Coffee marketer raises the alarm over rogue agents

A newly formed coffee marketing company has run into headwinds owing to sporadic theft of produce from its contracted farmers.

Barely two months since it rolled out its services, the management of the Co-operative Bank of Kenya-backed Kenya Co-operative Coffee Exporters Limited (KCCE) is already raising the alarm over suspected theft of coffee by people claiming to be its agents.

“KCCE has not appointed any other marketing agent to market on our behalf. Anyone holding themselves out as marketing agents of KCCE have not been appointed as such, and have no authority to sell any coffee on our behalf,” the marketer’s CEO, Mrs Lucy Murumba said in statement.

She further stated: “KCCE is not marketing coffee through the auction, therefore coffee belonging to societies that have been appointed as their marketing agents should not appear on any coffee catalogue,”

But even as KCCE cried foul, officials at the Kenya Coffee Planters and Traders Association (KCPTA) that runs the weekly Nairobi Coffee Exchange (NCE) denied knowledge of the issue, but promised to look into it once the company lodged an official complaint.

“We are not aware of the matter...it could be something happening at the farm or co-operative society level, but we shall look into it,” Mr Daniel Mbithi, an official with the KCPTA told Business Daily.

Industry analysts had in December warned that the contracts that had been signed by KCCE by the time it rolled out its operations may not translate into actual business going by history in the industry where some farmers are known to sign contracts with dealers and marketers, but later surrender their produce to different ones whenever they were offered better terms.

Their warning came barely a month after the industry regulator Coffee Board of Kenya (CBK) issued a public notice in November warning against possible cannibalisation of coffee contracts in the wake of intense competition among the six active coffee marketers.

Some unscrupulous dealers have in the recent times taken advantage of regulatory shortfall to poach supplies of the commodity even among farmers with existing contracts with their rivals.

A coffee industry player who sought anonymity, however, claimed that KCCE could be a victim of the vicious fight for the lucrative marketing business.

“Of course new players always have to face some form of resistance whenever they try breaking into a new business or market fabric. Unfortunately for KCCE this has come in the form of theft of supplies from its contracted growers which is painful and can destabilise their planning,” he said.

As at December 6, 2009, KCCE said it had signed contracts with coffee farmers amounting to 20,000 tonnes equivalent to 37 per cent of the 54,000 tonnes that the Coffee Board of Kenya (CBK) expects from the current 2009/10 crop season.

And on Tuesday, a statement from Mrs Murumba’s office showed that KCCE had already signed marketing agreements for about 10,000 tonnes this crop season and that over 110 coffee societies countrywide had already signed with it and more were expected to do so.

“We have commenced coffee marketing and for instance coffee from Katheri and Thagara Co-operative societies in Meru have fetched over Sh39 per kilogramme of cherry compared to previous payment of Sh27 per kilo. This is the highest payment ever in Meru,” the KCCE CEO said.

The entry of KCCE was heralded as one that would substantively transform the current state of the marketing business where some traditional big players have faltered heavily.

A notable case of failure is the Kenya Planters Co-operative Union (KPCU), which is currently under receivership over a debt owed to Kenya Commercial Bank (KCB).

KPCU, that at one time boasted of an estimated membership of 70,000 farmers and a 70 per cent market share has since sunk to the lowest owing to intense competition from new and efficient players.

A major setback for KPCU was poor management and failure to honour statutory obligations to various government and private agencies including farmers which prompted the government to forge a deal between Co-operative Bank and the Cooperative Development ministry to establish a new marketing firm that would cater for the needs of farmers as the giant firm wobbled in its day-to-day operations.

Mrs Murumba, however, remained optimistic KCCE would brave the setback and meet its set targets.

“We appreciate and commend coffee farmers for the visionary strategic initiative in forming KCCE that will forever change the fortunes of the coffee industry in Kenya,” she said.