Kenyan dairy sector explores financing solutions for Quality-Based Pricing system

KENYA – The Kenya Dairy Board, the State Department for Livestock Development, and UNIDO have brought together representatives from banks, SACCOs, public finance institutions, dairy cooperatives, processors, and technology providers to explore financing solutions for Kenya’s transition to Quality-Based Pricing (QBP).

As the regulator mandated to promote and develop the Kenyan dairy industry, KDB recognized that Quality-Based Pricing rewards farmers for the quality and composition of the milk they produce.

Participants discussed practical financing opportunities for milk analyzers, cooling and testing equipment, digital systems, quality-control infrastructure and working capital for cooperatives and processors; investments central to raising standards across the value chain.

This convening marks an important milestone in KDB’s continued efforts to develop financial products that respond to the real needs of dairy farmers, cooperatives and processors.

Moving forward, the board stated it will continue working with the State Department and partners to engage interested financial institutions, develop suitable products, establish pilot partnerships and explore risk-sharing mechanisms that accelerate QBP adoption nationwide.

In line with our mandate to regulate, develop and promote the Kenyan dairy industry, we remain committed to building a more productive, resilient and competitive dairy sector — one that rewards farmers for excellence and quality.

Introduced by the former Agriculture and Livestock Development Cabinet Secretary Andrew Mwihia, the Quality-Based Milk Payment System (QBP) is part of the ongoing reforms to shift Kenya’s dairy sector from volume-driven production to value-based earnings.

Speaking during an engagement with dairy stakeholders, Livestock PS Jonathan Mueke said the new system will ensure farmers who produce high-quality milk earn more.

Under QBP, milk will be tested at collection centres for butterfat, protein content and safety parameters, with higher-quality milk attracting premium prices and bonuses.

To support farmers, the government is implementing the AI Subsidy Program, subsidised livestock vaccination, provision of bulk milk coolers and improved feed monitoring.

Agriculture CS Mutahi Kagwe noted that “For many years, the milk industry has essentially been a quantity-based system where pricing has depended only on the litres supplied. Moving forward, we are adding another dimension—quality. The quality of milk you bring will also determine how much you earn,”