Farmers who supplied milk to the collapsed Old KCC have a reason to smile, after President Uhuru Kenyatta directed that they be paid dues in January.
Payment will be backdated to more than a decade.
The President was touring the North Rift and said the government was committed to settling a promise made to farmers last year — that Sh500 million they are owed would be paid.
While visiting the region last year, the President said the government would waive the debt to support farmers in milk production. And this year, Parliament approved the amount in the Budget.
“We put money into New KCC this year to ensure the dues owed to farmers are settled. The government has already allocated the money so that farmers can continue with their investment. The list is there and, by January, we will ensure the beneficiaries get their dues,” he added.
President Kenyatta also assured farmers that the firm’s ownership would not be sold as alleged by a section of farmers.
“Those are lies; New KCC is the property of Kenyan farmers,” he said.
Mr Nixon Sigey, managing director of the processor, said at least 130,000 dairy farmers — including transporters and co-operative movements that delivered milk to the firm in 1999 — would benefit from the funds.
“This is the best early Christmas gift to farmers. The payment will motivate farmers to have confidence in the processor,” he said.
Mr Sigey said the list would be subjected to rigorous verification to ensure only genuine farmers and cooperatives benefit.
In the next three weeks, “We will submit the list to the county cooperative department for verification. We hope to conclude this exercise by January, as directed by the President. Payments will then be made,” said the MD.
He added: “Verification will assist us to get details of the next of kin, as some farmers might have died”.
The previous firm collapsed in 1999 due to financial mismanagement. It was later placed under receivership, until the Narc administration took over its control, turning around its fortunes.
Many farmers have welcomed the payment, saying it will help them improve dairy production.
Mr Sigey said: “Farmers will give the company a vote of confidence after it posted a good performance. This will create a sense of trust in our partnership with farmers,” he said.
Last year, the firm recorded an increase in farmer pay-out from Sh2.5 billion to Sh4.5 billion, while it also carried out modernisation of some factories such as Eldoret, Dandora, Nyahururu and Sotik to increase efficiency and capacity.
“We expect the pay-out to increase to Sh6 billion once the process is completed,” said Mr Sigey.
The entire firm has a capacity to process 1.4 million litres daily.
The Kenya Dairy Board, the industry regulator, estimates that milk production increased to 5.2 billion last year.
Mr Sigey said the company had played a key role in stabilising milk prices in the market.
“We are happy that the government, through the Strategic Food Reserves, has factored in Sh500 to take care of excess milk and protect farmers”.
The increase in milk production is attributed to bigger provision of milk coolers and affordable artificial insemination services by county and national government officials.
In late November, the Privatisation Commission allayed fears that there were plans to sell New KCC to a private entity.
Commission chairman Henry Obwocha said at the New KCC Eldoret factory, that they were on a familiarisation tour and not valuing the company’s assets.