By Kamundia Muriithi
Twenty-four co-operative societies in Embu County are struggling to pay a Sh90 million loan borrowed five years ago to set up a coffee mill that has since stalled.
The debt has ballooned to Sh127 million as most societies are unable to service the loan.
Each society was to pay Sh3.8 million, while the loan was secured by a parcel of land owned by a cooperative societies union.
The coffee mill chairman, John Maruku and former Embu Senator Lenny Kivuti, confirmed that the societies are unable to service the loan.
They appealed to the county and national government to waive the debt to save the societies.
The Embu County Coffee Mill has remained dormant despite having state-of-the-art machinery procured from Brazil in December 2014.
The loan from the Commodities Fund was used to construct the main buildings and buy milling machinery with a capacity of 2.8 tonnes per hour.
Embu County Government which partnered with farmers contributed Sh15 to get a stake and committed to repaying Sh10 million annually. It has contributed Sh40 million so far.
Maruku said the societies are unable to service the loan due declining coffee production in the county and fall in prices of the commodity at the coffee auction.
He said farmers had hoped that they would start milling their coffee immediately and earn more to repay the loan quickly.
Kivuti said counties must find a way of bypassing brokers and adding value to coffee to bridge the gap between the Sh3, 000 price of premium coffee at supermarket and the measly Sh50 paid to farmers.
Statistics from the co-operative sector show that coffee production in the county last year was just 11 million, a tumble from the production of 15 million kilogrammes in the year 2014 when the machinery was brought.
Maruku, who is the chairman of Murue cooperative society, said last year’s sale was the worst in decades where a bag of grade AA coffee sold at $90.
In the latest rates by co-operative societies, farmers have been paid between Sh42 and Sh85, a decline from four years ago when they pocketed over Sh100 per kilogram.
“The coffee auction is set up in a way that a farmer will always be exploited. That was the reason the management committee of Murue decided to start a mill so that we can add value to our coffee by dry milling it and bypassing the transportation cost to the miller. Others joined us but the delay in operationalizing the mill is costing us heavily,” lamented Maruku.
In December last year, Governor Martin Wambora said the mill was ready and they were awaiting the installation of three-phase electricity for the meal to start operations.
County Co-operatives Director, David Muriuki, said the three phase electricity has been installed and the mill would start operations with this year’s coffee harvest.
Muriuki supported calls to waive the debts saying some struggling societies with just 17,000kgs cannot afford to service their quota of the loan.
“When the mill starts operating the government will benefit from taxes and development of the region than from following up the loan, which would leave farmers bankrupt and suffering,” he stated.
He said only five societies in the county account to 80 per cent of the coffee produced and which can afford to comfortably service their quotas.
He enumerated those societies as Kibugu-2.5 million kilogrammes, Murue-2 million, Gakundu-1.5 million and Thabana 1 million.
The commissioner expressed hope that once the mill starts working, Embu would gain by reduction in production cost by at least 30 percent.
“When the coffee is milled in the county, the costs associated with transportation, security and handling to private millers will be avoided,” he said.
The idea of a County Mill was the initiative by Murue Co-operative Society long before the county government was constituted but other coffee cooperatives were incorporated bringing membership to more than 110,000 farmers.
Kirinyaga have also built their own mill but it is yet to start operations.
Most co-operative societies take their coffee beans to private millers for dry milling.
