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Nyeri reaps from joint coffee marketing, but tough hurdles remain [Nation (Kenya)](Nation (Kenya) Via Acquire Media NewsEdge) When 106 coffee factories in Nyeri supported their county government's decision to market their produce jointly, their aim was to scout for a buyer who would offer them the best prices. Governor Nderitu Gachagua decided to eliminate cartels networks that had long determined prices, often to the detriment of farmers. The cartels' influence was felt from hamlets in Central Kenya and other coffee-growing areas to world capitals such as London and New York. And a few months down the line, Mr Gachagua's plan seems to be bearing good results, albeit not at the rate the farmers expected. The county government had initially promised to pay farmers a minimum of Sh100 per kilogramme after selling the coffee directly to global buyers. Upon taking the county leadership, Mr Gachagua embarked on a tough mission — marketing Nyeri coffee in international markets. This proved a very challenging task given that the industry had been dominated by international dealers since pre-independence days. Cartel networks turned to powerful, local personalities for support in their fight against the new marketing plan. There were claims that Nyeri coffee was rotten and not traceable to the respective societies, ostensibly because it was poorly stored. INTERNATIONAL PROPAGANDA Mid last month, Mr Gachagua warned farmers that their earnings would be less than promised. This sparked protests, with some growers pouring cold water on the governor's joint coffee marketing strategy. Despite local politics and international propaganda, Mr Gachagua's strategy is somewhat paying off. Farmers from Kahiraini coffee factory in Mathira this year received Sh80 per kilogramme of cherry, a 550 per cent increase from the previous year's Sh12.30 per kilogramme. Growers from Kiuu in Mukurwe-ini received the lowest amount — Sh38 per kilogramme. In the previous year, they were paid Sh35 per kilo, meaning they have realised a 10 per cent increase through the joint marketing plan. Figures from the county government indicate that coffee milled centrally at Sagana-Kenya Planters Cooperative Union (KPCU) helped cut losses to 17 per cent from over 35 per cent suffered previously. The superior grades of AA, AB, and PB increased to more than 38 per cent from 5 per cent and with the elimination of price fluctuations, farmers' societies were expecting better returns. Nyeri coffee farmers realised a gross sale of Sh3.1 billion, with direct market sales increasing to over 40 per cent from 5 per cent. Mr Gachagua sees this as a great achievement. "Local cartels blocked Nyeri coffee from accessing the market by claiming that Nyeri had been contracted to them. The adverse campaign was both local and international. The breakthrough came on March 24, 2014 when the national government intervened," Mr Gachagua said. CHERRY SOLD "Therefore, Nyeri coffee was four months late in the market. This delay led to loss of opportunity to sell the coffee when the prices were at their peak." In 2012/13, farmers in Kagumo coffee factory were paid Sh34 per kilogramme, but this time round, they received Sh60, a 78 per cent increase. Those from Karindundu got Sh44.65 in 2012/13 and Sh64 this year, a 44 per cent increase. Tambaya growers received Sh70 from Sh40.60 per kilogramme received the previous year, a 70 per cent jump. Last Wednesday, a meeting called by the management of Mutitu Factory, an affiliate of Rugi Farmers' Cooperative Society in Mukurwe-ini, to discuss the payment ended in disarray when the chairman, Mr Kirega Maina, failed to explain the disparity between the rate of payment announced by the governor and what growers received. Figures released last month showed that farmers from the factory received Sh67 per kilogramme of cherry sold, but only Sh41 reached their accounts. The farmers demanded that their chairman explain the Sh26 difference. "We are going to take what has been put into our account for now, but we need to be informed by the governor what has happened to Sh26. They are treating us like slaves," the farmers said while confronting Mr Maina, who was forced to call off the meeting. The chairman said the factory's gross sales were Sh30 million, with the highest possible rate of Sh22 million. MARKET COFFEE JOINTLY He said after deduction of factory expenses amounting to Sh2.9 million, each farmer would pocket Sh41.75 per kilo. Last year, the farmers received net pay of Sh37 per kilo. "After deducting marketing charges, factory expenses, and society contributions, what we remained with is what we distributed, with the final amount being Sh41.75," said Mr Maina. The county government's initiative also inadvertently benefited a few factories which defied Mr Gachagua's directive to market coffee jointly. Offer high prices. Farmers from Thiriku, Kiandu, Mutheka, and Gachatha coffee factories in Tetu sub-county who opted to continue with their previous millers and marketers despite pressure from the county government, also benefited after their commercial marketers offered high prices to counter the county's offer. The farmers from the four factories received their payments in May after deductions of 20 per cent for factory expenses. The growers were paid between Sh67 and Sh80 per kilogramme. Their millers and marketers were Central Kenya Coffee Mills, Sustainable Management Services Limited, and Sasini Coffee Limited. Last year, the governor formed a taskforce to look into the challenges facing marketing of coffee and come up with recommendations on how to improve the business. MONOPOLISED BY PLAYERS One of the recommendations given by the taskforce and approved by stakeholders was that marketing of coffee be done collectively in order to have greater bargaining power in the market. However, Othaya Farmers' Cooperative Society was an exception since it has been milling its coffee since June 2010. The society's factory has been earmarked by Nyeri County government as an alternative miller for coffee from the Sagana KPCU, currently rented to the Kenya Cooperative Coffee Exporters Mills. The taskforce recommended that milling be done by individual factories to ensure proper grading, traceability of beans and separation of certified coffees. The governor said the coffee value chain was monopolised by players who made sure that all the produce from the societies was processed and marketed through them and at the price they dictated. Poor pricing mechanism has been blamed for the decline in coffee production in Kenya from 135,000 tonnes in 1999 to last year's average of 45,000 tonnes of clean coffee. INADEQUATE VOLUMES Kenyan coffee fetches premium prices in the world market. However, it was embarrassing that while coffee prices globally were in excess of $3.5 (Sh311) per kilo, farmers in 2012/2013 received an average of Sh34 per kilo. Some farmers did not receive any payment from commercial marketing agents as all income went to meeting the cost of production. Formerly, appointment of millers and marketers was done at factory level by farmers themselves and upon production and wet processing, the milling was assigned to a commercial miller. Due to this, societies made huge milling losses that reduced the volume of coffee reaching the market. This cut the final pay to the farmer and in some factories, milling losses were 30 per cent for good quality coffee. The coffee was then handed over to different marketing agents, making it difficult for any society to consolidate its produce even at the local level. This led to inadequate volumes for societies to meet demand in the external market, leaving the traders to consolidate coffee at the auction and offload it in the market at better prices. (c) 2014 Nation Media Group. All Rights Reserved. Provided by SyndiGate Media Inc. (Syndigate.info). |