Processors fail to exhaust powder milk import quota

Processors failed to import 44 per cent of the allocated quota of powdered milk as the deadline for shipping in the duty-free product ended last year.

Milk processors cited high cost of the commodity in the international market for failure to meet the import quota despite the extension of the initial deadline.

According to Global Dairy Trade, a tonne of powdered milk is now retailing at Sh297,258 at the international market up from Sh283,765 in December.

By the end of the year, processors had only managed to bring in 5,000 tonnes out of 9,000 tonnes.

“As at the end of last year, processors had imported 5,000 tonnes of powdered milk as most of them were crippled by high cost at the international market,” said Kenya Dairy Board managing director Margaret Kibogy.

With the duty-free window having expired, importers will now have to bring in the commodity at the market rate, with 60 per cent duty and 7 per cent dairy levy.

The Treasury in October issued a gazette notice exempting all the consignment loaded on ships from September 1 to December 31 from paying duty to enable processors import the balance of the product.

READ: More questions than answers on duty-free milk powder imports

The window, which was initially announced in May last year, was originally supposed to end in August before an extension was issued as processors had only managed to import 4,500 tonnes by September.

Processors depleted their powdered milk stocks last year after they reconstituted it to meet the rising demand for the commodity to bridge the deficit caused by dry weather. Milk volumes have stabilised following improved supplies from farmers, which has seen consumer prices drop.

New Kenya Co-operative Creameries last year cut the factory price of milk following an increase in the volume of supplies.

Dairies cite high cost of the commodity in the international market for failure to meet the import quota despite the extension of the initial deadline.