Kenya: New coffee firm faces pacts hurdle

Kenya: New coffee firm faces pacts hurdle
03-08-2009

NAIROBI — Contracts that coffee farmers signed with marketing agents in Kenya could stand in the way of a firm that was set up to market the produce on behalf of small-scale growers.

Although the Kenya Co-operatives Coffee Exporters Limited seeks to eliminate middlemen along the coffee marketing chain, its dream may not be realised soon since some co-operative societies have already signed milling and marketing contracts.

But buoyed by the enormous support the new firm has received from coffee societies, its directors are upbeat that it will be in business during this coffee season.

At the weekend, the Minister for Co-operative Development and Marketing Joseph Nyaga told the societies that are yet to sign the contracts to do so only for milling.

“You should sign milling contracts only. Officials from KCCE will come back to you to sign marketing contracts. We are not at war with the millers and any society is free to take its coffee anywhere for milling,” said Mr Nyaga when he met farmers’ representatives in Nyeri Town.

Second window

According to the minister, the new firm was formed after realising that the second window for marketing of local coffee which was introduced two years ago had not helped small-scale farmers.

He said the firm would be well capitalised to make it difficult to be manipulated by other forces within the marketing chain that would like the coffee trade to remain in their hands.

Shares in the firm will cost Sh100 each and the minimum that an in individual can buy is 1,000.

KCCE acting chief executive officer Lucy Murumba said the marketing contracts that farmers have signed with the agents have an exit clause which the societies could use to have their coffee marketed by the new outfit.

She said the firm had already entered into negotiations to directly market Kenya’s coffee to some key supermarkets that are owned by co-operatives in Israel and Scandinavian countries.

“The demand for our coffee is high and we have established that the market is there,” said Ms Murumba.

The firm, she said, had already applied for the registration of Kencafe as its brand name to facilitate the sale of coffee internationally.