By Dr. Rotich Adams, DBA, MBA, LLB
Uhuru has taken his newly acquired skills during the last elections to the business world. However this is dangerous since itâ€™s difficult to know whether he is abusing his powers as a president or its just pure business.
Brookside recently bought off the Molo Milk brand (18% market share), which had overtaken the highly priced Brookside Brands. That is like TNA buying off ODM or Raila Odinga himself for those of you whose heads only think politically.
Â Analysts suspect Buzeki Dairy which owns Molo Milk was intimidated or arm twisted into acquiescing to the lopsided deal. Buzeki is owned by a Kericho political honcho.
This is a case of a man fighting to create a monopoly, by eliminating competition so he can exploit Dairy farmers. Brookside whose key brand, Tuzo, Ilara and Brookside have combined market share of 42% is set to have a dominant market share of over 60%. That means they will dictate milk prices.
School milk program is set to be revamped to Sh2.6 billion, and itâ€™s not easy to know whether itâ€™s out of Uhuruâ€™s love for kids, or itâ€™s just out of expanding business for Brookside.
With Brookside set to supply 70% of the milk to schools, with the rest including KCC sharing the rest 30% of the business, itâ€™s easyÂ to see, how Uhuruâ€™s Brookside will pocket at least 1.5 billion ofÂ the Sh2.6 billion school milkÂ budget.
Itâ€™s a classic case of a company profiting out of shoeless kids who wear torn clothes. I havenâ€™t even touched how the laptops project cash is being exaggerated to line up pockets of key Jubilee honchos.
Molo Milk employees are now jobless after Brookside (their new owners) ordered them to vacate the premises without pay and benefits, and reapply.
For those who know business, what follows is monopolistic practices, where KCCâ€˜s market share will be clawed into. And KCC being a parastatal, over which Uhuru has control over, there, does appear to be an obvious conflict of interest.
And given Rutoâ€™s victimization of Murkomen to please his Master Uhuru for fear of being politically undercut, Dairy farmers are now left to their own devices. Ruto, who has been intimidated to sing an anti-Devolution and anti-Knut tune, will just let his dairy farmer supporters in Kalenjin counties to slide into poverty, to protect his half loaf in government.
Brookside- destined for monpsony status (Single buyer) will exploit them. Dairy Farmers in Rift Valley who were duped into supporting Jubilee, will have to find another enterprise when KCC is pushed out of business. Â
And Uhuru is sly, he knows that if he can neutralize Dairy farming and devolution while Ruto watches and choirs along, Rutoâ€™s political influence in Rift Valley would take a nosedive.Â If you are his diehard, like Raymond Cheruiyot and co. ask your tribal leader to read this analysis.
My crystal ball tells me, KCC would be slowly sabotaged and driven out of business. And with Brookside controlling 60% market share, the market fundamentals will dictate Uhuru controls the milk prices from the comfort of State House.
The KCC stabilizing role of milk prices would obviously be diminished and Dairy farmers in Rift Valley and Central would be beholden to Uhuru. At Uhuruâ€™s whim, Dairy farmers would be exploited.
This coming at a time when Miraa farmers have lost UK business secondary to phased sanctions- the only remaining customer in the EU market, Jubilee tribes in 2013, appear the biggest casualties of Uhuruâ€™s ruthless capitalism. By these actions, Uhuru is eating his own children, for his own selfish gains.
Thereâ€™s already talk of KCC being privatized, and you never know, Brookside is very keen on acquiring a majority stake, together with a Chinese Dairy company. And poor souls, that would be it. Game over for Dairy farmers. KCC is what NCPB is to the maize farmers.
It stabilizes the prices. Buys the commodity at a reasonable price when thereâ€™s excess and sells it when thereâ€™s scarcity, just to play around with the demand and supply dynamics to ensure that farmers continue to profit, even in the worst market situations. It cushions farmers against middlemen and greedy corporations like Brookside.
They ensure that prices that farmers sell the commodity do not go below a certain price. They guarantee to buy it in times of glut. I know they havenâ€™t been the best in that front, but Dairy farming and Maize farming would be worse off and more exploited by middlemen without NCPB and KCC.
We all know of companies that acquire competition only to close them down, like EABL acquired the Thika Castle facility only to shut it down. Of course the goal was to eliminate competition, with the goal of building a beer industry monopoly. It s erecting what is called Barriers to entry in economics.
We all saw Uhuru buy off competitors ahead of the 2013 election, only to dump them after they had reached a point of no return. One such politician is Musalia who after being enticed into Jubilee was duped and dumped by Uhuru. Â
Uhuru also bought off many of the CORD parties, to further expand his parliamentary majority, and of course neutralize URP influence in Jubilee. Those small parties are intended to caucus with TNA in case of wrangles, ahich are upto now being swept under the carpet.
Ruto- the Kalenjin Tribal leader is also known to have been bought off to create what they called a Tyranny of Numbers. In close tow, followed by Balala and Ngilu
And as the richest man in Kenya, Uhuru as President seems to be intent on raising campaign money for 2017 through dubious means in a conflict of interest under the guise of capitalism, has his eyes on being the richest man in Africa by the end of his second term in 2022.
If you are in the Dairy industry, you either divest to other industries where Uhuru has no control over like maize, wheat and Beef or out of love for your president stay on, and like your own cows be milked by Uhuru.
Uhuru now- not only has the money, but also the presidential powers which he can now abuse to re-organize/ reengineer the Dairy industry to the benefit of his own greed. I love capitalism, but Uhuruâ€™s capitalism is not compassionate, which makes it greed. All these, while Ruto watches…. https://www.kenya-today.com/opinion/uhurus-plot-to-sabotage-dairy-industry
Dr Rotich is a Fellow of the American Center for Business, a Liberal Business think Tank . His pet subject and interest is business in emerging markets in the Developing world.
Okoth, Jackson, The Standard, Jul 4th 2013, Brookside Dairy acquires majority stake in Molo Milk http://www.standardmedia.co.ke/?articleID=2000087532&story_title=brookside-dairy-acquires-majority-stake-in-molo-milk