Is debt-ridden KPCU warming up their way out of the woods yet?

A new breath of fresh air is about to blow at Wakulima House, the Head offices of KPCU following a recent directive by President Uhuru Kenyatta for this giant co-operative union, to be restructured and put back on its feet

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PHOTO/COURTESY

After being in receivership and moribund state for years now, the financially-troubled Kenya Planters Co-operative Union (KPCU), is once  back to the spotlight.

A new breath of fresh air is about to blow at Wakulima House, the Head offices of KPCU following a recent directive by President Uhuru Kenyatta for this giant co-operative union, to be restructured and put back on its feet.

“We are very excited about this intervention by the state to revive KPCU. As a board, we are ready to support any initiatives that will put the Union back on its feet,” said William Gatei, Chairman of the Board of Directors, KPCU Limited.

He disclosed that the Union has been consistent in clearing off its outstanding debts so that it can be lifted out of receivership.

KPCU top management is hopeful that the state intervention will aid in clearing its outstanding debt portfolio, estimated at more than KSh2 billion as well as KSh1.6 billion that the Union is owed by the defunct Coffee Board of Kenya.

The Union is also appealing for a reinstatement of its coffee milling license so that it can access foreign markets, hitherto closed off to it due to the fact that it no longer mills any coffee.

“Local coffee prices are low at the moment due to a number of serious problems that affect the industry as well as KPCU. The board has come up with a number of strategies to review the coffee sector and put back the union on its feet. But we are still faced with numerous financial challenges because KPCU is still under receivership,” said Mr Gatei.

The Co-operatives industry is holding its breath, especially those operating within coffee growing areas, all keen to see what happens next at KPCU.

“The foundation of KPCU needs a re-look as well as growing of coffee in Kenya.  We need to ask ourselves what went wrong with coffee business especially for small scale farmers. Possibly we need to re- evaluate the whole value chain from the farm all the way to the market, look at all the emerging issues, current trends in marketing and so on and then make informed decisions,” said John Mwangi, Chief Executive Officer of Tai Sacco Society Limited, which draws a large bulk of its members from tea farmers in Githunguri, Kiambu County.

Experts maintain that only a lean and efficient KPCU is needed if it is to survive a liberalised coffee milling business. 

KPCU still has comparative advantages such as vast pieces of land and warehousing facilities as well as a supply network. What is needed is a complete overhaul of KPCU, to bring it up to speed with a liberalised and ferociously competitive coffee business.

Allowing the giant union to go down and its assets sold off cheaply will not only expose farmers to exploitation but also open up the business to manipulative tendencies of powerful vested interests, business cartels and criminal gangs.