At least 100,000 farmers owed millions of shillings by the Kenya Cooperative Creameries (KCC) dating back decades ago will be paid by end month.
The company, since renamed New KCC, will settle the debts in two phases.
The first payment starts end of March where farmers will get a total of Sh368 million out of the Sh500 million owed.
The remaining will be settled before the next financial year starting in July 1.
New KCC Chief Executive Officer Nixon Sigey said the money had been delayed, despite being set aside last July, so as to verify the lists to weed out fraudsters.
“The validation process has caused the delay since we want to ensure genuine people are paid. We conducted a rigorous verification with the various county cooperative departments since their dues dates back to 20 years ago, and the Sh368 million is now ready for payment to the registered farmers,” he said on Wednesday.
Mr Sigey said the settling of the decades-old debt was a big boost to the processor, saying it would encourage farmers to supply them with milk.
“The payment will motivate farmers to have confidence in the processor. . . the second phase will begin after the payment of the farmers and dairy farmers who have not yet registered are encouraged to do so to be considered in the payment of the monies,” he told the Business Daily.
Mr Sigey noted at least 130,000 beneficiaries — including dairy farmers, transporters and co-operative movements that delivered milk in late 1990s before the old firm went under — would benefit from the funds.
While touring the North Rift last year, President Uhuru Kenyatta said the government was committed to settling the debts, following a promise he made to do so the previous year.
Parliament approved the amount in the 2016/2017 budget. President Kenyatta said in November that the farmers would get the money by January 2017.
“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,” said President Kenyatta then said.
Many farmers have welcomed the decision by the government to settle the debt, saying it will help them improve dairy production.
Mr David Chombet, a farmer from Uasin Gishu County said he would expand his dairy farming with the money.
“We want to thank the government for settling the debt. This will encourage farmers to invest in the dairy sector,” he said.
Collapsed in 1999
The previous firm, KCC, collapsed in 1999 due to financial mismanagement. It was later placed under receivership, until the Narc administration took over its control in 2003, turning around its fortunes.
Mr Sigey said the company plays a crucial key role in stabilising milk prices in the market.
“We are happy that the government, through the Strategic Food Reserves, has factored in Sh500 million to take care of excess milk and protect farmers,” he added.