Dairy farmers in Rwanda will soon negotiate the price of milk directly with buyers after the government announced it will stop setting farm-gate prices, a move aimed at ensuring milk prices better reflect rising production costs and market conditions.

The policy shift was announced by the Minister of State for Agriculture and Animal Resources, Solange Uwituze, following growing complaints from dairy farmers, who argued that the current farm-gate price of Rwf 400 per litre no longer covers the cost of producing milk.

Farmers say the rising prices of animal feed, veterinary medicines, fuel, electricity, water and labour have significantly increased production costs, leaving many producers with shrinking profit margins.

Henry Rwamugema, a dairy farmer from Karama Sector, said the cost of keeping dairy cattle has continued to rise as farmers spend more on veterinary services, labour, fodder and transporting milk to collection centres.

"The current price of Rwf 400 per litre is no longer sustainable. It does not allow farmers to recover production costs or earn a reasonable profit," he said.

His concerns were echoed by Butare Musoni Alex, a dairy farmer from Rwempasha Sector, who said inflation has made milk production increasingly expensive.

"Today, almost everything we need has become more expensive. Diesel alone now costs about Rwf 2,900 per litre, yet we sell milk at only Rwf 400 per litre. It is clear we are operating at a loss, and the only practical solution is to increase the milk price," he said.

Responding to the concerns, Uwituze said the government will no longer determine milk prices but will instead facilitate negotiations between dairy farmers, milk buyers and processors.

She said the new approach mirrors the pricing systems already used for crops such as maize and potatoes, where producers and buyers negotiate prices based on market conditions and production data.

The Ministry of Trade and Industry will work alongside the Ministry of Agriculture to convene negotiations but will no longer determine milk prices on behalf of the industry.

Cassien Karangwa, Director of Value Chain Analysis at the Ministry of Trade and Industry, negotiations are expected to conclude next week, paving the way for a revised milk price that better reflects current market realities while reducing financial pressure on dairy farmers.