NANDI, Kenya – President William Ruto has promised to clear approximately Sh400 million owed to dairy farmers supplying New Kenya Co-operative Creameries (New KCC) by October 31, 2026, as the government moves to address delayed payments and persistent milk shortages.
Speaking during his tour of Nandi County on Sunday, October 18, Ruto said some farmers had gone two to three months without receiving payment for milk delivered to the state-owned processor.
He pledged to settle the outstanding arrears by the end of the month and introduce a payment schedule requiring farmers to receive their money before the fifth day of every month.
“By the end of this month, we want to pay all the outstanding milk debts. Some farmers have not been paid for two or three months, and we want to pay every farmer,” Ruto said.
The President put the outstanding amount at approximately Sh400 million, promising that no farmer would be left unpaid.
“We have, I think they have told me, Sh400 million. We will pay every farmer what we owe them,” he said.
The announcement comes amid concerns over milk shortages that have affected supplies to processors and renewed scrutiny of Kenya’s dairy production, collection and distribution systems.
Ruto Sets New Monthly Payment Deadline
Ruto said the government would require New KCC to pay farmers before the fifth day of every month to prevent fresh arrears from accumulating.
“We have said that we want our milk payments made before the fifth of every month, so that everyone has received their money. We do not want debts,” he said.
The proposed deadline follows earlier government interventions in the dairy sector, including Ruto’s 2024 directive that New KCC purchase milk at Sh50 per litre.
The latest pledge seeks to address complaints from farmers over delayed payments, which can affect their ability to meet production costs and sustain dairy operations.
However, the government has yet to provide a detailed financing plan for the Sh400 million payout or explain the measures that will ensure the new payment deadline is consistently met.
New KCC Factories To Manage Their Own Finances
The President also announced plans to decentralise the management of New KCC factories, saying individual plants would take responsibility for their finances rather than relying on decisions made at the company’s Nairobi headquarters.
“For a long time, KCC has been run from Nairobi, yet the people in Nairobi do not have the milk. We are the ones who have the milk,” Ruto said.
He criticised the existing arrangement, arguing that revenue generated from milk sales had been used to settle various obligations without sufficient clarity for farmers supplying the factories.
“When they receive money, they go and pay debts, settle supplies and pay other people,” he said.
Ruto said the government intended to introduce a factory-level management model similar to structures used in the tea and coffee sectors.
“We have said that every factory should manage itself,” he said, adding that each New KCC factory would be expected to take responsibility for its operations and financial decisions.
Under the proposed arrangement, local officials would be held accountable for mismanagement and delays in paying farmers.
Ruto warned that officials responsible for poor performance could be replaced or face legal consequences.
Government To Take Responsibility For Existing KCC Debts
The President said the national government would address outstanding liabilities associated with New KCC’s central management while ensuring individual factories could operate without inherited debts.
He said the government would take responsibility for the outstanding obligations and allow factories to focus on purchasing milk, selling their products and paying farmers.
“The debts remaining at KCC in Nairobi, I will deal with those in Nairobi,” Ruto said.
He added that the government would work to ensure factories did not accumulate further liabilities under the proposed decentralised model.
New KCC’s debt burden has previously attracted parliamentary scrutiny. In August 2024, a parliamentary committee raised concerns about unpaid debts owed to the processor by government institutions, including State House and the Office of the First Lady.
The latest announcement renews questions about the company’s financial position, the management of milk revenues and the measures needed to ensure farmers receive timely payments.
Milk Shortages Put Dairy Sector Under Pressure
The commitments come as Kenya faces concerns over milk availability and supplies to processors, raising questions about production levels, collection networks and distribution.
Clearing the outstanding arrears could provide relief to farmers awaiting payment, while the proposed factory-level management system is intended to strengthen accountability over revenue and expenditure.
However, the government has not yet outlined how the decentralisation will work in practice, including how factory finances will be monitored, how existing liabilities will be separated from future operations and how the monthly payment deadline will be enforced.
The immediate commitments are to settle approximately Sh400 million owed to dairy farmers by October 31, 2026, and ensure subsequent payments are made before the fifth day of each month.
Whether the measures will ease the wider milk shortage will depend on their implementation and on broader improvements in the country’s dairy supply chain.
