Why region's coffee societies are struggling to stay afloat

A coffee farmer at work in his farm. An audit report indicates many coffee societies cannot afford to pay their farmers because of mismanagement, poor technology and untrained staff. [File]

Majority of coffee societies in Central Kenya cannot pay farmers as a result of gross mismanagement, an audit has revealed.

A performance audit by the State Department for Cooperatives on 25 cooperative societies in Nyeri County found that many are facing difficult financial times and that poor management practices were eating into farmers' dues.

The report states that lack of professionalism and want in management skills is pushing many coffee cooperative societies in the region to their deathbeds.

The dire state of the cooperatives was laid bare, with revelations that 22 out of the 25 coffee societies in the county have been borrowing money to finance operations.

“Over-borrowing to pay farmers their advance for cherry is still a key concern, with most societies heavily relying on this credit in their operations, which puts the cooperatives at risk,” states the report.

The report recommended that the Government enforces cooperative societies' rules on borrowing, including ensuring members give approval before any society seeks credit.

Further, the report recommended that the societies utilise a Sh3 billion revolving fund for advances and working capital.

The report noted that there was low representation of women and youth in society management committees, a challenge that threatened the future of the coffee sector.

The audit found that the number of active coffee cooperative society members had been declining every year, with some dormant shares still not transferred.

The audit also found that most societies did not have ownership documents for their property.

Further, the report warned coffee societies that they would continue to suffer poor management practices unless they embrace proper data management practices.

“We recommend the training of cooperative society management teams to adapt an online management system so that they can be more efficient in running the society,” said audit committee leader Sam Kuria during the dissemination of findings of the report to the chairpersons of the cooperative societies.

The audit revealed that majority of coffee societies’ management staff only had between Class 8 and Form 4 education.

Poor pay for society employees and a lack of skills in the societies were also cited. “There is lack of professionalism in factory managers and chief executive officers and very low pay package for employees,” the report stated.

A high turnover of top managers and ageing staff were also cited as challenges in the management and revival of the coffee sector.

Some societies were found to be relying on old factory technology dating back to the 1960s and 1970s.

On a positive note, the audit found that majority of the societies had benefited from a debt waiver and had written off the amount of debt in their books of accounts for 2017.

However, farmers continued to experience delayed payments for coffee delivered.