The National Treasury has moved to regularise a Sh2 billion emergency payment made in January to support dairy farmers grappling with surplus milk, asking Parliament to approve the funds that were released before lawmakers’ consent.
The request is part of a mini-budget tabled this week, highlighting the government’s effort to comply with constitutional requirements while cushioning the sector from seasonal oversupply losses.
According to the budget papers presented to the National Assembly, the money was disbursed through the State Department for Co-operative Development and Management on January 2 as capital grants.
These grants were intended to facilitate “adequate preparation of milk glut and ensure timely mop-up of excess milk, stabilisation of raw milk price and timely payment of arrears to farmers,” addressing both cash flow and price stability challenges for dairy producers.
The Sh2 billion payout is drawn from the Sh245.9 billion accessed under Article 223 of the Constitution, which allows the Treasury to withdraw funds from the Consolidated Fund in urgent cases without prior parliamentary approval.
Section 36(9) of the Public Finance Management (National Government) Regulations guides this process, permitting State agencies to exceed approved budget allocations by up to 10 percent to meet unforeseen needs.
Treasury officials emphasised that the law requires any emergency withdrawals to be presented to Parliament within two months for scrutiny and approval.
The recent disbursement reflects the urgency of managing a rapidly expanding dairy sector that has seen record deliveries to formal processors, raising both opportunities for growth and concerns about excess production.
Data from the Kenya Dairy Board shows that annual milk intake by processors hit 1.01 billion litres for the year ending December 2025, up from 908.4 million litres the previous year.
This milestone is the highest recorded since the board began collecting data in 2001, underscoring the dairy sector’s rapid formalisation and the scale of production that prompted the government’s timely financial intervention. The lowest intake recorded was in 2002 at 143.6 million litres, highlighting the sector’s extraordinary growth over two decades.
The Sh2 billion emergency support underscores the government’s proactive stance in cushioning farmers and stabilising the market amid record milk surpluses, while ensuring compliance with legal processes.
