the Dairy Industry are still making profits despite the gradual increase in milk volumes. The milk consumers now have a choice to buy from New KCC, which is a critical State Investment that plays an important role in controlling the price of milk in the market.