/Coffee Saccos struggles with huge loans borrowed many years ago

Coffee Saccos struggles with huge loans borrowed many years ago

Apudo Were

Rev. Elizabeth Kibai is the Agriculture Committee Chairperson . She addresses the press over the millEmbu coffee cooperatives struggling to pay a Sh90 million loan borrowed five years ago to set up a coffee mill that has since stalled. The debt has ballooned to Sh127 million since most of the 24 societies in number societies are unable to service the loan.

24 in number are meant to pay Sh3.8 million, while the loan was secured by a parcel of land owned by a cooperative societies union.

According to the  coffee mill chairman, John Maruku and former Embu Senator Lenny Kivuti, the societies are unable to service the loan hence appealed to the county and national government to waive the debt to save the societies.

The County Coffee Mill has remained dormant despite having state-of-the-art machinery procured from Brazil in December 2014.

County Coffee Mill County Coffee Mill

Former Embu Senator Lenny Kivuti and Embu County Coffee Mill chairman John Muriuki attend church at Kavutiri Catholic ChurchThe loan from the Commodities Fund was used to construct the main buildings and buy milling machinery with a capacity of 2.8 tonnes per hour.

Embu County Government which partnered with farmers contributed Sh15 to get a stake and committed to repaying Sh10 million annually. It has contributed Sh40 million so far.

Maruku said the societies are unable to service the loan due declining coffee production in the county and fall in prices of the commodity at the coffee auction.

He said farmers had hoped that they would start milling their coffee immediately and earn more to repay the loan quickly.

Kivuti said counties must find a way of bypassing brokers and adding value to coffee to bridge the gap between the Sh3, 000 price of premium coffee at supermarket and the measly Sh50 paid to farmers.

Statistics from the cooperative sector show that coffee production in the county last year was just 11 million, a tumble from the production of 15 million kilogrammes in the year 2014 when the machinery was brought.

Maruku, who is the chairman of Murue cooperative society, said last year’s sale was the worst in decades where a bag of grade AA coffee sold at $90.

In the latest rates by cooperative societies, farmers have been paid between Sh42 and Sh85, a decline from four years ago when they pocketed over Sh100 per kilogram.

“The coffee auction is set up in a way that a farmer will always be exploited. That was the reason the management committee of Murue decided to start a mill so that we can add value to our coffee by dry milling it and bypassing the transportation cost to the miller. Others joined us but the delay in operationalizing the meal is costing us heavily,” lamented Maruku.

In December last year, Governor Martin Wambora said the mill was ready and they were awaiting the installation of three-phase electricity for the meal to start operations.

County Cooperatives Director, David Muriuki, said the three phase electricity has been installed and the mill would start operations with this year’s coffee harvest.

Muriuki supported calls to waive off the debts saying some struggling societies with just 17,000kgs cannot afford to service their quota of the loan.

“When the mill starts operating the government will benefit from taxes and development of the region than from following up the loan, which would leave farmers bankrupt and suffering,” he said.

He said only five societies in the county account to 80 per cent of the coffee produced and which can afford to comfortably service their quotas.

He enumerated those societies as Kibugu-2.5 million kilogrammes, Murue-2 million, Gakundu-1.5 million and Thabana 1 million.

The commissioner expressed hope that once the mill starts working, Embu would gain by reduction in production cost by at least 30 percent.

“When the coffee is milled in the county, the costs associated with transportation, security and handling to private millers will be avoided,” he said.

The idea of a County Mill was the initiative by Murue Cooperative Society long before the county government was constituted but other coffee cooperatives were incorporated bringing membership to more than 110,000 farmers.

Kirinyaga has also built their own mill but it is yet to start operations.