Ruto promises to clear about KSh400m owed to New KCC milk farmers this month

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President William Ruto says the government will pay off about KSh400 million that New Kenya Co-operative Creameries (New KCC) owes dairy farmers by the end of October, and that the processor’s factories will start managing their own money.

Speaking in Kapsabet, Nandi County, on Sunday during a tour carried live on State House channels, Ruto said some farmers who supply New KCC had gone two to three months without pay. He put the arrears at about KSh400 million and said every farmer would be paid what they are owed.

He added that farmers should in future be paid for their milk before the fifth day of each month, so that fresh arrears do not build up.

Factories to run their own books

The President said New KCC had for a long time been run from its Nairobi headquarters, which used milk revenue to settle debts and supplier bills that farmers did not understand. Under the new arrangement, each factory will manage itself, in a model he compared to tea and coffee factories.

Factory leaders would be held to account if payments stall, he said, and any officials who mismanage a factory could be replaced. Debts left at the headquarters would be handled at the national level so that factories do not inherit them.

Ruto did not say when the change would take effect, where the money for the arrears would come from, or whether the restructuring would change New KCC’s ownership.

Earlier payment promises

The pledge follows earlier commitments on how fast farmers are paid. At the commissioning of the upgraded New KCC plant in Nyahururu, Laikipia County, Ruto directed the processor to pay farmers KSh50 a litre and said the government was spending KSh5 billion to modernise it, according to the Office of the President.

“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,” he said at the time.

At the same event, the President said the government would help farmers get better animal breeds that need less feed, and would widen access to seasonal credit through the Agricultural Finance Corporation. “The government has allocated AFC KSh10 billion for this purpose,” he said.

By Ruto’s own account on Sunday, some suppliers are now waiting two to three months for their money.

Drought squeezes supply

The arrears come as a long dry spell cuts milk output across the North Rift. At Huruma Market in Turbo, Uasin Gishu County, milk vendor Amelia Cheptoo told the Kenya News Agency that she now buys milk at between KSh80 and KSh90 a litre, up from KSh50, and sells it at between KSh90 and KSh100.

“The cows are not producing as much milk as they used to, and dairy companies are not receiving much milk,” Cheptoo said. Her daily supply from farmers has dropped from 12 gallons to between eight and ten, and she has had to look for suppliers in other areas to keep her business running.

Formal milk deliveries to processors have also fallen, as BusinessRadar reported this week, leaving gaps on supermarket shelves. Farmers and traders are now counting on the October-to-December short rains to restore pasture and milk yields.