By: FRANCIS MUREITHI
What is your assessment of the dairy industry?
The industry is vibrant and playing a critical role in improving food security. Milk production stands at over 5.2 billion litres annually. Between 70 to 80 per cent of milk consumed in this country is produced by smallholder farmers. Consumption is growing by about 2.3 per cent annually. We are processing currently 1.5 million litres per day, which translates to an average of 600 million litres annually.
What can be done to lower the cost of production?
True, the cost of production in the entire value chain is high. As New KCC, we feel there are issues that need to be addressed urgently to manage the escalating costs. One thing that must be addressed urgently is the cost of feeds, which account for up to 60 per cent of production expenses. This is the reason why farmers are pushing for abolition of 16 per cent value added tax charged on raw materials used in the manufacture of feeds.
El Nino is here with us. What is your level of preparedness to handle the expected increased milk deliveries?
We’re ready for the heavy rains and I want to assure our farmers that we have enough capacity to process all the milk they will have this period. We have put in place the best infrastructure to process excess milk into powder to avoid glut. Our machines in Eldoret, Kitale and Kiganjo are in good condition, therefore, there is no cause for alarm.
We have set aside Sh400 million to modernise our Eldoret plant where we are installing new machines that will process more milk and enhance instant powder milk production.
Farmers are not happy with processors due to reduced milk prices. Why did this happen?
The dairy sub sector is a fluid industry that is strictly controlled by the cardinal rule of supply and demand and because of such market forces, the prices are likely to fluctuate. However, to ensure farmers are not exploited and to cushion them from unexpected price cuts, we are offering competitive prices to stabilise the market.
Our average producer price stands at Sh35. Future price increase will entirely depend on supply and demand forces. We value our farmers and we want to maintain the level of trust and confidence they have in us.
Farmers are pushing for the buying of milk based on the quality as opposed to quantity. What is the progress from your side?
We are not yet there but this is the way to go in the near future. We have started some programmes with our local and international development partners to sensitise and train our dairy farmers to start embracing quality because ultimately, in future payments will be based on quality and not quantity. It is a system worth investing in as farmers will rake in more money.
Some farmers were seeking to buy shares at New KCC. What is the progress of the eagerly awaited privatisation?
It is still on course and when the government will decide it’s ready to float the shares, our farmers who are major stakeholders would be advised accordingly and would be given the first priority. Our goal is to see farmers own this company and help it grow to the next level.
SOURCE: DAILY NATION