Sh90m coffee factory stalls in Embu amid piling debts

Former Embu Senator Lenny Kivuti and Embu County Coffee Mill chairman John Muriuki attend church at Kavutiri Catholic Church. [Joseph Muchiri, Standard]

An ambitious Sh90 million coffee milling plant that would have multiplied earnings for farmers is yet to start operating.

Farmers obtained a Sh90 million loan, five years ago, for the mill that has since stalled.

Twenty four co-operative societies that jointly undertook the project are now struggling to repay the loan that has since ballooned to Sh127 million.

The loan from the Commodities Fund was used to construct the main buildings and buy machinery from Brazil with a capacity of milling 2.8 tonnes of coffee per hour.

The county government initially contributed Sh15 million for a stake in the project and promised to further contribute Sh10 million annually. It has so far contributed up to Sh40 million.

Each co-operative society was to pay Sh3.8 million to clear the loan that was secured on a parcel of land owned by the union of coffee cooperative societies.

The mill’s chairman, John Maruku and former Embu Senator Lenny Kivuti have expressed concern that farmers might not be unable to offset the loan and appealed to the national and county governments to grant a waiver.

“Farmers had hoped that they would start milling their coffee immediately and earn enough to repay the loan quickly. This is yet to happen as the farmers’ debt continues to pile,” said Maruku.

Declining production

The societies’ inability to pay is further compounded by declining coffee production and falling coffee prices.

Kivuti said counties must find a way of bypassing brokers and adding value to coffee to improve earnings.

Statistics from the co-operative sector show that coffee production in the county last year fell to 11 million kilogrammes from 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 coffee earnings were the worst in decades, with a bag of grade AA coffee going for  $90 (Sh9000).

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

The county mill was the initiative of Murue Cooperative Society long before the county government was constituted. Other coffee cooperatives joined later, bringing membership to more than 110,000 farmers.

“The coffee auction is set up in a way that a farmer will always be exploited. That was why the management committee of Murue decided to start a mill so that we can add value to our coffee and cut costs. Others joined us but the delay in starting operations is costing us heavily,” said Maruku.

In December, Governor Martin Wambora said the mill was ready and only needed electricity  to start operations. 

County Commissioner of Co-operatives David Muriuki yesterday said electricity had been installed and the mill would start operations this year.

Societies struggling

Muriuki backed calls to waive farmers’ debts, saying some societies are struggling and cannot afford to service their loans.

“When the mill starts operating the Government will benefit from taxes and development of the region instead of pursuing farmers on the loan,” he said.

He said only five coffee societies: Kibugu, Murue, Gakundu and Thabana can afford to service their loan quotas.

The commissioner expressed hope that the new mill will cut coffee production costs by at least 30 per cent.