Govt Pushes New KCC Privatisation to Solve Farmer Payment Crisis

The government is preparing to privatise the New Kenya Co-operative Creameries (KCC) to address persistent problems in paying dairy farmers and to boost milk production.

According to the Cabinet Secretary for Co-operatives and SMEs, Wycliffe Oparanya, KCC has been struggling to pay farmers for milk supplies, which has negatively affected production. He revealed that the government is working to clear the millions owed to farmers.

“KCC is currently struggling to pay farmers for milk supplied, and the government is working on a privatisation programme to solve these challenges,” he said.

The government has committed to restructuring KCC to improve efficiency and financial stability. Oparanya explained that reforms are being carried out under the Bottom-up Economic Transformation Agenda, including reviewing staff structures and implementing a pay farmers first policy to ensure timely payments.

Farmers, however, have expressed concerns about the privatisation plan, especially in the Rift Valley, insisting that they should retain ownership of the company through shares.

They argue that government ownership should be converted into farmer-controlled shares rather than sold to private investors.

KCC also faces challenges with outstanding debts from government agencies, which total over Ksh 180 million and hinder its ability to pay farmers.

Additionally, there are unresolved claims from former employees of the defunct KCC, which the new company is not legally obliged to pay. An inter-ministerial committee has been tasked with verifying these claims.

Beyond KCC, the Ministry of Co-operatives is implementing broader sector reforms. The registration of new SACCOs has been suspended due to financial instability, and the Cooperative Bill, pending for years, is expected to become law soon. Once enacted, the law will address governance and financial mismanagement in the sector.

On coffee, Oparanya said production is expected to rise from 50,000 to 150,000 metric tonnes by 2029. The Principal Secretary for Co-operatives, Patrick Kilemi, noted that only 4,900 of over 30,000 SACCOs have filed returns in the last three years, and the Ministry plans to remove the rest from records.

“Some of these Saccos have failed to file audited returns for years … it’s time we acted,” he said.

The Commissioner for Co-operatives, David Obonyo, emphasised the Ministry’s commitment to supporting the sector to increase productivity.

He noted that the coffee sector is already benefiting from better pay for farmers after many years of challenges.