A cooperative society invests 200 million shillings in a coffee marketing agency

Capital markets

A cooperative society invests 200 million shillings in a coffee marketing agency


A farmer from Tuiyo, Kapseret ward of Uasin Gishu County during the harvest of ripe berries on September 25, 2021. PHOTO | JARED NYATAYA | NMG

charlesmwaniki_img

Summary

  • Co-op Holdings Co-operative Society invested 200 million shillings in its coffee marketing subsidiary last year, bringing its total investment in the unit to 480 million shillings.
  • Co-op Holdings is itself a union of over 3,800 co-operative unions from across the country and is the largest shareholder of Co-operative Bank, a publicly traded lender, with a 64.6% stake.
  • The decision to set up the coffee marketing subsidiary came after the chapter of members from the coffee sector sought to improve the income from their harvest.

Co-op Holdings Co-operative Society invested 200 million shillings in its coffee marketing subsidiary last year, bringing its total investment in the unit to 480 million shillings.

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

The subsidiary, however, has posted losses in recent years, forcing Co-op Holdings to write off 280 million shillings of previous investments in the unit in 2019.

“There was an additional investment in KCCE in 2021 of 200 million shillings. The investment in KCCE was fully impaired in 2019 due to loss history,” Co-op Holdings said in its latest annual report.

Co-op Holdings is itself a union of over 3,800 co-operative unions from across the country and is the largest shareholder of Co-operative Bank, a publicly traded lender, with a 64.6% stake.

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

The decision to set up the coffee marketing subsidiary came after the chapter’s members from the coffee sector sought to improve income from their crop, which was making huge losses after years of mismanagement in the sector.

The cooperatives have targeted improvements in production, quality, marketing of their products to global buyers, as well as value addition for local and external sales.

KCCE operates 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 to sell locally and internationally, under the Shiriki Coffee brand.

KCCM, on the other hand, was established to offer coffee grinding services to farmers to reduce costs and losses, and currently operates a dry mill in Sagana.

[email protected]