State releases Sh500m for buying excess milk

Treasury has released to the New Kenya Co-Operative Creameries (New KCC) initial capital of Sh500 million to finance mopping up of the excess milk in the market.

The money is part of Sh1.5 billion the ministry has requested from the exchequer to enable the NKCC handle the excess milk in the market. Co-operative and micro, small & medium enterprises (MSME) development Cabinet Secretary Simon Chelugui confirmed that the money has been disbursed to the processor to start procurement of the surplus milk.

Chelugui who spoke last Tuesday during a press conference with milk suppliers of NKCC said the money will enable the processor to stabilise milk price at a minimum of Sh45 per litre from farmers.

He said 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.

“In view of this, the government has taken El Nino rain’s effects on the dairy industry seriously and has now provided New KCC with funds to mop up the excess milk during the season, with the first instalment of Sh500 million being released immediately,” said Chelugui.

The money, he explained will enable the processor purchase, dry into milk powder and store the surplus milk as part of the strategic food reserve, and hence even seasonality in supply. The surplus milk produced and stored will be available to the market during low seasons, thereby stabilising the milk supply in the market.

He added: “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.”

Normal production

The rains are expected to result in a surplus of over 50 million litres of milk between now and January 2024. This is over and above the normal production which unless processed into milk powder will go to waste.

New KCC Managing director Nixon Sigei hailed the government, saying a lot of excess milk will be saved from waste. “With the support, NKCC will even receive milk from non-affiliated farmers currently supplying to private processors and thus save the country from huge wastage of milk,” he said.

Ann Wacira, a supplier of milk to NKCC called on the Government to extend the period to March 2024 as the El Nino rains are likely to extend up to the first quarter of 2024.

“Government needs to expedite the processor modernization so that in future the institution can have enhance capacity to handle all the excess milk in the market,” she said.

Chelugui confirmed that the government will continue to support the NKCC modernisation programme to enhance processing capacity and efficiency.

He said in the 2023/24 and 2024/25 financial years, government will provide Sh3.8 billion to the processor to undertake modernisation programmes in Runyenjes, Mogotio, Kabianga, Narok and the upgrading of Dandora, Miritini, Eldama Ravine, Eldoret, Sotik and Kitale Plant as phase III.

“Phase II which includes Nyahururu, Kiganjo and Nyambene are all complete and ready for commissioning,” Chelugui added.