Co-op society injects Sh200m in coffee marketing agency

Co-op Holdings Co-operative Society made an investment of Sh200 million in its coffee marketing subsidiary last year, raising its total investment in the unit to Sh480 million.

Co-op Holdings owns 91 percent of the Kenya Co-operative Coffee Exporters Limited (KCCE), a subsidiary that was formed in 2009 to give coffee farmers more control over the marketing of their produce. The rest of the shareholding is held by individual cooperatives.

The subsidiary has however been loss-making in recent years, forcing Co-op Holdings to write off Sh280 million worth of previous investment in the unit in 2019.

“There was an additional investment in KCCE in the year 2021 of Sh200 million. The investment in KCCE was fully impaired in the year 2019 due to the history of losses,” said Co-op Holdings in its latest annual report.

Co-op Holdings is itself a union of more than 3,800 co-operative unions drawn from around the country and is the biggest shareholder in listed tier-one lender Co-operative Bank with a stake of 64.6 percent.

It also holds a 33.4 percent stake in Co-operative Insurance Society Ltd, which in turn is the majority shareholder of listed underwriter CIC Insurance Group with a 74.3 percent stake.

The decision to create the coffee marketing subsidiary came after the section of members drawn from the coffee sector sought to improve the earnings from their crop, which was making huge losses after years of mismanagement of the sector.

The cooperatives targeted improvements in production, quality, marketing of their produce to global buyers, and also value addition for sale locally and externally.

KCCE runs two subsidiaries—Kenya Co-operative Coffee Dealers (KCCD) and Kenya Co-operative Coffee Millers (KCCM).

KCCD started operations in 2012 with the aim of roasting and packaging Kenyan coffee for sale locally and internationally, under the Shiriki Coffee brand.

KCCM on its part was formed to offer coffee milling services to farmers in order to cut costs and losses, and currently operates a dry mill in Sagana.