Dairy farmers will be paid Sh65 a litre of milk from this month, plus a bonus of Sh2 a litre every quarter, President William Ruto announced at Mashujaa Day in Eldoret.

"Beginning this month, dairy farmers will earn Ksh65 per litre with a bonus of Ksh2 to be paid every quarter," Ruto said on Tuesday, 20 October 2026.

The President said the producer price had already risen from Sh35 to Sh60 a litre under his administration before this latest increase.

Arrears and New KCC reforms

Ruto promised to pay about Sh400 million owed to dairy farmers by the end of October.

Days earlier, he announced plans to decentralise New Kenya Cooperative Creameries (New KCC). Each of its eight factories would run independently and supply milk directly to its regional market. The government says this would cut transport costs and reduce reliance on the Nairobi factory for distribution, easing shortages and lowering consumer prices.

Record production, tight supply

Milk production has been growing. The Kenya National Bureau of Statistics Economic Survey 2026 shows fresh milk output reached a record 5.5 billion litres in 2025, up 3.5 per cent, the third straight year of growth. Intake by processors passed one billion litres for the first time, up 11.5 per cent.

Shoppers are nonetheless facing shortages and rising shelf prices. Farmers blame expensive animal feed and falling output after poor long rains. Some sell directly to consumers, who pay more than processors.

The Central Bank of Kenya's latest agriculture survey found that 74 per cent of farmers, retailers and wholesalers expect the price of packeted milk to rise further in the coming weeks.

What it means for consumers

Higher farm-gate prices should encourage farmers to deliver more milk to processors. But unless processing and distribution costs fall, the increase may also feed into retail prices. The government is counting on the New KCC reforms to absorb part of the cost.

Photos: Kenyans.co.ke