Government releases Sh500 million to new KCC

Government has provided New Kenya Cooperative Creameries (KCC) with funds to mop up the excess milk currently being experienced in the country due to effects of El Nino rains

The first installment of Sh500 million has been wired to KCC to enable New KCC purchase the surplus milk, convert it to milk powder and store the surplus milk as part of the strategic food reserve, and hence even seasonality in supply.

In a press release Tuesday evening, Cooperative and MSME Cabinet Secretary Simon Chelugui said the rains are expected to result in a surplus of over 50 million litres of milk between now and January 2024 and added this is over and above the normal production which unless processed into milk powder will go to waste.

“The mopping up of this excess milk has a financial implication of an estimated Sh1.5 billion, which will go towards the purchase of the surplus milk from the farmers,” Chelugui explained.

He added that this support will act as a stabilisation fund to ensure farmers have a market for their produce and that there are no losses at the farm level, and by extension, the entire value chain benefits from the interventions thus leading to milk price of a minimum of Sh45 per litre for the time being.

Chelugui in the statement said that the government continues to support the moderation programme to enhance processing capacity and efficiency and ensure New KCC continues to perform this critical strategic role.

He added that the government has also earmarked Sh3.8 billion to carry out modernization programmes in Runyenjes, Mogotio, Kabianga, Narok and the upgrading of Dandora, Miritini, Eldama Ravine, Eldoret, Sotik and Kitale Plant as phase III.

This he said is after Phase II which included Nyahururu, Kiganjo and Nyambene which are all complete and ready for commissioning.

In addition, Chelugui said that the government has also introduced subsidy programmes on BT cotton seeds and fertilizer, which indirectly support dairy feed production in the form of cotton seed cake, hay and silage.

“Animal feeds account for approximately 60 percent of the total cost of milk production and the government has removed taxes and levies on imported raw materials for animal feeds, which will lower the cost of production”, Chelugui said.

He assured dairy farmers of the government’s support and commitment to ensure that the dairy industry continues to be stable in line with BETA for the good of the dairy farmers, consumers, and many other stakeholders along the dairy value chain

The total annual milk production in Kenya is approximately 5.2 billion litres, of which 3.9 billion is cow milk, 1.1 billion litres is camel, 0.28 billion litres goat and 0.067 billion litres is sheep milk.

The dairy industry accounts for 14 percent of agricultural GDP, approximately 30 percent, which is between 1.5 and 1.8 million litres per day, processed by the over 35 registered processors, and 70 percent goes through the informal markets of hawkers and domestic use.

Kenya’s dairy industry also supports smallholder dairy farmers who own between 1 and 3 cows, estimated to produce about 80 percent of the total milk, and benefits over 4 million people along the dairy value chain.

The milk per capita consumption in Kenya is 78 litres, down from 110 per year, the highest in Sub-Saharan Africa compared to Uganda at 65 litres.