Kenyan Government Announces Sh2.5 Billion Upgrade for New KCC and Milk Price Stabilization Fund

Naivasha, Kenya – In a significant move to bolster the dairy sector, the Kenyan government has announced a Sh2.5 billion modernization and expansion program for the New Kenya Co-operative Creameries (KCC) plant and equipment. This initiative is set to dramatically increase the factory’s processing capacity, benefiting dairy farmers across the country.

According to Kenya News Agency, speaking at a Cooperative Leaders forum in Naivasha, the government is committed to transforming the dairy subsector, recognized as a key value chain within the Bottom Up Economic Transformation Agenda (BETA). The New KCC’s processing capacity will be increased from 300,000 to 800,000 liters per day, marking a significant upgrade in the factory’s capabilities.

Additionally, the government plans to establish a milk price-stabilization fund, executed through New KCC, with an allocation of Sh3 billion. This fund aims to stabilize milk prices in the market amidst an expected glut due to favorable weather conditions boosting production. The funds will be utilized to mop up excess milk from farmers, converting it into long-life products for storage in the Strategic Food Reserve, thus ensuring a stable market price and good returns for farmers.

Chelugui highlighted the current challenges facing processors, including a high supply of milk that surpasses the intake capacity of factories. The stabilization fund will play a crucial role in ensuring all milk from farmers is collected, thereby supporting the dairy industry.

The government is also considering the provision of milk coolers to dairy farmers through their cooperatives under the New KCC’s auspices. This initiative coincides with President William Ruto’s directive to increase the price of milk from Sh42 to Sh50, aiming to benefit dairy farmers.

The President’s recent meeting with dairy stakeholders addressed various sector challenges, including high breeding costs, disease prevalence, expensive animal feed, limited value addition, post-harvest losses, and low market access. The New KCC is tasked with stabilizing both producer and consumer milk prices by efficiently managing milk surpluses during the glut period.

Daniel Marube, Executive Director and CEO of the Cooperative Alliance of Kenya, emphasized Kenya’s potential to increase dairy milk production. He urged dairy cooperatives to focus on improving the quality and quantity of milk through animal upgrading. The cooperative leaders also called for subsidies on animal feed to reduce costs for farmers.

Ambrose Koech from K-Piller Sacco in Bomet County appealed to the government for subsidies on animal feeds and for streamlining the milk market to ensure fair pricing and avoid exploitation by middlemen.

The Cooperative Leaders meeting was an opportunity for government officials and cooperative leaders to review the performance of the cooperative sector and discuss ways to enhance the dairy industry’s prospects.

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