The Kenyan government has pledged to clear over Ksh 250 million in pending bills owed to farmers by New KCC within the next month. This announcement comes as part of a broader strategy to address the financial struggles of the state-owned milk processor and ensure timely payments to the country’s dairy farmers.
The commitment was made following a significant meeting held at Lemaiyan Hotel in Naivasha. The meeting brought together the new management and board members of New KCC, along with Cabinet Secretary for Co-operatives, Wycliffe Oparanya. The gathering was convened to discuss the company’s dire financial situation and to map out a recovery plan.
CS Oparanya revealed that New KCC had been facing annual losses, prompting the urgent need for government intervention. “We have met with the new board and management to discuss the company’s challenges and outline the way forward,” Oparanya stated. He acknowledged the prolonged delays in payments to dairy farmers and expressed a commitment to resolving these issues promptly.
Under the new payment scheme, farmers will receive half of their dues upon delivery, with the remaining balance to be settled within two weeks. This new approach is designed to alleviate the cash flow problems faced by farmers, ensuring they are compensated more promptly for their milk deliveries. CS Oparanya emphasized the government’s resolve to make the dairy sector more sustainable and farmer-friendly.
In addition to addressing payment delays, the CS ordered a forensic audit of New KCC’s accounts. Despite receiving continued government support over the years, the company has struggled with financial mismanagement and operational inefficiencies. The audit aims to uncover any irregularities and provide a clear picture of the company’s financial health.
Oparanya also highlighted the importance of regular engagement between New KCC’s management and the farmers. This, he noted, would be crucial in addressing ongoing challenges and fostering a more collaborative environment. The new management team at New KCC has been instructed to implement a revamped financial model to enhance the company’s operational efficiency.
Security at New KCC’s facilities will also be bolstered through the involvement of the National Youth Service (NYS). This measure is expected to safeguard the company’s assets and ensure smoother operations across its plants nationwide.
The pricing strategy of New KCC was also defended by Oparanya. He stated that the current price of Ksh 50 per litre offered by the company is the highest in the country. He urged private companies to follow suit and adopt similar pricing models to support the dairy industry.
Acting Managing Director of New KCC, Samuel Ichura, confirmed that the company currently owes farmers over Ksh 250 million but assured that efforts are underway to clear these outstanding payments swiftly. “We have already cleared the July arrears and are working on processing the August payments as part of our recovery efforts,” Ichura said.
David Maina, Chairman of New KCC, reiterated the company’s focus on reorganizing its operations to become more efficient and competitive. This restructuring effort is part of a broader strategy to turn around the company’s fortunes and ensure long-term sustainability.
Overall, the government’s commitment to clearing the pending bills and addressing New KCC’s operational challenges marks a significant step towards stabilizing Kenya’s dairy sector. By ensuring timely payments to farmers and implementing necessary reforms, the government aims to foster a more resilient and efficient dairy industry. The next month will be critical as New KCC works to fulfill its financial obligations and embark on a path to recovery.
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