New KCC urged to halt milk supply to government agencies over unpaid debts

KENYA – The New Kenya Cooperative Creameries (New KCC) has been instructed to immediately cease supplying milk to government agencies that have failed to settle their outstanding debts.

This directive was issued by the National Assembly’s Committee on Trade, Industry, and Cooperatives, which expressed concern over the negative impact these debts have had on New KCC’s operations.

Committee Chairperson James Gakuya emphasized that New KCC, being a business entity, should not be compelled to continue providing milk to agencies that have not cleared their dues, as this affects the company’s ability to fulfill its financial obligations, including paying farmers.

“You cannot tell farmers that you can’t pay them because government bodies owe you,” Gakuya stated during a meeting with Cooperatives Principal Secretary Patrick Kilemi.

PS Kilemi, accompanied by acting New KCC Managing Director Samuel Ichura, disclosed that various government ministries owe the milk processor Sh184.3 million, while an additional Sh52.24 million is owed by other government agencies.

The debts have strained New KCC’s operations, making it difficult for the company to meet its obligations.

PS Kilemi requested the committee’s assistance in ensuring that the outstanding debts are paid, noting that these delays have hindered the company’s ability to stabilize and improve its operations.

He acknowledged that while there have been past delays in payments to dairy and coffee farmers, the situation has improved, with payments now up to date until June. He assured the committee that the remaining payments would be completed by the end of the month.

In a related development, President William Ruto has announced a government intervention to stabilize milk prices and support dairy farmers.

The government will inject Sh1 billion into New KCC to help the company strengthen the dairy sector and enhance farmers’ capacity to increase production.

President Ruto directed New KCC to review and set the purchase price of milk at Sh53 per liter for local farmers, with Sh50 paid directly to farmers and the additional Sh3 allocated to cooperatives, SACCOS, and transportation costs.

Speaking at Kobujoi market in Aldai Constituency, where he launched a Sh300 million last-mile project and inspected the ongoing construction of a modern market, President Ruto highlighted the importance of supporting local dairy farmers amid a national milk shortage.

He reiterated the government’s commitment to regulating the importation of powdered milk, which has been undermining local production.

Ruto further emphasized the potential of Kenya’s dairy industry to produce high-capacity milk, citing ongoing initiatives such as the installation of milk coolers and other processing infrastructure as crucial steps to reduce wastage and boost production.

The government’s economic stimulus program is expected to benefit over two million dairy farmers, helping them enhance their production capabilities.

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