Kenya Farmers Association has settled debts worth Sh700 million. KFA managing director Simon Cherogony said the debts had accumulated over the years.
In a statement released yesterday, Cherogony said the management sold 14 non-core assets. The board of directors headed by Richard Mibei identified the assets disposal.
"The money was used to pay most of its creditors. The other amount was used to pay government taxes, rates owed to various county governments worker's outstanding dues and part of NSSF deductions," Cherogony said.
"We have laid down measures and plans on how to settle debts and debenture holders 'banks' identified some 26 non-core assets that would have been sold at a throw price to recover the debts," he said.
"National Bank of Kenya was holding a bulk of KFA assets that were at risk of being disposed off at cheap price," he added. Among the debts settled by KFA is the National Bank loan, which was cleared in full.
The outstanding debts are Barclays Bank which is demanding a negotiated amount of Sh362million. The rest are demanding a total of Sh300, which include trade creditors, rates and services owed to various institutions.
He however defended the sale of association's non-core assets saying the money owed to two commercial banks, Government institutions and workers was hindering its revival.
"The sale of the assets had been sanctioned by the KFA board of directors and was legal. The consent signed between National Bank of Kenya and Barclays Bank over the debts was above board aimed at ending the debts that had accumulated since 1996," he said. The MD said the move has helped in avoiding the debenture holders from disposing key KFA assets at a loss.
The association is also in the process of updating and reorganizing its membership registers to reflect the membership in Kenya Grain Growers Co-operative Union (KGGCU) and KFA limited. A consultancy firm has been engaged to carry out the exercise.
The same firm is also working on the legal status of KFA following the various changes of the organization from KFA to KGGCU, and back to KFA. KFA plunged into debts in the early 1990s over poor management and the current board has been working to revive the organization that is key in supplying farmers with farm inputs. The organization now operates 36 branches across the country with a workforce of 252 workers.