Co-op Holdings Co-operative Society made an extra investment of Sh200 million in its coffee marketing subsidiary last year, taking its cumulative capital outlay in the business to Sh680 million.
The society had invested a similar amount in Kenya Co-operative Coffee Exporters Limited (KCCE) — in which it holds a controlling 91 percent stake— in 2021 when the value of its ownership rose to Sh480 million.
KCCE was formed in 2009 to give coffee farmers more control over the marketing of their produce. The rest of the shareholding is held by individual cooperatives.
The subsidiary has however been loss-making in recent years, forcing Co-op Holdings to write off Sh280 million worth of previous investment in the unit in 2019.
“There was an additional investment in KCCE in the year 2022 of Sh200 million. (2021: Sh200 million). The investment in KCCE was fully impaired in the year 2019 due to the history of losses,” said Co-op Holdings in its latest annual report.
Co-op Holdings is itself a union of more than 3,800 co-operative unions drawn from around the country and is the biggest shareholder in listed tier-one lender Co-operative Bank with a stake of 64.6 percent.
It also holds a 33.4 percent stake in Co-operative Insurance Society Ltd, which in turn is the majority shareholder of listed underwriter CIC Insurance Group with a 74.3 percent stake.
The decision to create the coffee marketing subsidiary came after some members drawn from the coffee sector sought to improve the earnings from their crop, which was making huge losses after years of mismanagement.
The cooperatives targeted improvements in production, quality, marketing of their produce to global buyers, and also value addition for sale locally and externally.
KCCE runs two subsidiaries —Kenya Co-operative Coffee Dealers (KCCD) and Kenya Co-operative Coffee Millers (KCCM). KCCD started operations in 2012 with the aim of roasting and packaging Kenyan coffee for sale locally and internationally, under the Shiriki Coffee brand.
