New KCC delays exports to the Middle East over milk shortage
What you need to know:
Goods like butter and ghee are in high demand in oil-rich countries like Dubai and Qatar which do not produce their own owing to the dry climate.
New KCC depends on the value-added products to boost its revenue, bringing in about Sh400 million in a year from regional exports.
The processor is currently operating below its installed capacity of 1.5 million litres per day as the shortage persists.
Milk processor New KCC has cut back production of ghee, cheese and butter by 20 per cent due to a biting milk shortage that has reduced supplies from farmers.
The move has forced the State-owned dairy to delay exports of the value-added products to Middle-East countries as earlier planned in order to maintain supplies to the local market.
“We have had to halt plans to export these products to Middle East countries as planned earlier,” said New KCC managing director Nixon Sigey in an interview.
Huge potential
The milk processor had announced plans of exporting to Middle East countries where there is a huge, untapped potential for the company which relies mainly on East African markets.
Goods like butter and ghee are in high demand in oil-rich countries like Dubai and Qatar which do not produce their own owing to the dry climate.
New KCC depends on the value-added products to boost its revenue, bringing in about Sh400 million in a year from regional exports.
The processor is currently operating below its installed capacity of 1.5 million litres per day as the shortage persists.
This has also affected other processors such as Brookside which recently had to raise farm-gate prices to boost supplies.
Impacted negatively
The shortage has also impacted negatively on production of powder milk in New KCC’s Kitale plant, which is currently re-constituting stocks of powder to liquid milk to bridge the shortage.
Mr Sigey said that supplies could improve with the onset of the March rains. “We expect that the situation will come back to normal very soon,” he said. The scarcity has seen consumer prices on processed milk rise by up to Sh5 for a half-litre packet.
The same is retailing at Sh48 in major supermarkets.
New KCC increased its buying price for raw milk by Sh6 a kilogramme to Sh41, creating a fierce battle for supplies with Brookside raising its pay to Sh40 for the same quantity.
