The New KCC is struggling financially and is on the verge of collapse. This has emerged as tens of farmers come out lamenting that the milk processing company has not paid them for months.
According to reports, the New KCC has pending arrears of up to Sh300 million stretching for up to four months. Among the hardest hit farmers are milk suppliers in Nakuru, Nyandarua, Trans Nzoia, Uasin Gishu, Nandi, Kericho and Narok counties.
“KCC is currently struggling to pay farmers for milk supplied, and the government is working on a privatization programme to solve these challenges,” said the Cabinet Secretary for Co-operatives Wycliffe Oparanya.
The crisis at KCC has been worsened by debts that various government institutions and departments have not settled. For instance, the Ministry of Defence and the Administration Police Service are the largest debtors. They owe the New KCC Sh49.49 million and Sh32.38 million respectively, according to documents that were tabled before the National Assembly Committee on Trade, Industry and Co-operatives.
The Kenyatta National Hospital (KNH) owes the factory Sh14.98 million. State House owes Sh14.62 million. At the same time, the National Security Intelligence Service owes the factory some Sh4 million while the Nairobi Water and Sewerage Company owes the factory Sh2.27 million.
There is also an unpaid debt of Sh52.24 million that other government agencies owe the factory.
According to CS Oparanya, the government is now considering privatizing the factory in what he claimed is a bid to improve efficiency and productivity, and address farmers’ financial concerns.
Formerly known as KCC, the milk processor had collapsed in 1998 following years of persistent abuse, including cash flow problems and mismanagement. In 2000, the government of the late former president Moi sold the company to a group of private investors at a throwaway price of Sh447 million. This was despite KCC having a market valuation of Sh2 billion.
The new private investors, however, were unable to revive it. In 2003, the then new government of late former president Mwai Kibaki bought the factory at Sh547 million and managed to revive it.
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