House probe blames KCC for milk glut

Thursday February 25 2010

The committee chairman, Mr John Mututho, said the probe had stumbled upon “incompetent handling of the milk crisis” by managers of the state-owned New KCC, which further aggravated an already bad situation.

Committee chairman, Mr John Mututho, said the probe had stumbled upon “incompetent handling of the milk crisis” by managers of the state-owned New KCC, which further aggravated an already bad situation. Photo/FILE 

By BENJAMIN MUINDI

Managers of the New Kenya Co-operatives Creameries should be sacked for poor handling of the crisis in the dairy sector.

In an apparent change of tune over the glut that has led to wastage of millions of litres of milk, Parliament’s Agriculture committee this week said investigations had revealed that the crisis was not occasioned by excessive importation of dairy products — as had been earlier argued —but by poor management of the industry.

The committee chairman, Mr John Mututho, said the probe had stumbled upon “incompetent handling of the milk crisis” by managers of the state-owned New KCC, which further aggravated an already bad situation.

Speaking at Parliament buildings on Wednesday evening, the Naivasha MP tabled documents that showed the claimed importation of dairy products, which stood at just 1.5 per cent of Kenya’s milk production, had not increased substantially enough to kill demand for locally produced milk.

Supported findings

And on Thursday, the Kenya Dairy Board (KDB) supported the findings of the committee, saying imports did not, in any way, occasion the glut. “The crisis has been due to overproduction, which has outstripped the processing and marketing capacity of our processors,” said KDB chairperson Martha Mulwa.

“All imports and exports are well documented and controlled. We are working closely with security and other government agencies to prevent and apprehend any culprits who may decide to illegally import the commodity through our porous borders.” Ms Mulwa spoke at a Press conference called after a day-long crisis meeting by the board members in Nairobi.

According to KDB, 1.4 per cent of the milk imported into Kenya is due to the lack of specialised capacity by processors to manufacture certain milk products, and the various dairy products imported in 2009 did not have a significant negative impact on local dairy production.

“In fact, the importation had the reverse positive impact in the country by sustaining the demand for milk and its products during the long dry spell last year,” said KDB chief executive officer Paul Gichohi.

KDB said the quantities imported were insignificant, catered for special markets like tourism and refugees, and were mostly restricted to specific products. “Therefore the blame lies squarely on the managers of two stations of the New KCC — at Ol Kalau and Nyahururu — who triggered the crisis,” summarised Mr Mututho.

The MP said the two stations failed to direct some 25,000 litres of to other stations that had the capacity to process it when the crisis started. But the New KCC chairman Matu Wamae dismissed Mututho’s claims of incompetence and lack of forethought among his managers.

“We had forecast that, after the El Nino rains, milk production would hit 550,000 litres a day, but that figure increased to 700,000 litres,” he said. However, this defence may come too late since the Agriculture committee has already directed Co-operatives minister Joseph Nyaga, under whose docket the new KCC falls, to sack the managers.

“Kenyans are suffering as a result of their (the managers’) poor show in the handling of the crisis,” said Mr Mututho. The probe also revealed that New KCC has been struggling to regain the export markets it lost in the 2008/2009 financial year as a result of drought and the country’s volatile political climate.

The company has since posted export managers in Tanzania, Uganda, Rwanda and Burundi in an effort to reclaim its position as a regional supplier. At the same time, the firm is also sourcing for a new director to steer it through the tumultuous times, a prospect that may receive a Sh2.4 billion boost if plans by Co-operative minister Joseph Nyaga to rescue the industry get Cabinet’s approval.

New KCC will receive the bulk of the cash to make powered milk, build a UHT plant and stock the national strategic food reserve. Just a few days ago, the government approved another Sh300 million funding of the sector to improve its processing capacity, but officials claim the money has not been released yet.

Mr Nyaga also believes the current KCC board and management do not have the capacity to handle the task at hand. This came to the fore when he faced the Agriculture committee early this month, and faulted both the management and the board for narrowing their focus on a Sh500 million profit for the firm.

In an earlier interview with the Nation, Mr Nyaga said that, before the current crisis, he had engaged in a protracted argument with the board over the need to look at the long-term picture of the industry. “But their concentration on the half a billion shillings was so huge!” he said.

His claims were, however, refuted by Mr Wamae, who said the firm had already invested in a drier for processing an extra 300,000 litres, mainly for export, despite the fact that no aid was forthcoming from the government. As the boardroom games and counter-accusations continue, farmers forecast an even greater crisis in May and June if nothing is done, and done quick, to prepare for another flood of milk from the country’s farms.