Co-op Bank eyes coffee processing with Sh1bn loan


Co-operative Bank's managing director Gideon Muriuki at a past event. Co-operative Bank has pledged to guarantee Nyeri coffee farmers Sh1 billion for processing instead of exporting raw beans. Photo/FILE

The Co-operative Bank has pledged to guarantee Nyeri coffee farmers Sh1 billion for processing instead of exporting raw beans.

The bank further said it would help the farmers to set up a warehouse and provide initial staff for the facility.

Speaking to Business Daily, managing director Gideon Muriuki asked farmers to pool resources so that they could reduce operational costs and reap maximum benefits like their counterparts in Colombia and Ethiopia who have cashed in on their numbers for financial muscle.

He urged growers to fully utilise a coffee mill that farmers recently put up in Othaya in order to produce their coffee under one giant co-operative.

“Coffee farmers need a Sh1 billion bank guarantee to process and market their produce. The Co-operative Bank will guarantee them the money, a warehouse and the initial staff,” he said.

Mr Muriuki said the initiative was not new as it had been tried out in the past but was infiltrated by politics and allegations that the co-operatives belonged to individuals. He said even the people who were then being accused of owning the societies had no shares.

“Growers should not look back where they were but should instead focus on transforming coffee farming into a more rewarding enterprise,” said Mr Muriuki.

He said farmers owned 65 per cent shares in the Co--operative Bank, hence the institution’s continued support for the agricultural sector.

Mr Muriuki gave the example of Colombian farmers who are small-holders with between one to two acres but were able to come together and as a result now own the national airline, Avianco, They are also the financiers of key infrastructure in that country.

“Colombian coffee is of lower quality than Kenya’s.

They use our coffee to blend theirs but they have been able to reap maximum benefit because they only sell it from the central auction ” said Mr Muriuki.

His sentiments were echoed by Nyeri Governor Nderitu Gachagua who supported the idea of farmers coming together to process their crop adding that the issue of increasing productivity needed to be addressed.

He said a new amalgamated Crops Act 2012 which was assented to by former President Mwai Kibaki in January 2013 would guide the operations of the agricultural sector and urged farmers to familiarise themselves with it. The Act also seeks to harmonise various crop regulations.

\Mr Gachagua praised Othaya coffee farmers for taking the lead in value-addition and urged other growers to support the initiative.

The farmers bought a milling machine worth Sh8.5 million in 2011 and are set to market their own coffee in the local supermarkets within the next one month.