New KCC feels the heat over spilt milk

• Farmers currently hit hard by glut fear firm could take industry back to the dogs

Farmers are up in arms over the decision by New Kenya Cooperative Creameries (New KCC) management to turn away milk suppliers due to a production glut.

The move has seen thousands of litres of the product go down the drain, literally.

Milk supply has in recent weeks outstripped the local processing capacity, causing farmers who had embraced dairy farming enthusiastically following the revival of the New KCC to suffer huge losses.

The situation has also led to a slide in the price of the commodity, dealing another blow to farmers.

Gilbert Onyancha, a farmer from Kimumu in Eldoret, who keeps eight zero-grazing animals, criticised creameries for poor planning and management which had eaten into profits. He said farmers had suffered for a long time due to low prices.

The New KCC has previously been viewed as one of the success stories of the Kibaki administration. In 2002, the country’s milk output stood at 2,811,950 litres daily with many farmers keeping off due to poor prices.

After New KCC’s revival, dairy farmers who had abandoned the trade resumed rearing dairy cows and, by 2007, milk production had reached 4,230,000 litres according to Kenya Dairy Board.

The price of a litre of milk rose from Sh8 to a high of Sh24 late last year before falling to Sh20 last week which is still considered by many farmers as a good price.

New KCC enjoys 40 per cent market share while the other 60 per cent is shared out by other processors and hawkers.

During its revival stages, the once vibrant creamery carried out campaigns to increase milk production.

Last week, New KCC chairman Matu Wamae said they were receiving more milk than they could process.

“We never expected production of milk to increase to this level. We are now overwhelmed,” he said.

Mr Wamae attributed the increase to the El-Nino rains experienced in the country from October last year to the first two weeks of January.

New KCC, he said, has been receiving an average of 680,000 litres of milk per day up from 400,000 litres against a processing capacity of 550,000 litres a day.

“Every day we are getting an excess milk intake of 130,000 litres,” Mr Wamae said.

In an interview with the Sunday Nation, former New KCC director Timon Busienei, who is also a large-scale dairy farmer, said the recent three-day closure reportedly to service machines might not have been genuine but a trick by management to reject milk from farmers.

Mr Busienei said the closure cost farmers about Sh60 million.

“We haven’t reached our peak season of April to June and farmers should brace themselves for the worst if this is the way the management is behaving,” he said.

Mr Busienei said the firm is supposed to act like National Cereals and Produce Board, which cushions farmers from exploitation.

“They should wake up from their dreamland and guard farmers against exploitative private dairies because we have increased our capacity threefold,” Mr Busienei said.  

He blamed the current milk glut on the fact that New KCC has not ventured much into long-life product processing, a situation he says could throw the dairy industry back to the dogs.

He said long life product processors can consume 530,000 litres per day to produce products with a shelf life of over one year. Milk products with a longer shelf life include milk powder, the ultra-heat treated milk popularly known as UHT, cheese, butter and sour milk (mala).

He said New KCC has three UHT milk plants alone with a processing capacity of 300,000 litres per day. The biggest UHT plant in Eldoret with a capacity of 140,000 litres per day has not been operational since the firm was revived.

A source familiar with the dairy business said the firm had yet to fully exploited its Middle East export market.

Mr Reuben Chesire, the former KDB chairman who has since died, once suggested that the school milk programme be revived so as to cushion farmers from massive losses in the event of a glut.