By Wainaina Ndung’u
A leading dairy co-operative society in Central Kenya has announced plans to borrow money to start packaging its own milk.
Mukurwe-ini Wakulima Dairy Co-operative Society members over the weekend gave its management a go-ahead to take a Sh32 million loan to purchase a packaging line.
Society chairman Muhika Mutahi said they were emboldened to start packaging after registering losses for the first time in its history.
“Milk processors ambushed us with a completely new requirement that stipulated rejection of our supplies if they did not have over 27 per cent butterfat content. It was a completely new term in my 22 years in the dairy industry,” said Mutahi.
He told the society’s annual general meeting at Mukurwe-ini Stadium that the new requirement had increased their proportion of spillage (disposed stocks) especially during the glut period.
“Our experience is that the processors completely abandon these demands during the dry period due to scarce supplies,” said society’s General Manager Duncan Muya.
The society plans to construct an 80,000-litre processing plant in Mukurwe-ini town. It had resorted to hawking milk in Ngurubani and Sagana townships and Nairobi due to the processors’ stringent requirements. The society also acquired a Sh5.2 million refrigerated tanker to transport milk as part of measures to cut losses.
“Our advice to farmers is that only economies of scale will make our operation inexpensive and we are asking them to increase production to a minimum of 30,000 litres a day,” said Mutahi. According to the society, milk production tumbled to a four-year low of 25,000 litres a day from an average 39,000 litres.
“We also realised that most of our farmers had gone back to coffee farming, which had impressive returns in the last two years. But we see them coming back to dairy farming with the slump in coffee returns in the last one year,” added Muya.
Last year, the society made a loss of Sh7.2 million before tax despite recording increase in turnover from Sh454 million in 2010 to Sh546 million. Earnings per share declined from Sh8.60 to Sh3 in the same period.