KPCU’s bailout plan is good news
Posted Sunday, November 21 2010 at 19:02
The recent announcement by the Co-operative Development and Marketing minister Joseph Nyagah that the government will waive Sh4 billion debt owed by coffee societies in the country is cause for celebration.
This is a positive move towards fully reviving one of the most critical sectors of our economy. The cooperative societies are the backbone of development and their revival will go along way in revitalizing a sector that was the leading foreign exchange earner until the late 1980’s.
We do recognise that one of the giant cooperatives is still under receivership. The Kenya Planters Cooperative Union (KPCU) went into receivership over Sh644 million debt it owes the Kenya Commercial Bank.
We welcome the government’s assurance that KPCU will not be sold and that plans are under way to restructure the union.
However, there is need for the process of bailing out the coffee giant to be expedited. Small holder farmers who own the KPCU, which employs over 700,000 people, do not know how soon the union will revert to them from the receiver managers.
It is important to recognise that as long as the union is under receivership, coffee farmers will be exploited by unscrupulous middlemen. Small holders are turning to private millers and marketers, some of who are out to exploit them.
It is a fact that KPCU’s woes are a result of mismanagement, political interference and lack of creativity by the management in the face of competition in a liberalised market.
But with property worth more than Sh3 billion and a strong backing from small holders, all is not lost.
Now out of bankruptcy
The coffee giant can still be turned into a profit making venture. Similar efforts in the past by the government have born fruit, where it bailed out the Kenya Cooperative Creameries (KCC), the Kenya Meat Commission (KMC) and Uchumi Supermarkets which are now out of bankruptcy.
Nevertheless, as the farmers appreciate the government’s noble action of bailing out institutions, it would be important to quickly pursue the leaders who looted these institutions.
This will act as a deterrent to incoming office bearers who may be thinking that they have gotten avenues to enrich themselves and their families.
The coffee sector contributes significantly to the national income; it is a leading foreign exchange earner after tea and horticulture, yet the government has not paid sufficient attention to this sector.
Even though the government enacted the Coffee Act 2001 to streamline the industry, and give incentives to farmers, more needs to be done. Coffee production has continued to decline from 130,000 tonnes in 1988 to about 50,000 in recent years.
The farmers, especially small holders, have lost faith in the industry. Many have shifted to tea, dairy farming and horticulture. The few who are still in the coffee business need to be supported.
There is also the need to adopt innovative sustainable practices to improve the quality and quantity of coffee.
These initiatives should also win back those farmers who have abandoned coffee growing as well as attract new farmers especially from non-traditionally coffee growing zones like North Rift and Western regions.
The writer works with Ufadhili Trust: www.ufadhilitrust.org