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KMC must make profit, says minister

NAIROBI, Kenya, Feb 16 – Livestock Minister Mohammed Kuti has challenged the Kenya Meat Commission (KMC) to ensure that it returns to profitability by mid this year.

Mr Kuti said on Wednesday that a lot of resources had been put into reviving and transforming KMC and pointed out that the board, management and staff should do everything possible to ensure that it turns around its loss-making streak.

Since the inauguration of the current board and management nearly two years ago, the commission\’s net loss has reduced from Sh105 million in 2009 to Sh53 million last year.

"I want to hear in June that you have managed to reduce that loss to at least zero or that you have started making profits," he directed.

KMC has not made profit since it was established in 1950 largely due to mismanagement which led to its 15 years closure.

A rehabilitation of the factory at a cost of Sh500million and a subsequent injection of Sh250 million to facilitate the operations in 2006 saw the meat processor open its doors once more to livestock farmers.

However, images of thousands of dying cattle being driven to KMC\’s slaughterhouse in 2009 due to drought presented a huge setback for the commission which affected its recovery.

KMC has however strived to reverse this damage by for instance taking in only healthy animals that meet its market specifications for slaughter and changing its sales strategy. This plan has begun to pay off with the total output in tonnage for example having increased by 76 percent in the 2009/2010 financial year.

Exports have also gone up from Sh32.1 million in 2009 to Sh70.5 million last year, representing a 119 percent increment.

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Mr Kuti however advised it to step up its marketing campaigns to ensure that their products are widely available on local and international supermarket shelves.

He recommended that they should seek to sell their products to the government, which is a big buyer.

"You need to start selling yourself to the stakeholders. You must always be very strategic in marketing," he said adding that they need to secure more orders from the Middle East.

The minister also directed that the commission needs to put the producers first and ensure that they get the return on their investment.

About 70 percent of livestock suppliers to the commission come from the pastoral community but most of them have suffered in the hands of middlemen who fleece them.

KMC has already taken a first step towards this challenge and has partnered with First Community Bank that will enable the farmers to secure livestock financing and also facilitate smooth livestock off-take in addition to strengthening market linkages.

"The farmer shall not be charged any interest by the bank in this destocking initiative. There is no fixed purchase price for the cattle but prevailing market rates which shall mutually be agreed at the respective markets," said KMC Managing Director Ali Hassan of the plan which will mostly target farmers from drought-prone areas.

At the same time KMC signed a two-year Collective Bargaining Agreement with the Kenya Union of Commercial Food and Allied Workers (KUCFAW) that will see the unionisable staff receive a 12 percent pay hike.

The increment, which is the first since the re-opening of the commission will be backdated to July 1 2010 and will also see lower cadre staff enjoy a 15 percent rise on rent.

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KUCFAW Secretary General Boniface Kavuvi hailed the agreement as a step forward as it will also see all staff most of whom have been hired on a three or six months contractual basis, sign a minimum of three year-contracts.

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