Arabfields, Mira Sabah, Special Economic Correspondent, Nairobi, Kenya — Kenyan President William Ruto has announced an increase in the price paid to dairy farmers to 65 shillings per litre, alongside a quarterly bonus of two shillings per litre, as the government seeks to improve rural incomes and address persistent milk supply shortages.

The announcement was made during the Mashujaa Day celebrations in Eldoret on October 20. Ruto said the revised rate would take effect in October, building on previous increases that raised the farm-gate price from 35 shillings to 60 shillings per litre.

For small-scale dairy farmers, who supply much of Kenya’s milk, the increase could provide additional income at a time when the cost of animal feed, veterinary services and other farm inputs continues to put pressure on household budgets.

The new rate also comes as Kenya faces a seasonal decline in milk production. Data from the Kenya Dairy Board show that deliveries to formal processors fell from 84.4 million litres in June to 75 million litres in August, reflecting difficult production conditions in several dairy-producing regions.

The decline has affected processors and consumers alike, with reduced availability of some packaged milk products and upward pressure on retail prices. Fresh packaged milk prices rose by 6% in September, according to national inflation data reported by market analysts.

Kenya’s dairy sector remains a major contributor to the agricultural economy. National milk production reached approximately 5.5 billion litres in 2025, a 3.5% increase from the previous year, according to the 2026 Economic Survey. Milk intake by industrial processors also exceeded one billion litres for the first time, rising 11.5% from 909 million litres in 2024.

These figures highlight the sector’s growth potential, but recent supply constraints underline the challenges facing producers. Dry weather has reduced pasture availability in some areas, forcing farmers to rely more heavily on purchased feed, which can substantially increase production costs.

The government is pursuing several measures alongside the price increase. An investment of about 1.43 billion shillings is supporting the installation of 230 bulk milk coolers, including solar-powered units, to improve milk collection and reduce spoilage. The facilities are expected to help cooperatives handle approximately 475,000 litres daily and support more than 115,000 farmers across 41 counties.

Improved livestock genetics are another part of the strategy. Subsidies have reduced the price of sexed semen, used in breeding programmes, making the technology more accessible to farmers seeking to improve herd productivity.

For cooperatives and processors, the challenge will be to maintain reliable collection and payments while adapting to higher procurement costs. The government has also indicated that outstanding payments owed to farmers should be settled by the end of October, a commitment that could help ease cash-flow pressures if fulfilled.

The higher farm-gate price may encourage some farmers to invest in better feed, breeding and animal health, potentially supporting production over the longer term. However, the effect will depend on whether the increase is sufficient to offset rising input costs and whether processors can sustain purchasing volumes without passing excessive costs on to consumers.

Weather conditions will also influence the outlook. Kenya’s October-to-December rainy season is expected to improve pasture and fodder availability in many areas. If rainfall supports a recovery in milk yields, processor deliveries could begin to improve in the coming months, easing shortages and limiting further price pressure.

A stronger recovery is not guaranteed. Feed expenses, transport costs and uneven rainfall could continue to constrain production, while increased payments to farmers alone cannot immediately reverse the effects of a prolonged dry spell.

The government’s longer-term objective is to build a more productive dairy industry capable of meeting domestic demand and expanding into regional markets. Achieving that goal will require sustained investment in cooling infrastructure, affordable feed, animal health and efficient supply chains.

For farmers, the immediate question is whether the higher price will translate into better margins after expenses. For consumers, the key concern is whether improved farm incentives and a recovery in production can restore more dependable milk supplies without further increases in retail prices.

The coming months will provide a clearer indication of whether the new pricing policy can deliver both outcomes, stronger earnings for producers and a more stable dairy market for Kenyan households.