Munya directs New KCC to pay farmers Sh33 per litre of milk

New Kenya Co-operative Creameries (New KCC) has found itself in a dilemma after the State lifted the protectionist veil and directed it to raise what it pays dairy farmers by Sh8 per litre.

Agriculture Cabinet Secretary Peter Munya Wednesday directed the firm to pay Sh33 per litre of milk with immediate effect, saying the government has used a lot of resources to enable the firm to survive the narrow margin.

“I have directed New KCC to pay farmers Sh33 from the current low of Sh25,” he said at a news conference yesterday.

With the high supply of raw milk currently in the market, and competitors Brookside paying an average of Sh20 per litre, it might be difficult for the State-owned firm to compete favourably in the market.

President Uhuru Kenyatta directed the Treasury on Tuesday to release Sh500 million to New KCC for mopping up excess milk from farmers. However, the money falls short of the Sh2 billion that the Department of Livestock had earlier requested for this exercise.

This comes at a time when processors are stuck with long-life products as they are unable to sell in the regional market due to their high price that has made the goods uncompetitive in the regional market such as Uganda, Tanzania and the Middle East.

Economist Toni Watima said the intervention is too minimal to affect the market as the amount delivered to the milk firm is not substantial.

“This policy intervention will not have a direct impact on farmers. It is very minimal intervention,” said Mr Watima.

He argued that the move would affect the New KCC profits because it will have to buy milk from farmers at a higher price than competitors for the same market.

New KCC managing director Nixon Sigey, however, said the decision would not affect their operations even in the wake of increased production.

“This is a good move that will help our farmers and we do not think it will have an impact on our operations,” Mr Sigey said.