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KMC needs Sh822 million to avert closure, says official

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Agriculture secretary Mwangi Kiunjuri
Agriculture secretary Mwangi Kiunjuri during a past visit to Kenya Meet Commission plant in Athi River. FILE PHOTO | NMG 

Cash-strapped Kenya Meat Commission (KMC) needs Sh822 million funding to avert closure following low production and swelling pending bills.

Agriculture Cabinet Secretary Mwangi Kiunjuri said the funds are needed to settle farmers’ dues, oversee renovations and settle debts.

The government-owned meat processor has consistently made losses over the years.

“To address this dire situation, there is need for urgent bail out funding…,” Mr Kiunjuri told the National Assembly’s Agriculture and Livestock Committee. In the year to June, KMC posted a net loss of Sh228.1 million, a slight improvement from the Sh309.2 million loss made a year earlier.

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The company has grappled with poor performance since the 1960s because of political inteference, obsolete machinery, and loss of the European Union market due to animal diseases. Its archaic machines, aged up to 70 years, are manually operated pushing up labour costs.

The unreliable supply of raw materials and frequent breakdowns of the plant have slowed down KMC’s efficiency making it operate at a loss.

Mr Kiunjuri said livestock farmers had lost faith in the plant and were unwilling to to supply it with raw materialls plunging it deeper into crisis.

The plant owes farmers Sh228 million.

“In order for KMC to cater for about Sh19.8 million monthly overhead costs, the required production utilisation capacity is 10,000 or 330 cows a day compared to its current capacity of 100 cows a week,” he said.

The Treasury reduced the Sh500 million allocation to KMC for machinery repair in the current financial year as the government moved to implement austerity measures.

At the time the reviews were done, KMC had entered into a contract with Turkish company Sanet Veet Industrial to upgrade its Athi-River plant to boost production and efficiency.

An initial sum of Sh125 million was disbursed.

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