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Daily Nation : February 16th 2014
SUNDAY NATION February 16, 2014 AGRICULTURE | Middlemen who control entire value chain are colluding to fleece growers Coffee-zone counties fight to free market Governors want trade system overhauled to give farmers freedom to determine prices BY MWANIKI WAHOME @mwanikiwahome_ firstname.lastname@example.org centre of a row between Nyeri County and value chain actors that have over the years dominated the coffee business. Coffee societies currently ap- H point millers and marketers who enter into contracts to take up coffee after wet processing, from which point these firms take control of value chain activities. Farmers wait for whatever price the Nairobi Coffee Exchange auction determines. The system of picking the millers and marketers is largely dependent on elected coffee society officials, some of who are compromised by the milling firms. Now, county governments in coffee-producing zones want an overhaul of the current system in which farmers sell their coffee through millers and marketers appointed by the societies. “The societies have been experiencing high milling losses, reducing the volume of coffee that ends up in the market, which in return has reduced the final pay received by farmers,” read a statement from the Nyeri coffee societies last week. “In some societies, such losses have gone up to a high of 30 per cent for good quality coffee.” Governors Nderitu Gach- agua (Nyeri), William Kabogo (Kiambu), Mwangi wa Iria uge milling losses and control of prices by multinationals are at the (Murang’a), Joseph Ndathi (Kirinyaga) and Peter Munya (Meru) last week issued a joint statement saying they planned to collectively market their coffee to improve farmers’ earnings. Some societies have invested in milling plants as a way to enable farmers to earn more from their produce. An insider familiar with the business says millers used the excuse of losses to fleece the farmers as they control the entire system. Matters worsened after the amendment in 2009 of the Coffee Act 2001 through a finance Act that allowed the issuance of multiple licences, effectively handing control of the coffee industry, from the farm to the cup, to a group of players, mainly multinationals. BOXED IN Farmers being short-changed Millers using the excuse of losses to control prices, causing farmers to receive very little for clean coffee Kenyan farmers receive 7 per cent of the total retail sale, compared to 80 pc in Uganda, despite having a superior quality of berries High cost of production has caused returns from sale of berries to dwindle Sh34 Shillings that farmers received on average per kilo, against a global market rate of Sh300 BY FRANCIS MUREITHI @FMureith1 email@example.com At least 10 contractors in the central Rift Valley region have been blacklisted by Kenya Power for doing substandard work. Together with North Rift and Western, Central Rift forms the larger Western Kenya region; KP has registered more than 600 contractors as it aims to meet the increasing demand for electricity that currently stands at 79 megawatts. KP regional chief engineer Geof- frey Mulli said most of the contractors had flouted safety procedures while installing lines, with some resulting in fatal accidents. “Some contractors endanger their Business 35 Banks adopt technology in efforts to cut costs BY RAMENYA GIBENDI firstname.lastname@example.org Commercial banks are turning to technology to cut operating costs and boost growth. Equity Bank last week completed an upgrade, joining a growing number of local banks that have had to overhaul their systems to improve efficiency as they fight for more customers to boost returns. The upgrade, carried out in partnership with Infosys Technology, IBM, Oracle and Open Way Group, will enable the bank to roll out more technology-driven innovative products. Diamond Trust bank announced an upgrade of its banking system 2013 while KCB has already rolled out its electronic queue management system (eQMS) hoping to address the long queues in the banking halls. Barclays Bank, on the other hand, FILE | NATION Coffee farmers in Nyeri will no longer sell their product through middlemen if the county government succeeds in overhauling the current system through which millers have been exploiting farmers. The firms registered multiple companies from milling, warehousing, roasting and marketing, introducing conflicts of interest, and even adopted fictitious names to guard their interests in the value chain. The fragmented selling of cof- fee to different marketing agents makes it difficult for any society to consolidate its coffee even at the local level, the end result being inadequate volumes to meet external market demand. The coffee is consolidated at the Nairobi Coffee Exchange (auction) and off-loaded to the market at better prices than those offered to farmers. African Fine Coffee Associa- tion director Robert Nsibirwa believes that Kenyan farmers are restricted in a way that has created desperation due to poor returns. “The regulator (Coffee Board of Kenya) thinks the Kenyan farmer is unintelligent, but boxed in, the farmer has been moving away from the coffee farming business,” he said. According to Mr Nsibirwa, Ugandan farmers receive 80 per cent of the per kilo sale price, compared to the 7 per cent offered to Kenyan farmers even when Kenyan coffee fetches higher premium prices compared to thoe of its neighbours. “It is embarrassing that while coffee prices globally were in excess of $ 3.5 (Sh300) per kilo, Kenyan farmers in 2012/13 received an average of Sh34 ($0.4) per kilogramme of cherry,” the societies’ statement says. But experts say farmers will have to raise productivity per tree to between 30 and 40 kilograms from the current average of two, to boost returns. The other concerns in the sector revolve around the high cost of production, management of the growers associations and declining sales returns. has revamped its online systems to enhance the integration and convergence of its mobile payment systems. ICT services will allow the bank to process transactions more efficiently and provide customers with better access to services through mobile devices. Equity Bank Group chief execu- tive James Mwangi said investment in new technology was a necessary expense for the bank to register sustained growth in new market segments. “This system is expected to ... Boxed in, farmers have been moving away from the coffee farming business” Director of African Fine Coffees Association, Robert Nsibirwa provide a platform on which a comprehensive range of innovative products and services can be anchored. The new banking system is also expected to help the bank save on infrastructure and maintenance costs, and improve customer relationships,” a statement from the bank said. The new core banking system, known as Finacle 10, has a capacity of handling 35 million accounts, up from the present 8 million accounts. It will allow the bank’s 8.7 million customers to transact seamlessly across five countries − Kenya, Uganda, Rwanda, Tanzania and South Sudan. Kenya Power blacklists 10 contractors in Western region own staff, some of whom have died while on duty, while others were found to be corrupt, soliciting money from clients and thus denying Kenya Power revenue,” Mr Mulli said. Last year, a casual worker employed by one of the blacklisted contractors was electrocuted while working on line in Nakuru Town. Speaking to the Sunday Nation last week in Nakuru, the official said his company has received several complaints about the contractors from clients. Central Rift region has more than 200,000 consumers who pay an average of Sh700million per month in electricity bills, which translates into about Sh8.4billion annually. “Our objective was to connect at least 3,000 clients per month, but we managed 2,000 due to logistics and procurement challenges,” he said, adding that rampant vandalism of transformers was still a big challenge in the region that has seen the loss of between 15 to 20 transformers every month. “This translates into losses in excess of Sh100 million every year,” Mr Mulli said. “Apart from disrupting power supply to our clients and denying us revenue, these vandals are to blame for reduced development and jobcreation.’’ As a mitigation measure, the com- FILE | NATION Kenya Power Western Kenya region chief engineer Geoffrey Mulli. pany had started reinforcing all its transformers with metal bars and increasing the height on the poles. Meanwhile at least 19,717 pre-paid meters have been installed in the region as the company moves towards cutting down costs incurred in employing meter readers. But Mr Mulli said only 10 per cent of the region has been covered in the pilot project, which has been put on hold to upgrade the system to close loopholes. “We’re perfecting our system and sorting out some teething problems, and soon we shall re-launch the prepaid meters system,” he said. In another development the com- pany has raised the alert about over fraudsters who have been taking advantage of the increasing number of clients seeking connection to the national grid. After accessing client data, they have managed to steal thousands of shillings from desperate customers waiting to be connected by duping them into transfering the money through M-Pesa.
February 15th 2014
February 17th 2014