NAIROBI, Kenya Jan 21- The Ministry of Cooperatives is calling for a review of the current structure of issuing milk-powder importation licenses to Kenya.
Terming the situation as “serious” Cooperatives Minister Joseph Nyaga said the licenses ought to be renegotiated to capture periods of low milk production arguing the current agreement is stifling growth of the milk industry.
“The problem is very big. When you get to a situation where everyone can easily get a license to import milk powder, we’re hurting the small farmer who works day and night to produce that milk,” Mr Nyaga said.
He said the practice was cutting off opportunities for local milk companies to create value addition chains for their produce as consumers opt for cheaper alternatives in the market.
“We are importing milk powder from Europe where it is highly subsidised and that will kill industries like New KCC which are in the same business,” he said.
The minister revealed he had already picked up the issue to be addressed at the Cabinet level.
He was speaking during the signing of a tripartite agreement between New KCC, Cooperative Bank and Cooperative Insurance Company (CIC) to unlock funding for dairy farmers as well as insurance cover for livestock and dairy farming equipment.
Co-operatives Banking Division Director Zachary Chianda said the Maziwa Plus Loan Program would address challenges such as credit accessibility and high cost of maintenance of dairy cattle.
“As a bank we feel have put together a package of financial services to the cooperative societies as well as individuals to support areas such as vehicles for delivery, coolers for the milk or even buying of hybrid cows,” Mr Chianda said.
The loan program aims at assisting farmers meet financial needs including purchase of inputs, and acquiring high breed dairy cows.
The bank will finance a farmer in buying the dairy cattle, which will then be insured by CIC through a negotiated package that cushions a farmer in the event his herd dies or is unable to produce milk consistently.
“We are giving complementary services of making sure whatever is given out in terms of loans and even the livestock is secure through our livestock insurance program,” CIC Managing Director Nelson Kuria said.
Cooperative Bank has initially committed Sh300 million to the program with a possibility of increasing the amount as it picks up. The maximum loan amount is Sh10 million with a maximum repayment period of 48 months at 15 percent per annum.
Under the partnership, the Bank will target small, medium and large-scale farmers, vendors and dairy groups.
New KCC Acting Managing Director Milcah Mugo said the company was currently in the process of up scaling its milk handling capacity to address increased milk production following the new agreement.
“We are doing our best not to disappoint farmers when they bring milk to us and we are forced to turn them away for lack of handling capacity,” Ms Mugo said.
She said the capacity could go well beyond the current 680,000 liters being delivered to the company on a daily basis.