NAIROBI, Kenya, Oct 16 - The government has been urged to consider bailing out the troubled Kenya Farmers’ Association (KFA) and avert its imminent collapse.

New Kenya Cooperative Creameries (KCC) Chairman Matu Wamae said on Friday that the state should take over the running of the association which is currently faced with the threat of having its assets auctioned.

“They (KFA) have been facing a lot of problems so I think the best thing is for the government to take over and put enough resources (into it). Later, when it has been run properly, they can possibly sell it back to the owners again,” he said.

Nearly 100 core assets belonging to the association will be sold off if Barclays Bank and National Bank of Kenya banks make good their threat to auction them to recover a Sh516-million debt owed to them.

Although they have been unable to settle the arrears, farmers have maintained that they will not let go of their assets which include prime buildings saying that even though its run down, the association enables them to have easy access to farm inputs at affordable prices.

Mr Wamae however argued that saving the organization would be in the best interest of all stakeholders.
“If they do that, we will save the workers from being sacked, the business will continue and maybe the company will even expand,” he said.
The New KCC is itself a beneficiary of a government takeover and has been on a profitability path for the last six years.

Mr Wamae said they expect to make a profit of approximately Sh500 million for the year ended June 2009 and they were still pushing to have dairy farmers given priority to own shares once the privatisation of the New KCC gets underway.

The Chairman spoke during a press briefing to announce a 33 percent pay increment for the New KCC’s unionisable workers which will be spread out in two years.

During the briefing, the firm’s Managing Director Francis Mwangi projected that milk production in the country was expected to double to about 600, 000 litres per day with the onset of the El Nino rains.

With the rains, he said dairy farmers would have enough food for their cattle which would in turn increase production which has gone down by 30 percent due to the ongoing drought.

The manager however appealed to the government to fast track the development of infrastructure in the rural areas to enable farmers to delivery their produce without any inconveniences.

Mr Mwangi said the company had enhanced its processing capacity to enable it cater for the milk overflow.

“We are ready to absorb all that milk, we are up scaling our capacity especially for those facilities that process powder milk and UHT so that we can be able to intake, process and sell the milk in dry seasons,” he said.

They have three ‘powder making’ plans in Kitale, Eldoret and Kiganjo which have the capacity to convert about 270,000 litres of milk per day into instant powder.

The milk and related products would be sold both locally and internationally in countries such as Nigeria, Yemen and Egypt where the company has established markets.