New KCC pushes dairy farmers to private companies amid payment crisis

KENYA – Dairy farmers in Murang’a have cited delayed payment from cooperative societies as the major challenge crippling the sector, forcing them to sell their milk to private companies.

Speaking in Murang’a, the farmers affiliated to the new Kenya Cooperative Creameries Corporation revealed that the latter had not paid for the milk delivered to them for the last three months forcing them to opt for private companies.

David Kirika Mwangi a dairy farmer observes that he opted to sell his milk privately after a series of delayed payments.

“Milk cooperatives will not only pay meagerly but will also delay the payments and that affects production because you have to feed your cow,” said Mwangi.

The farmer urged the government to particularly focus on subsidizing the price of raw materials for animal feeds.

He noted that with reduced cost of farm inputs farmers will be able to produce enough maize to make silage which can be stored to cushion during the drought seasons.

The delayed payments come after New KCC reported a US$7.38 million (KES 953 million) net loss, drew US$18.56 million (KES 2.40 billion) in government grants, and received a going concern warning for the fourth consecutive year, in the year ended 30 June 2025.

The deterioration predates the revenue decline: The last meaningful pre-tax profit on record was FY2020, when it made US$736,000 (KES 95 million) on US$67.96 million (KES 8.79 billion) in revenue, with a 30.3% gross margin.

By FY2021 revenue had risen to US$73.2 million (KES 9.46 billion), the highest in the available record, yet pre-tax profit had collapsed to US$20,900 (KES 2.7 million) and gross margin had already fallen to 26.6%.

Since that peak, revenue has fallen 22% to US$56.9 million (KES 7.35 billion). Four consecutive pre-tax losses have totalled US$32.96 million (KES 4.26 billion).

Gross margin declined from 26.6% in FY2021 to 5.4% in FY2024 as cost of sales reached 94.6% of revenue, before a partial recovery to 15.4% in FY2025.

New KCC has collected between 82 and 87 million litres annually for five consecutive years against a standing budget target of 120 to 122 million litres, achieving just 68-72% of target every year.

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