Rampant theft of beans drives coffee industry to the edge of ruin

Over the last four years, widespread theft of coffee beans has deeply eaten into the fortunes of the multi-billion shilling industry.

Farmers outside Kagere Coffee Factory in Othaya on January 31, 2016 after unknown people stole 200 bags of coffee. PHOTO | JOSEPH KANYI NATION MEDIA GROUP

BY MUCHIRI GITONGA, mgitonga@ke.nationmedia.com

IN SUMMARY

  • With forecasted 30-40 per cent drop in coffee production, there are fears that the anticipated scramble for the scarce beans by millers and marketing agents will worsen the situation.

Over the last four years, widespread theft of coffee beans has deeply eaten into the fortunes of the multi-billion shilling industry.

Smallholder farmers marketing their produce through co-operative societies have lost millions of shillings to armed gangs, which raid factories at night and cart away bags of unshelled beans.

Central Kenya, specifically Nyeri County where some of best coffee in terms of quality come from, has borne the brunt of these thefts. Just last week, 51 bags of the crop were stolen from Ndia-ini factory in the county in a daring morning raid.

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Also a week ago, a gang of 30 struck at dawn stealing 35 bags in Mukurwe-ini.

“The fact that there were farmers around the factory and the police who never prevented the crime tells a lot about those behind these thefts,” Mr Wachira Mwago, a former chairman of the defunct, Coffee Board of Kenya told Smart Company.

Stakeholders in the coffee industry blame the theft of the produce on unscrupulous millers, marketers and even dealers who are said to collaborate with crooked co-operative society officials.

READ: Gang cooks chicken, steals coffee beans at a Nyeri factory

Confusion arising from the transfer of some functions to county governments, some of which lacked the capacity and legal framework to deal with the industry, has also been cited as the reason for the sprouting of cartels who have found loopholes to cash in on.

Speaking on condition of anonymity, a manager at the coffee directorate, which is under the Agricultural and Food Authority, blamed the heists on a move by the director-general to cede licensing of coffee permits and movement licences to county governments without adequate preparations and consultations.

“Machakos and Kiambu counties refused to take up the functions due to lack of capacity, but Nyeri, Kisii and others took up the licensing despite lacking the capacity,” he said.

Towards the end of last year, farmers in Nyeri County are estimated to have lost coffee worth more than Sh100 million to gangs which target factories. Unfortunately, most of the stolen produce had not been insured. Factories affected include Kiamariga, Tambaya, Gititu, Ndimaini and Ichamama.

Conspiracy

Isolated incidents have also occurred in the neighbouring Murang’a County. An audit done in February after an alleged theft of Sh7 million worth of coffee reported by Kagere Co-operative Society officials, unearthed a conspiracy comprising factory management, senior staff and millers.

Some officials, supported by millers and marketing agents, are suspected of being behind the thefts. They then sell the loot and pocket the proceeds.

With forecasted 30-40 per cent drop in coffee production, there are fears that the anticipated scramble for the scarce beans by millers and marketing agents will worsen the situation.

“Some dealers have orders and already there is panic as signs are clear that yields could drop by up to 40 per cent,” Mr Newton Nderitu, a former chairman of Othaya Co-operative Society told Smart Company.

Though the exact value of the stolen coffee cannot be ascertained because of varied grades, Nyeri county executive for agriculture Robert Thuo said the amount of stolen coffee beans points to a section of millers, marketing agents and dealers who are using co-operative society officials to destabilise the sector ahead of the implementation of proposed rules that would loosen their grip on the industry.

It is said this group has been financing factions in coffee societies or colluding with crooked cooperative society officials, to influence decisions on who is to mill and market the produce.

Mr Thuo denied claims that the lack of movement permits could be fuelling coffee thefts.

“Millers, marketing agents and dealers who are fuelling thefts know that their jobs are at stake once the coffee Bill is passed and now want to disorganise the industry,” he said.

As such, the executive said, they are not happy with the contents of the proposed law by the Nyeri county assembly as it will drastically change their operations along the value chain and they will no longer exploit farmers.

Under the draft law, millers are prohibited from holding marketing licences. Millers and marketers will also no longer have to look for business from societies as has been the case.

“They will be required to participate in open tenders to mill or market coffee from any society and the awarding of the tender will be based on their performance and compliance,” Mr Thuo said .

Millers would inform farmers the grades of their produce and their quantities within 48 hours while marketing agents would be required to disclose the sale price and deposit proceeds to growers’ bank accounts within 14 days after sales.

The Bill bars marketing agents from involving themselves in direct sales. Millers are also prevented from holding marketing licences.

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