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Produce enough or close shop, coffee firms warned

All coffee co-operative societies whose annual production is below 500,000 kilogrammes of fresh cherries risk being de-registered in a programme being implemented by the government. FILE PHOTO  | NMG
All coffee co-operative societies whose annual production is below 500,000 kilogrammes of fresh cherries risk being de-registered in a programme being implemented by the government. FILE PHOTO | NMG 

All coffee co-operative societies whose annual production is below 500,000 kilogrammes of fresh cherries risk being de-registered in a programme being implemented by the government.

And these groups – some of which are on their last legs have only one option: to merge.

“We are advising these societies to merge as they are not viable since they cannot meet their overheads,” Commissioner for Co-operatives Mary Mungai whose office is carrying out the programme told Smart Company in an interview.

She said there’s no need to have organisations that cannot achieve economies of scale.

This programme is part of reforms the government is implementing to revive the coffee sub-sector, which has been facing lean times after liberalisation in the early 1990’s.

Before then, it used to provide employment to thousands of people - direct and indirectly earning the country millions of shillings in foreign exchange.

In a mess

According to a task force President Kenyatta appointed last year to see how the sub-sector could be turned around, several co-operative societies are in a mess.

Some have very little production meaning that what farmers would have earned goes to meeting overheads.

Most are the ones that split in the late 1990’s following what came to be known as coffee wars.

This happened in Central Kenya especially in Nyeri County when small-holder farmers rose against the leadership of their giant cooperative societies.

They accused them of widespread corruption although a team the government of former president Moi appointed to investigate causes of the war, blamed the licensing of commercial millers who were seeking a piece of pie.

Before, there was only one miller, the Kenya Planters Cooperative Union (KPCU), which is owned by farmers.

Commercial millers had to find a way to penetrate the coffee market which ended up dividing farmers.

This is what led to a fight pitting two rivals – one that supported fragmentation of giant societies and the other opposing the move.

This resulted in splitting of two giant societies – Mukurwe-ini Coffee Growers Cooperative Society with its 28 factories, and Tetu Farmers’ Cooperative Society.

The former disintegrated into 13 units and the latter into single units where each of its 19 factories became a society on its own.

Mathira Farmers’ Cooperative Society, which had 36 factories had earlier decided to split into 13 units - in a consensus when a group of growers in Mukurwe-ini and Tetu started agitating for sub-division.

Not all were for the idea including the managements of the two societies prompting pro-split proponents to use violence to achieve their end.

They started overrunning factories and taking them over after flushing out employees in the process destroying property and lives.

Then in 2004, a campaign was started by the Kibaki administration to amalgamate some of these groups that had split especially those that fragmented into single entities.

Unviable

They had proved to be economically unviable. A report prepared by the Ministry of Agriculture on coffee production in the last three years, shows some societies – most of which were part of defunct Tetu Farmers are on their death beds literally.

One of them is Njuriga Cooperative Society, which produced 38,400 kilogrammes of coffee cherries in 2016/2017 season, which ends in October from which their members were paid Sh29 per kilogramme they delivered.

The highest the society recorded was 87,694 kilogrammes in 2014/2015 season. Its neighbours Githiru, Mung’aria and Wachuri Cooperative Societies have also not been doing well. At Githiru for instance, members delivered 51,578 kilogrammes while Wachuri recorded 91,274 kilogrammes.

This season was not favourable for coffee owing to hostile weather but even in the previous years the two did not meet the 500,000 kilogrammes threshold.

Mrs Mungai says is the requirement for a society as stated in the Cooperative Act.

Two others, Mung’aria Cooperative Society and Marua, which split from Rutuma Cooperative Society to form a company, show the worst performance.

The former only managed 14,874 kilogrammes of coffee cherries in this season after members moved out over poor management. They decided to sell their coffee to societies offering better returns.

Mrs Mungai did not reveal when they will start de-registering these unions but said: “We are advising the managements of these societies to consider the merger option.’'

Amalgamate

There are players in the sub-sector who do not see the need to amalgamate noting that some of these single units such as Gachatha Cooperative Society is rated as one of the best in Nyeri.

One of them is the chairman of Gikanda Farmers’ Cooperative Society in Mathira, Nyeri County, Mukuha Chiera who says merging is not a solution.

The cure, according to him, is to improve production and this is why Gikanda with only three factories produces an average of two million kilogrammes of coffee cherries.

“Farmers have first to accept that coffee farming is a lucrative business and it is their life line and then get the necessary support from their cooperative society,” Mr Chiera explained.

He observes that many farmers have been waiting for improvement of coffee prices in the world market while they pay very little attention to production.

In Murang’a it has been the other way round as some societies that merged almost 18 years ago after splitting giant societies, are now applying with the cooperative department to be allowed to fragment again.

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