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Nakumatt milk supplies resume after pay deal

Shoppers at a Nakumatt outlet. Big retailers owe milk processors Sh3.5 billion. FILE PHOTO | NMG
Shoppers at a Nakumatt outlet. Big retailers owe milk processors Sh3.5 billion. FILE PHOTO | NMG 

Milk processors have resumed supplies to Nakumatt Supermarket after reaching a deal with the retailer. The dairies had withdrawn products last month over non-payment.

New Kenya Cooperative Creameries (New KCC) managing director Nixon Sigey who is also the chairman of Kenya Dairy Processors Association said processors had agreed with Kenya’s biggest retailer on an undisclosed time for payment of deliveries as one of the conditions for resumption.

The deliveries, he said, will however be reduced by 20 per cent.

“We now have a special arrangement with Nakumatt that has seen New KCC resume supplies to the retailer. However, we have cut our supplies by about 20 per cent to avoid huge accumulation of debts that might result in delayed payment,” said Mr Sigey.

But Githunguri Cooperative general manager John Kilonzo said they intend to hold talks with Nakumatt with a view to resuming supplies.

The processor stopped supplies last year.

“If other processors have resumed supplies then we can negotiate with the retailer on the way forward,” said Mr Kilonzo.

New KCC withdrew its stocks last month after the payment delay went beyond the agreed credit period of 90 days.

“We are delivering our supplies everyday so long as they do not default on the current terms that we have agreed on,” he added.

Kenya Dairy Board managing director Margaret Kibogy said non-payment affects the entire value chain as it makes it difficult for factories to pay farmers.

She said that retail chains have to pay their dues at least after 30 days to avoid inconveniencing other parties.

The MD added that the board was working closely with the processors to solve the matter in order to avert a crisis in the sector.

As of late last year, all major supermarkets owed milk factories Sh3.5 billion arrears according to the regulator.

Overall, manufacturers have been complaining of serious cash flow problem following delayed payment of Sh40 billion by retailers.