Members of Parliament have called on the New Kenya Co-operatives Creameries (KCC) to stop supplying milk to government agencies that have failed to settle their outstanding debts.
The plea comes amid concerns that the milk processor is struggling to meet its financial obligations, particularly paying dairy and coffee farmers, due to the massive unpaid debts.
On Thursday, August 22, New KCC Managing Director Samuel Ichura and Cooperatives Principal Secretary Patrick Kilemi appeared before the National Assembly Committee on Trade, Industry, and Cooperatives.
The two were summoned to explain why farmers had not been paid despite delivering milk to the processor. During the meeting, it was revealed that New KCC is owed a significant Ksh.184.3 million by various government bodies, with some agencies not paying their debts for a long time.
Among the major debtors are the Ministry of Defence and the Administration Police Service, which owe Ksh.49.49 million and Ksh.32.38 million, respectively.
State House also appears on the list of those owing money, with an outstanding debt of Ksh.14.62 million for milk supplies. Similarly, the Office of the First Lady owes New KCC Ksh.3.07 million.
Other government entities that have failed to clear their debts include Kenyatta National Hospital (KNH), with a debt of Ksh.10.53 million, and the hospital's private wing, which owes Ksh.4.45 million.
The National Security Intelligence Service (NSIS) has a pending bill of Ksh.4 million, while Nairobi Water and Sewerage Company owes Ksh.2.27 million.
Embakasi North MP James Gakuya, who chairs the committee, voiced his concern over New KCC's continued supply of milk to government agencies that have not paid. He pointed out that the company’s primary responsibility is to run a profitable business and that it cannot continue to deliver milk to agencies that have failed to honor their obligations.
"New KCC is in business, and no one is forcing you to keep supplying milk to government agencies that still owe you money," said MP Gakuya. "You cannot tell farmers that you can't pay them because government bodies owe you. You need to put your business interests first and ensure that the milk processor remains financially stable."
According to Gakuya, the unpaid debts are not only hurting New KCC but also the farmers who rely on timely payments for their dairy products.
The MP urged the milk processor to consider halting supplies to these government agencies until the outstanding amounts are cleared. He further called on the government to prioritize settling these debts to prevent further financial strain on the company and the farmers.
In response to the MPs' concerns, Principal Secretary Patrick Kilemi admitted that New KCC is struggling to stay afloat due to the massive debts. He explained that the company is having difficulty meeting its obligations, including payments to farmers, because of the delayed payments from the government agencies.
However, he reassured the committee that steps are being taken to address the issue. Kilemi noted that there has been some progress, and he is optimistic that the remaining payments will be made by the end of the month.
"The situation is improving, and we expect the remaining debts to be settled soon," said PS Kilemi. "We need the committee's support to ensure that the outstanding debt is paid so that we can continue our operations smoothly."
The MPs are now urging the government to act quickly and clear the outstanding debts to avoid further complications for New KCC and the dairy farmers who depend on the company for their livelihoods.
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