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New KCC in Sh1bn upgrade as it eyes markets abroad

Milk processor New KCC is modernising its equipment at a cost of Sh1 billion in readiness for a foray into more foreign markets.

On its radar is South Africa, the Democratic Republic of Congo and the Arab world.

“This year alone, we will have spent Sh700 million to replace obsolete machines in our factories to enhance capacity.

“We started in Nyahururu and Dandora with Sh300 million and Sh400 million for the Eldoret factory,” said Mr Nixon Sigey, the New KCC managing director when he inspected the new machines at the Eldoret factory last week.

Other plants which will benefit from the modernisation programme are Nyahururu, Dandora Kitale, Kiganjo and Sotik.

The firm said the two-year programme, which begun in 2016, seeks to increase its processing capacity and curb wastage during oversupply.

READ: New KCC to finally pay 100,000 farmers their dues owed for decades

Bulk milk

“With this increased volumes we want to assure farmers of market for this bulk milk. Already our products have penetrated Tanzania, South Sudan and Somali markets.

“We are also eyeing the Middle East market especially with the ghee and butter products as well as Southern Africa especially the Congo with huge market,” he said.

The new equipment will process raw milk into instant powder, long life milk for the UHT category for the Eldoret factory while Dandora will handle fermentation of raw milk into yoghurt and mala products.

“We want to also meet the consumer preference since our yoghurt brand is really growing.  We have witnessed increased milk production in the country. But we lacked enough capacity to process most of it,” he added.

The milk firm said the upgrade is expected to increase the farmers’ pay from Sh2.5 billion in 2015 to Sh6 billion in the next financial year.

Mr Sigey said the Eldoret factory had recorded increase in milk intake from 150,000 litres a day and this is expected to double with the installation of new equipment in the next month.

READ: Milk price rises as production cost shoots up on drought

Increase capacity

New KCC has the capacity to process 1.4 million litres daily and with the installation of the equipment, he said, this is expected to increase uptake and reduce the amount of unprocessed milk going to the informal market.

The MD said the processor has increased the number of contracted individual farmers and co-operatives that supply milk from the previous 60,000 to 80,000. The firm is targeting 100,000 suppliers by end of the year.

“We want to encourage dairy farmers to produce more milk. The challenge in the past has been feeds and in the last two months milk supply has dropped by 30 per cent due to drought. We have been training farmers on feeds preservation,” said Mr Sigey.

The MD said the firm was installing state-of-art equipment in the factories to enhance production efficiency.

Recent data from the Ministry of Agriculture revealed that the government’s commitment to drive the dairy sector’s growth had seen upward rise in the amount of milk delivered to milk processors from 541 million litres in 2014 to 600 million litres in 2015.

Kenya Dairy Board, the industry regulator, estimates that overall milk production increased to 5.2 billion litres in 2015.

“In all our networks across the country, currently we have the capacity to hold to 1.4 million litres in a day.

“The farming community had earned Sh2.5 billion to Sh4.5 billion so you can see the kind of benefit this institution has been to farmers,” said the MD.

The provision of milk coolers and affordable artificial insemination services by county and national governments have contributed to the rise in the amount of milk.

New KCC predecessor was placed under receivership due to massive financial mismanagement.

READ: New KCC will not be sold, farmers assured

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