|  Retail milk prices are set to stabilise after the Government last week agreed to purchase excess milk powder stocks held by the market's biggest player.
But the New Kenya Co-operative Creameries' (New KCC) managing director, said plans to export powder to the region are still on, with the revamping of a cooling plant in Eldoret that should increase processing capacity. The Special Programmes ministry announced plans last week to buy up to 2,000 tonnes of milk powder from New KCC, as part of a Sh600 million revolving fund to build a strategic milk reserve. The move is seen as a boon to New KCC, which has been overwhelmed by a rise in milk supplies, and capital tied up in its milk powder stocks, after a long rainy season and increased fodder production, saw milk production boom. The company had raised producers' ire by turning away farmers' deliveries lowering prices by Sh2 per litre, and delaying some payments. That combined with an increase in retail prices for KCC's products, sparked an outcry from the estimated 1 million small scale dairy farmers country-wide and consumers alike. Yesterday, Francis Mwangi, the Managing Director of New KCC said the Government plans will not stop their expansion plans to export milk powder to the region were still on. Key among the plans is rehabilitation of the Eldoret cooling plant whose production potential stands at 70,000 kilogrammes of milk powder and 20,000 litres of fresh milk. This would bring the New KCC's processing capacity up to 390,000 litres of milk per day. Thermal generators are to be installed at the plant to counter frequent power outages, which in the past have negatively impacted on performance at its other cooling and processing plants. Industry regulator, the Kenya Dairy Board (KDB) said the Government move marks a victory after 10 years of campaigning for a milk reserve. KDB says New KCC is holding 2,300 tonnes of powder stocks, that could be used during shortages often experienced from January to March, and September to October.The Kenya Livestock Marketing Council (KLMC) has welcomed the initiative. "Excess milk can now be stored, used as supplementary feeds for children in drought stricken areas and recycled for exports and future use hence reducing sector losses," said the council's chief executive, Mohammed Abbas in a teephone interview.Keeping powdered milk reserves could help ease the wastage of milk due to processing limits, that amount to around 95 million litres a year. "These plans will boost our efforts to motivate farmers to keep producing more," KCC's Mr Mwangi told the Business Daily on telephone yesterday. The milk sector has seen strong growth in recent years. Production grew 37 per cent since last year, making dairy the best performer in agriculture. Kenya, the biggest milk producer in the region, had produced 3.5 billion litres over the past year, according to KDB. About 360 million litres was taken up by processors and the balance sold as raw milk. Ten million litres were exported into southern Sudan, Somalia, Rwanda, Burundi, DRC, Uganda and Tanzania. Booming production has enticed the banking sector, with Co-operative Bank, Kenya Commercial Bank and Equity Bank recently launching specialised credit schemes for dairy producers who supply large producers. The dairy industry now contributes about 3.8 per cent of total agricultural earnings. | 
