Failure to revive coffee union means farmers can’t gain from high prices
Last week, I had the opportunity to tour some major coffee estates in the Thika-Ruiru area to get a first-hand feel of recent goings-on in a sector that used to be one of the most critical in this economy.
All the major coffee estates are facing a serious shortage of labour — mainly coffee-pickers.
It seems that with the good coffee prices prevailing at the moment, farmers are now finding it more profitable to plant their own coffee than to sell labour to the plantations.
They are returning to coffee farming in droves. The other incentive is the fact that private sector millers and marketers are doing a much better job than State-controlled commodity boards and co-operative unions that once dominated marketing and milling.
The integrity of the payments and marketing systems has also improved remarkably.
With private millers competing to give services, they have been forced to invest in new technology that makes it possible to trace coffee from the weighing bridge to the time it is milled, graded and packed.
I also think there are major investment opportunities for developing commercial coffee nurseries.
With the renewed interest in coffee farming and as prices continue to improve, demand is going to outstrip the capacity of the State-controlled and chronically under-funded Coffee Research Foundation — the main outlet for seeds and seedlings for coffee farmer.
Socfinaf Estate, a subsidiary of the Tatu City Group, has seen the opportunity and has put up a massive commercial nursery where it is developing 280,000 seedlings.
I also think there are major opportunities for new investment in warehousing facilities in major coffee growing areas.
These are just impressions of a journalist. A story tracing new trends in the coffee industry will require a more comprehensive article.
But the good news is that looking at anecdotal evidence, new circumstances in the international marketplace have provided the industry with a new foundation for recovery.
What is required at the moment is smart intervention by the State to revive coffee-growing in the small-holder sector.
I just don’t understand why it is taking so long for the government to revive the Kenya Planter’s Co-operative Union (KPCU).
The small-holder will not enjoy the good international prices if he is not supported by an entity that gives him seasonal credit and inputs, and releases his payments on time.
Just the other day, the government spent billions of shillings reviving Uchumi Supermarkets Ltd., which is basically a chain of big shops whose shares were listed on the stock exchange.
Why is KPCU’s revival taking so long? I have heard it said that part of the difficulty is KPCU’s dual registration as a co-operative and a private company — an argument that does not wash if you consider the amount spent reviving Uchumi.
At stake here are the interests of over 700,000 small-holder farmers scattered all over coffee-growing areas of Kenya.
Indeed, small-holder coffee farming was introduced as part of an agrarian revolution with the objective of tackling rural poverty.
We must revive KPCU as quickly as possible to allow rural farmers to earn the good prices prevailing.
The government started talking about reviving the coffee industry way back in 2004 when it appointed a taskforce to streamline the operations of KPCU and the Coffee Board of Kenya.
The process led to a European Union-funded study that recommended a major restructuring of KPCU’s balance sheet, including sale of non-core assets.
KPCU is currently under receivership appointed by Kenya Commercial Bank, which claims Sh654 million. KPCU has contested the receivership in court.
Last year, the Ministry of Co-operatives Development and the Treasury prepared a Cabinet paper recommending that the government pumps in Sh916 million, part of which would be used to pay off the KCB loan.
The plan was that once the KCB loan is paid, the government would take over the management through its own receiver.
The paper yet to be approved. Meanwhile, KPCU’s assets are rotting away. It is a big shame.
