Business Daily (Nairobi)
Allan Odhiambo
5 June 2008
Giant miller Kenya Planters Co-operative Union (KPCU) is set to unveil new service tariffs by September as the competition for customers intensifies in the coffee industry.
Chief executive officer Peter Kimani said a review of the firm's tariff lines was almost complete, adding that a new structure would be in place in three months.
"Our new tariff lines will be unveiled before September this year as part of plans to become a low - cost service provider," he told Business Daily.
Currently, millers charge an average $70 per tonne for the processing of parchment coffee.
Analysts have said that the charges are likely to fall in the long run thanks to competition triggered by new players entering the business in droves.
"The competition is real and we certainly have to adjust or lose out to the new players. I may not tell the exact adjustments that we shall make on the tariffs but they would be significant," Kimani said.
In the just ended coffee season, the industry witnessed a massive scramble for consignments of coffee amid huge drops in production in key growing areas.
This led to just 42,000 tonnes of the commodity being obtained against a demand of 53,214 tonnes.
Efficient services and competitive rates became key in determining the volume that contracts millers landed because producers resorted to pursuing the best bargains in the market.
The industry's woes can be traced back to last year when a cold spell hit most growing areas, affecting the development of berries.
Besides the cold, cases of Coffee Berry Disease were also reported in areas such as Embu, Kirinyaga, and Nyeri.
Mr Kimani, however ,predicts better output in the coming season with analysts saying millers and other players in the industry are likely experience less pressure on their operations.
Coffee Board of Kenya (CBK) managing director, Loise Njeru, said projections showed that the industry could realise about 57,000 tonnes of coffee in the 2008 season, compared to the 42,000 tonnes last season.
"Higher output is achievable in the new season unless major distractions such as disease outbreaks are witnessed," Ms Njeru told Business Daily in a recent interview.
"The cropping capacity for the coming year is immense. The production for year 2008 is expected to grow by about 40 per cent.
This is largely due to biannual bearing cycle and improved husbandry practices especially in the estate sub-sector" the Coffee Research Foundation (CRF) said in a report.
But despite the expectations, Mr Kimani said KPCU was also planning to enter a partnership with new marketers so as to boost revenue.
"Many marketers lack milling facilities. We want to rope them into partnerships and boost our revenue base," he told Business Daily.
He said KPCU would continue its scheme on prompt payment for deliveries in order to keep the confidence of producers.
Late payments have been a thorny issue in the industry, with disillusioned growers threatening to pull out of the industry.
"We are also keen on insuring crop deliveries right at the time it reaches our delivery points countrywide. Safety of the crop is a major issue and we want to take it upon ourselves to carry the burden of crop security on our shoulders and not the growers," Mr Kimani said.
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