The government is on a collision course with dairy farmers over plans to decentralise operations under the New Kenya Cooperative Creameries (New KCC) management, a move officials say is necessary to revive the financially troubled processor.
Dairy farmers, however, warn that the decentralisation process will fragment the supply chain, erode New KCC’s market share and expose them to exploitation by private processors.
They argue that, as contributors to the New KCC through capital levies, they should have a decisive role in the control and restructuring of the entity instead of being sidelined in a government-led overhaul of the firm.
“The New KCC is owned by the farmers despite the government having pumped funds to transform its operations and they should be involved in the decision-making process on its operations,” said Kipkorir Menjo, Kenya Farmers Association (KFA) director.
President William Ruto has disclosed plans to dismember the New KCC and empower farmers to own factories in their regions to tackle managerial and financial challenges facing the parastatal.
“We want to make New KCC farmer-owned, and the model is like that of KTDA, where farmers possess ownership of factories in their areas of jurisdiction, countrywide. As a government, we shall assist them in managing the factories, implementing reforms and injecting some money,” explained President Ruto early this month while in Eldoret.
The government has pumped Sh2 billion into the giant milk processor to enable it to settle debts for milk deliveries and introduce reforms to salvage its operations.
“I want to make it clear that the release of the Sh2 billion will be the final payment I am making to the New KCC and there will be no more funds. I have given firm instructions to the Ministry of Cooperatives to make sure they carry out reforms in the New KCC,” said Dr Ruto.
The New KCC has appointed a new managing director, Joseph Choge, who replaced the outgoing boss Nixon Sigey, who had been in office since 2015.
Mr Choge has promised to introduce an array of measures to address the processor’s financial struggle, improve milk productivity and steer the company to success.
But dairy farmers have petitioned the government to introduce reforms to modernise the New KCC factories and expand its market share.
“The reforms will empower dairy farmers to increase milk productivity and earn better returns by pushing the cost of milk to Sh60 per litre at the farm gate level,” said David Too from Cheptiret, Uasin Gishu County.
According to dairy farmers in the North Rift region, the high cost of Artificial Insemination (AI) services offered by private breeders was compromising the quality of dairy breeds.
“The exorbitant cost of AI services has forced most farmers to resort to bulls for breeding, which compromises the quality of dairy animals,” said James Tuwei from Nandi County.
Dairy farmers in the North Rift region earned Sh918 million for milk deliveries to the rival Brookside Dairies last year, as production increased on better agronomic practices by smallholders.
The payout represents a 27 per cent rise over earnings in 2022, with Brookside attributing the growth to the adoption of better farm practices following aggressive farmer empowerment programmes by the processor in the region.
Farmers in Uasin Gishu County received the highest payout for milk deliveries to the processor at Sh236 million, while West Pokot earned Sh211 million.
Data from the Uasin Gishu County Department of Agriculture and Livestock indicate that annual milk production stands at 220million litres from 340,000 herds of livestock.
According to a report by the Ministry of Agriculture, the country produced an average of 4.2 billion litres of milk last year against a potential of 12 billion litres, due to poor animal husbandry techniques by farmers.
The Kenya Dairy Board (KDB) has, however, launched a strategy increase national milk production from 5.2 billion to 10 billion litres annually and boost exports to one billion litres.
