It is time the State returned New KCC to farmers

By James Bett

The history of Kenya Co-operative Creameries (KCC) goes back to the colonial days with the first creamery at Kipkelion. It is this first dairy, organised by the colonial farmers, that eventually became KCC.

After independence, the African dairy farmer took over and for many years, just like Kenya Farmers Association, KCC was a success story. Many Kenyans today are in good jobs, educated, and have constructed beautiful houses with income from KCC.

It was therefore sad to see KCC being mismanaged until it collapsed in the 1990s. Its collapse led to a total collapse of local economic activities. Many dairy farmers were not paid for the milk that they had delivered. These negative effects were mainly felt in the Rift Valley and Mt Kenya regions and to a lesser extent in Kisii and western Kenya.

The small group that bought KCC from the KCB receivers did little to recreate the ‘good old days’. Instead, KCC 2000 sacked many members of staff, and reduced milk intake substantially. This coincided with the liberalisation of the sector. Whereas in Mt Kenya we saw the development of strong co-operative milk processors in Meru and Kiambu, the same did not happen in the Rift Valley. Rift Valley did not also see the arrival of private sector processors. That made the area suffer even more.

The collapse of KCC therefore saw prices go down but the private processors were happy in this environment because they made huge profits at the expense of farmers. One of the first steps that the Government undertook was to reclaim KCC 2000 assets and made it a parastatal. It was, however, always understood that once it stabilises, the now renamed New KCC would revert to farmers.

New KCC has been a great success as prices of the milk paid to the farmers rose substantially, paid dividends to Treasury and has helped the sector grow substantially. A successful New KCC is important for stabilising the sector, and indirectly influencing the payment of better prices to the farmers.

It is for all these reasons that Kenyan dairy farmers are watching how privatisation of New KCC will progress. Following the milk glut crisis earlier this year, farmers have panicked in case New KCC were to collapse yet again. The memory of earlier failure is still fresh. Co-operatives Minister Joe Nyagah and the Treasury must take the concerns and fears of the dairy farmers as they begin to privatise. Most farmers do not want New KCC privatised; we want it returned to us. We are willing to pay back what we believe belongs to them. New KCC has paid back interest in form of Sh80 million that has been paid to the Treasury as dividends.

That is why the proposal for the New KCC to be owned by dairy co-operative societies and unions makes much sense. We would also know that a small group, such as the KCC 2000 one, would never again destroy our company. The Government should assist farmers and organise a special national investment co-operative union that would buy New KCC from the Treasury.

Some may wish to buy shares as individuals. The only restriction would then have to be a limit to the number of shares the individual could own.

Such a privatised New KCC might find that it is in its interest that some of the shares are left with the Government. The Government, since the public owns it, could use such a company, for implementing the latter’s policies. It is sometimes difficult to implement Government policy through a private company.

Finally, New KCC must be restructured before reverting to the farmers. It must get a new strong management team, one that can compete with private milk processors. Once this is done, KCC will continue to play a key role in our economy. We should see poverty come down. We should see co-operative movement begin to play the key role that it should in reducing the income gap between the rich and the poor.

The writer is a milk farmer