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Showdown looms over planned sale of New KCC

BUSINESS
By Jackson Okoth | July 29th 2013
New KCC Chairman, Matu Wamae. [Photo:File/Standard]

By Jackson Okoth

Kenya: A legal battle is looming between farmers and the Government over the ‘actual’ ownership of the milk processor, New KCC.

The privatisation of the giant milk processor — currently estimated at Sh5.8 billion — is on the cards and is only awaiting Cabinet nod and gazettment.

This has, however, left a section of dairy farmers uneasy and calling for a resolution on pertinent issues before selling it. Last week, farmers in the North Rift petitioned the Government to initiate sale of the milk processor to its members.

Through their representatives, the farmers also demanded full disclosure of current status of the company in terms of properties, assets and liabilities before handing over the company. A director with Kenya Farmers Association, Kipkorir Menjo, expressed fear that the Government was scheming to sell the milk processor to some influential individuals keen to create a monopoly in the dairy sector.

However, Agriculture Secretary Felix Koskei only asked for more time to consult before taking any action. The State bought back the dairy firm, then known as KCC, in 2000 by injecting Sh547 million into its operations. In writing this cheque, however, the Government did not address the fate of some farmers who held part ownership in the processor at the time.

Now that it is becoming clear that the ownership of the New KCC is firmly in the hands of Government, there is confusion as to the state of farmers holding worthless shares certificates.

According to Dr Kipkirui arap Lang’at, Managing Director, New KCC, it is only a matter of time before a decision is made to sell the processor. “We remain on the queue of those state corporations slotted for privatisation,” he said.

Proposed process

He added however they are yet to receive directions from the Government on the proposed process.In what is certain to leave farmers with the short end of the stick, Dr Lang’at reiterated that the New KCC is a parastatal and “it is upon the Government to decide what to do with it.” 

While farmers have been urging the Government to give this dairy firm back to them, the legal conundrum surrounding this transfer is little understood by mostly the farmers.

Perhaps in a fall back plan, farmers have been urged to form larger milk co-operatives to enable them buy a stake when the firm is eventually privatised.

“Dairy farmers should mobilise and merge their milk co-operatives instead of expressing fears on privatisation of New KCC. This is the only way they can increase bargaining power and ensure good prices for their deliveries,” said Lang’at.

In recent weeks, all major milk processors have increased retail prices of their products, including fresh milk, which now retails at between Sh40 and Sh45 per half litre packets.

—Additional reporting by Edwin Cheserek.

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