By John Njiraini

Importation of powder milk must be stopped to save the dairy industry, Co-operatives Minister Joseph Nyagah has said.

Mr Nyagah said consultations are ongoing within the industry to petition the Government to ban the importation of powder milk, which is killing the local sector.

"It is unacceptable for the Government to continue issuing licenses to businessmen importing highly subsidised powder milk, when the country is experiencing an unprecedented increase in milk production due to heavy rainfall," he said.

Importation of cheap powder milk from New Zealand, Australia, Ireland and South Africa is said to be worsening a crisis in the country because local processors are holding large stocks that they cannot sell.

Leading milk processor New Kenya Co-operative Creameries (New KCC) for instance is experiencing a glut after milk delivery rose significantly from an average of 400,000 litres a day in October to 650,000 litres.

In effect, the company has accumulated more than two million litres of milk, forcing it to reduce the amount paid to farmers from Sh24 to Sh23. New KCC, which is facing capacity constraints, is now considering converting the milk to powder, but the increase in imports could mean lack of market.

Nyagah said the importation was too much and was choking the local industry.

Credit facility

He was speaking after presiding the signing of a memorandum of understanding for a new credit facility for dairy farmers dubbed Maziwa Plus Loan Programme.

The product, a partnership between Co-operative Bank of Kenya New KCC and Co-operative Insurance Company (CIC), is aimed at assisting dairy farmers meet financial needs like purchasing input, equipment and high breed cows to enable them increase milk production.

Co-operative Bank has already committed Sh300 million that would be available for lending at a 15 per cent interest rate.

Under the programme, individual farmers or groups can apply for loans to a maximum of Sh10 million repayable within 48 months.

"We want the dairy industry to grow. This is why we want to ensure farmers get the support they need," said Nyagah.

To qualify for the loan, farmers would have to deliver milk to New KCC, which will facilitate the repayment of the loan by channelling the farmers milk proceeds through Co-operative Bank. On its part, CIC will insure the cows at a four per cent premium value.

He was accompanied by New KCC acting Managing Director Milcah Mugo, CIC Managing Director Nelson Kuria and Co-opeartive Bank Director in charge of Banking Division Zacharia Chiande.