The State-owned Pyrethrum Processing Company of Kenya (PPCK) remains trapped by a Sh3.5 billion debt after a failed asset sale derailed the restructuring plan meant to clear long-standing financial obligations.
The aborted disposal was intended to unlock part of the firm’s Sh6 billion asset base, but delays during the transition from the defunct Pyrethrum Board halted the process before any assets could be sold.
At a Senate session last week, Agriculture Cabinet Secretary Mutahi Kagwe said that the liabilities include supplier arrears and staff pensions accumulated over several years of institutional decline.
“The debt portfolio is some Sh3.5 billion, and this debt is essentially owed to suppliers and staff pension…. The organisation has an asset portfolio of about Sh6 billion, so it is possible for us to cover the debt once we sell (the assets),” said Mr Kagwe.
“The process of doing so hit a problem at some point. The movement from the original company to this organisation, the transition period, the valuation of those assets and so on and so forth, delayed everything about the sale of the assets.”
CS Kagwe said that payments to farmer remain outstanding to the tune of about Sh10 million for flowers delivered between August and October this year, highlighting the processor’s fragile cash position.
Historical delays in payments remain a major cause of farmer quitting, with the Mr Kagwe observing that people stopped farming pyrethrum because they were not being paid on time, weakening production across key counties.
The halted assets sale prevented the company from cleaning its balance sheet, making it unattractive to investors and preventing it from rebuilding a consistent working capital for processing and farmer advances.
The debt crisis has intensified strain within the pyrethrum value chain, undermining confidence in a crop that was once central to Kenya’s position in the global natural insecticide market.
Overall output remains well below potential, limiting Kenya’s ability to supply markets that demand natural insecticides in the wake of restrictions on synthetic pesticides in multiple jurisdictions.
The CS revealed that he has drafted a memo to be presented to the Cabinet, proposing that the handover of the company to private management once the debts have been cleared and valuations updated.
To this end, a fresh valuation will be conducted to reactivate the disposal plan. Mr Kagwe noted that the previous valuation no longer reflects current asset values.
“The only way, in our view, in terms of policy structure that we can have a future within the pyrethrum sector is to involve the private sector,” Mr Kagwe told senators.
“There’s a Cabinet memo at the moment, which I have done, and we’re working with the Treasury to see whether we can go into leasing of the Pyrethrum Processing Company of Kenya. Once Cabinet agrees that we lease the organisation, we will need to go through the entire valuation of the assets again.”
