About 130,000 farmers who are owed Sh500 million by the Kenya Cooperative Creameries will be paid before the end of this month, the dairy firm has announced.
New KCC has promised to settle the debt in two phases. The first disbursement of Sh368million starts at the end of March. The remaining amount will be settled before the next financial year which starts on July 1.
The New KCC Chief Executive Officer Nixon Sigey said disbursement of the cash, which was released to the company by the Treasury, had been delayed by the need to verify the list of debtors.
“The validation process has caused the delay since we want to ensure genuine people are paid. We conducted a rigorous verification with the various county cooperative departments since their dues date back to 20 years ago,” he said on Wednesday.
Payment of the decades-old dues is intended to encourage farmers to supply New KCC with milk.
“The payment will motivate farmers to have confidence in the processor… farmers who have not yet registered are encouraged to do so to be considered in the payment of the monies,” he said in an interview.
Mr Sigey noted that the beneficiaries include dairy farmers, transporters and co-operative movements that delivered milk in the late 1990s before the old firm went under.
President Uhuru Kenyatta while touring the North Rift last year said the government was committed to settling the debts following a promise he made to do so the previous year.
In 2016, Parliament approved the amount in the budget.
The President had said the farmers would get the money by January this year.
“We put money into New KCC this year to ensure the dues owed to farmers are settled. The government has already allocated the money so that farmers can continue with their investment. The list is there and, by January, we will ensure the beneficiaries get their dues,” said President Kenyatta in last November.
Many farmers have welcomed the decision by the government to settle the debt, saying it will help them improve production.
Mr David Chombet, a dairy farmer from Uasin Gishu County said that with the money they will expand their dairy farming.
“This will encourage farmers to invest in the dairy sector,” he said.
The previous KCC collapsed in 1999 due to financial mismanagement. It was later placed under receivership, until the Narc administration took over its control in 2003, turning around its fortunes.
Mr Sigey said the company plays a crucial key role in stabilising milk prices.