Dairy farmers have opposed plans to decentralise the operations of the New Kenya Cooperative Creameries (New KCC), warning that this would further weaken the troubled processor and erode their market share.
President William Ruto recently revealed plans decentralise the operations of New KCC and empower farmers to own factories in their regions as part of a plan to tackle managerial and financial challenges facing the parastatal.
“We want to make New KCC farmer-owned, and the model is like that of Kenya Tea Development Agency, 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,” he explained early this month while in Eldoret.
He said that 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.
Dairy farmers however warn that the decentralisation process will fragment 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 director.
Dairy farmers have petitioned the government to introduce reforms to modernise the New KCC factories.
“The reforms will empower dairy farmers to increase milk productivity and earn better returns,” 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 Ministry of Agriculture, the country produced an average of 4.2 billion litres of milk last year against potential of 12 billion litres due to poor animal husbandry techniques by farmers.
The Kenya Dairy Board (KDB) has however launched strategy increase national milk production from 5.2 billion to 10 billion litres annually and boost export to one billion litres. Newly appointed New KCC Managing Director, Joseph 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.
