State now lines up rescue plan for debt-ridden KPCU

At the same time, the State sought the indulgence of the two debenture holders not to exercise their right to slice up the supermarket for disposal but to give it a lifeline.

Although the minister was not categorical about what time they would engage KCB bank, the tentative plan is to allow the current management to leave office and give way to the two receivership managers from Deloitte Consultancy to assume management.

“We will approach the receivership managers once we hold discussion with the ministry of Agriculture and adopt a common stand,”, said Mr. Nyagah in an exclusive interview with the Business Daily.

The financial woes of KPCU is blamed on falling revenue which it generates from milling coffee berries and offering them for the sale at the Nairobi Coffee Exchange (NCE) which carries out weekly auction of coffee.

The declining revenue is attributed to farmers opting to use other coffee millers who are not only offering higher prices to farmers but also paying on time.

In addition, the private millers are providing farm input to farmers to enhance their crop productivity.

KPCU attribute it’s sinking into the red status to farmers who have stopped delivery coffee to its warehouses hence unable to claim millions of shillings advanced to them as loans and farm input.

The loans which were given on the basis of recovery from coffee deduction have pushed the miller to the fringe of the lucrative coffee business.

Kenya is one of the main exporters of coffee to the world with coffee being the third agricultural foreign exchange earner after tea and horticulture.

According to Central Bank of Kenya (CBK) coffee deliveries to Coffee Board of Kenya (CBK) increased cumulatively in the first seven months of 2009 by 52.43 per cent to 37,909 metric tonnes.

Coffee accounts for 4.1 per cent of the country export bill.

Tea and horticulture account for 18.9 per cent and 14.7 per cent respectively.

Despite the good returns from coffee, coffee farmers have not benefited with their earnings continuing to decline over the years.

This has forced majority of them to uproot coffee plants and replace it with other cash crops such as passion fruits and food crop.

The government plan to rescue KPCU may herald a new era for coffee sector once billed as the black gold of Kenya.