President William Ruto’s directive to the New Kenya Cooperative Creameries (New KCC) to pay farmers a minimum of Ksh50 and remit payments within 15 days is poised to exert additional financial pressure on the already struggling state-owned firm.

During his speech in Nyahururu on Wednesday, Dr Ruto instructed New KCC to implement a Ksh50 per litre payment for farmers starting next month.

Furthermore, the President mandated the milk firm to transition from monthly payments to remitting payments to farmers every 15 days.

This directive comes at a challenging time for New KCC, grappling with financial difficulties related to farmer payments and facing issues with the timely remittance of deductions to Sacco from its members.

The company has also faced challenges in providing medical benefits to its employees, who experienced a prolonged absence of a medical scheme until workers threatened to boycott. The management reinstated the scheme in response to the employee’s concerns.

In line with guidelines set by the Kenya Dairy Board, processors are expected to pay farmers a minimum of Ksh45 per litre, but many often pay as low as Ksh30.

The pricing dynamics, traditionally influenced by supply and demand forces, result in farmers earning more during low seasons due to market supply scarcity.

Dr Ruto announced a Ksh5 billion modernisation program for the processor, with plans to construct a state-of-the-art milk plant in Narok serving farmers in the south rift.

Additionally, New KCC will collaborate with an Indian company to locally produce milk packaging materials, aiming to reduce production costs and enhance farmers’ earnings.

To enhance competitiveness, the government will inject additional funds to assist New KCC in timely farmer payments.

President Ruto also indicated a shift toward quality-based payments in the future, encouraging farmers to focus on producing high-quality milk.