Company Industry
More firms licensed to market Kenya’s coffee
KPCU’s market dominance comes under renewed attack as more than 40 new players are gazetted as qualified dealers
State-backed marketer KPCU’s dominance of coffee dealership is set to come under a renewed attack as the government moves to open the gates to a large number of private players into the lucrative business.
Beginning next month, more than 40 private companies will fight it out in the marketplace for a share of the Sh7 billion business most of which has been under the Kenya Planters Co-operative Union (KPCU), raising hopes for better pricing for growers.
State-backed outfit, the Kenya Co-operative Coffee Exporters Limited, is among new players who have been gazetted as qualified for licensing as marketing agents and dealers during the 2009/2010 crop season.
Seven companies have applied for licensing as marketing agents – signalling the level of competition that old players will be up against. Some 34 new companies have also applied for dealership licenses while two firms want milling permits.
Coffee farmers already have eight marketing agents and 63 dealers for their produce but many have complained that cartel-like behaviour among these players has prevented the benefits of better world pricing from trickling down to the farm gates.
“Our intention is to enable the applicants to offer services as specified in licences applied for,” Coffee Board of Kenya (CBK) managing director Loise Njeru said in a notice.
The entry of Kenya Co-operative Coffee Exporters Limited and other new players is however expected to trigger changes in the marketing and dealership platform with farmers as the main beneficiaries in terms of lower charges, better services as well more competitive pricing.
“This is a deliberate move by the government to lock out ineptitude. The writing is on the wall for the once dominant but inefficient players who have failed to deliver better services at competitive prices,” an industry player Etiene Delbar said.
CBK also said the action is aimed at breaking the cartels that dominate the dealership and commercial coffee marketing in Kenya.
Good news
“The good news is that more players want the marketing and dealer licences. Even better news for the industry is that the new export company is among those making an entry in the segment for commercial marketing and dealership that has for long been abused by cartels,” said a source.
The entry of Kenya Co-operative Coffee Exporters Limited comes as a victory for the Co-operative Development ministry that has been championing it in response to widespread outcry from growers who feel cheated of their earnings by unscrupulous brokers.
The misery of growers has been further compounded by the shaky co-operative societies and millers who have failed to pay farmers promptly after selling their produce.
Co-operative Development minister Joseph Nyagah said the state-backed marketer and dealer will be financed by the Co-operative Bank of Kenya to sell produce at the most competitive rates and farmers are promptly paid.
“It will seek the best prices in the market and the bank will pay the farmers on delivery,” he said. Co-op Bank has set aside Sh1 billion to pay farmers on delivery.
Ministry of Agriculture officials said “teething problems” in the re-organisation of the troubled KPCU had necessitated the new move.
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