The Kenya Meat Commission (KMC) is facing fresh questions over its financial future after the Auditor-General warned that the State-owned meat processor may struggle to remain sustainable as losses continue to rise, debts pile up and operations slow down.
The latest audit paints the picture of a commission weighed down by unpaid bills, shrinking sales and ageing machinery that has weakened its ability to run efficiently.
The audit report shows KMC's net loss for the financial year ending June 2025 rose to Sh410 million from Sh168 million the previous year, wiping out the gains made after the commission briefly returned to profit in 2022.
KMC blamed the poor results on cash flow challenges caused by delayed payments, with most of the outstanding bills owed by State agencies.
Auditor-General Nancy Gathungu said the commission's financial position continues to worsen, raising concern over its ability to achieve its objectives.
“The continued accumulation of losses signifies financial underperformance and sustainability challenges, casting doubt on the commission’s ability to operate profitably and achieve its financial objectives,” Auditor-General Nancy Gathungu said in the report.
The report also found that KMC is operating below its capacity because it is burdened by debts and relies on old machinery that has not been repaired or modernised.
Sales also declined from Sh1.71 billion recorded in 2024 after livestock supply dropped, with the report linking the decline to large amounts owed to farmers.
Outstanding debt owed to farmers and other creditors, including unremitted statutory deductions, increased to Sh488 million from Sh337 million. The amount includes Sh83 million in unpaid staff pension contributions and Sh115 million in income tax owed to the Kenya Revenue Authority.
Money owed to the commission by debtors also rose to Sh694 million from Sh692.2 million. Government entities account for the biggest share, owing KMC Sh552 million, which represents 80 percent of all receivables.
The commission is also yet to collect Sh19 million in rental income, while another Sh126 million in receivables was either unsupported, disputed or could not be traced, raising doubts over whether the money will be recovered.
The audit further shows KMC has been unable to service its equipment, leaving much of it obsolete and limiting production.
“The absence of timely repair, replacement and modernisation of machinery has compromised production efficiency, increased operational costs and limited the commission’s ability to meet the demand for its products,” the report added.