Ruto orders New KCC to pay farmers Sh50 per litre of milk

Workers at the New KCC processing plant in Eldoret, Uasin Gishu County. The government will spend Sh5 billion to modernise the firm's facilities across the country. [Christopher Kipsang, Standard]

President William Ruto has directed New KCC (Kenya Co-operative Creameries) – the State-run milk processor – to increase the amount it pays farmers for raw milk to Sh50 a litre effective March 1. 

This is a boon for dairy farmers and is likely to spark a price war among dairy companies as they woo farmers for milk supply. 

The companies currently buy milk from farmers at about Sh35 per litre. Prices had hit a high of Sh45 a litre last year as the prolonged dry spell hit the sub-sector hard, but milk production has since gone up following the rains, resulting in a drop in prices that firms pay to farmers. Retail prices have, however, remained up, with a litre going for Sh120 for most brands currently.  

The President, who spoke when he launched New KCC’s modernised processing facility in Nyahururu on Wednesday, also said dairy farmers who supply the State-run processor with milk would no longer experience delays in getting their dues and would be paid every 15 days. 

“From July 1, farmers will be paid every 15 days. This is how we will eliminate milk hawking, which arises when farmers are not paid for two to three months,” said Dr Ruto. 

He added that prices would remain constant at Sh50 and not fluctuate due to changes in weather patterns. The President also said the government would come down hard on companies that have been distorting the local milk market through irregular imports of milk powder that is then converted into fresh milk, packaged and sold locally.

He noted this has been locking out many Kenyan farmers from the formal market. 

“To the unscrupulous people who have been importing milk powder and coming to destroy the market for our milk, I have given firm instructions to the DCI and the dairy board to make sure that all smugglers – whoever they are, however powerful they may be – we must deal with them firmly and decisively,” said Ruto. 

“Our farmers must be protected from unscrupulous business people who are looking at their own benefit and not at the greater good of our farming industry. The industry employs many people and puts money in the pockets of many people. When a person imports milk powder from another country, they destroy the businesses of our farmers and cause losses for many of our youth.”

He made the remarks as the Agriculture Ministry Thursday said it had seized a consignment of illegally imported milk powder with an estimated market value of Sh35 million. 

Cabinet Secretary Mithika Linturi said such goods pose unfair competition to locally produced as well as imported dairy products as they retail at cheaper prices. 

The Ministry said it had taken samples for analysis by the Kenya Dairy KDB Board and Kenya Bureau of Standards (Kebs) laboratories and if adulteration, contamination or fraud is proven, charges will be preferred on importers by relevant agencies as this predisposes the public to grave health concerns.

The President said the government would spend Sh5 billion to modernise New KCC to enhance its efficiency to meet the needs of farmers.

This will enable the firm to upgrade existing facilities and set up new processing plants across the country. He said the goal of bolstering KCC's processing capacity is to ensure it handles the entire volume of milk produced by farmers.

“Investing in agriculture is the best way to create wealth and expand opportunities for the people and reduce the cost of living and food,” he said.

The Kenyan milk market has through the years been at the mercy of the weather, with prices paid to farmers as well as what consumers pay being dictated by the season. 

Prices go up during the dry seasons but drop sharply during the rainy seasons. Farmers have in the past been turned away with their milk by the processors during the rainy season, leading to an oversupply. With nowhere else to take the milk, they are at times forced to pour it down the drain. 

This has, however, improved slightly in the recent past as dairy firms develop the capacity to convert fresh milk into powder whenever there is a glut and convert it to milk during seasons when supply from farmers is low.

Farmers through their cooperatives say they are at the moment producing much more than the processors can absorb.