Minister accuses New KCC of sabotage

The milk glut among the country’s dairy farmers is due to “sabotage and deliberate incompetence” of the managers of the New Kenya Cooperative Creameries, a Cabinet minister said Thursday.

Speaking at a meeting with Parliament’s Agriculture Committee in Nairobi’s County Hall, Co-operatives Development minister Joseph Nyaga accused the managers of KCC of “misleading” the board on the “true picture” on the capacity of the company.

The minister said the managers had withheld some crucial information from the board leading it to make ignorant decisions in the industry. He thus said that he had changed the board and that was why he had discovered the managers’ incompetence.

Besides the incompetence, Mr Nyaga said, the unregulated imports of milk powder had also slowed down the uptake of milk from local farmers by the local companies.

“We have to curtail all the legal and illegal milk imports because the milk powder from the European Union is very cheap and our products cannot compete,” Mr Nyaga said. He added that this happened because of dairy farming in the EU were highly subsidised.

The minister vowed to sack all the managers at the parastatal for doing shoddy work, as it emerged that the sabotage was due to succession battles in the KCC management.

“I will do what it takes, I will sack people,” the minister said. “There has been speculation that I will confirm the acting managing director, that’s not true. The recruitment process has to go on.”

The chief engineer at the firm will be the first to go, the minister said, for he led in the procurement of a Sh73 million milk-processing machine. The machine bought last year, the committee heard, has only been working for six hours a day before breaking down.

“I am frustrated with the engineer,” the minister said.

The committee members declared the engineer incompetent and called for his sacking “since he can’t handle a power surge.”

“Why can’t they repair it (the machine) or return it to the manufacturer when the warranty is still active?” posed committee chairman John Mututho (Naivasha MP, Kanu).

But even as the minister laid the blame on the managers, the former MD Francis Mwangi, whose contract was not renewed, was also blamed for “frustrating” the minister.

Mr Nyaga has been on the spot over the over-supply of milk, which has made many farmers to pour away their milk.

On Thursday, he turned the heat on Mr Mwangi and the board chairman, Mr Matu Wamae, for “wrong decisions”. He said that when he asked the board to expand the capacity of the plant, they refused saying “they were ready for El-nino.”

He blamed the chairman for making “executive decisions” in early 2008 which limited the profits for the parastatal. This changed, Mr Nyaga said, when he appointed new directors to the board.

Thus the minister, who said he has been under pressure from the President and the Prime Minister over the crisis, added that he needed Sh600 million to end the crisis.

“That money was diverted to import maize last year and now we need it,” said Mr Nyaga.

At least 317,000 litres were poured away by the company on Wednesday after the milk went bad. Farmers are also being turned away from KCC’s depot with many of them pouring milk at the gate.

Mr Nyaga told the committee that the managers had panicked after the “farmers made noise” and are now acting to restore the workings of the firm. However, he insisted that KCC was not to be blamed as the other milk producers were also turning farmers away.

“I have instructed the board to meet every week until the situation stabilizes… I have issues with the management,” he said. Normally, the board meets once every quarter.

Similarly, the minister said the board had already picked Deloitte &Touche to recruit a competent Chief Executive.

This comes a day after the Agriculture Committee met Mr Mwangi to probe the circumstances under which his three-year contract was not renewed.
The minister maintained that Mr Mwangi had failed in team building and thus was not fit to lead the organization. He said a full report was being compiled by the Inspectorate of State Corporations on the abuse of office perpetrated by the former KCC boss.

The committee and the minister agreed that the management had lied to the board, which in turn lied to the minister, and thus the managers had to be disciplined.

Farmers in the North Rift, the minister said, were looking at the milk glut as an avenue through which he was running down the company, to lower its value and then sell it off at a throw-away price.

“That’s not true, the farmers will have to get the first priority in the upcoming sale of KCC,” he said. The sale was announced in this year’s budget and has to be executed within the year.