State denies it supports sale of KPCU

By Jackson Okoth

The Ministry of Co-operative Development and Marketing has denied allegations that it supports plans to sell off the giant coffee miller, Kenya Planters Co-operative Union (KPCU), now under receivership.

"We are pursuing a proposal to restructure the union, which includes splitting it into three entities to deal with milling, warehousing and marketing functions. This does not amount to selling it off," said Co-operatives Minister Joseph Nyagah.

He made these remarks on Monday in press briefing held at his ministry offices, organised to address some of the issues arising out of a recent media reports concerning the coffee sector.

KPCU was placed under receivership by Kenya Commercial Bank (KCB) after it failed to meet obligations to several creditors and suppliers. The amount of debts owed by KPCU was close to Sh700 million at the time it was placed under receivership.

"I support the placement of KPCU under receivership because this was to protect its assets from being grabbed by suppliers. I may not agree with the manner in which KCB is doing it," said Nyagah.

Consultations are ongoing between the Government and societies, farmers, large coffee estate owners and smaller individual farmers on how to revive operations at KPCU.

Following liberalisation of the coffee industry, KPCU lost its monopoly status and soon ran into financial problems after failing to compete with new mills.

Problems at KPCU have been persistent due to the fact that it had dual registration of being a private company and a co-operative. When this was sorted, it gave leeway for the co-operative ministry to intervene.

In the restructuring plan, the Government is advising the KPCU board to sell off its 54-acre land in Dandora or turn the property into real estate, using some portions to put up warehouses’.

Revenue generation

There is also a proposal to turn the KPCU Wakulima House offices into a car park, generating enough revenue to pay off the union’s debts.

It is also considering selling off some of its properties in non-coffee growing areas of Kisumu and Nanyuki, to provide the much needed cash.

"I will ask for a one month extension to the 6 months deadline given for us to submit a report to the president," said Nyagah.

The coffee has over the recent years been plagued with challenges. To shore up the sector, the Government last year waived an outstanding loan debt of Sh176.3 million for coffee farmers in Machakos and Makueni counties.

Announcing the waiver then, Nyagah said the move was meant to improve and stabilise the coffee-farming sector, which had drastically declined in the region.

The booming real estate sector had also started eating into land under coffee as farmers abandoned the crop for non- or delayed payments.