Kenya Dairy industry Bill
A dairy business operator must have a written contract with a producer organization or a registered entity representing primary producers to buy milk for processing, distribution, or sale. While a primary producer is not required to enter into a written contract with a buyer, they may choose to do so.
The milk sale contract should include at least the following details: the names of the parties involved, their respective obligations, the milk price per unit, the quantity to be sold or bought, and terms for oversupply or undersupply. It should also specify the agreed quality, testing and rejection terms, the time of actual transfer of ownership, and the collection or delivery schedule, including frequency and timing. The contract should outline its duration, payment terms, confidentiality clauses, terms for waivers and amendments, termination conditions, indemnity or insurance provisions, sanctions for default, notice or demand issuance, force majeure circumstances, and a dispute resolution mechanism.
Payment within 30 days
Dairy business operators are required to promptly pay primary producers for milk delivered within 30 days after the end of the month in which the milk was supplied. The Authority, or a county government where there is no conflict of interest, may assist in resolving disputes related to contract implementation upon request. Additionally, the Cabinet Secretary, in consultation with the Authority, may prescribe a standard form contract for the sale of milk, which can serve as a template with or without additional requirements.
Guaranteed Minimum Producer Price
The guaranteed minimum producer price for raw milk shall be prescribed and will vary based on different animal species. Dairy business operators must not pay or offer to pay a price below the guaranteed minimum producer price. Contracts for the sale or purchase of milk that do not comply with this requirement are void to the extent of the inconsistency.
Producer organizations or other registered entities representing primary producers must maintain records of milk purchased and sold. They must disclose to the primary producers, via a monthly statement, the payout price and any deductions made to arrive at the producer price. Violating any provisions of this section constitutes an offense.
Quality-Based Pricing
The Authority is tasked with promoting quality-based pricing of dairy produce. In consultation with relevant stakeholders, the Authority will prescribe different grades of raw milk to facilitate quality-based pricing.
