By: PATRICK NZIOKA
Muka Mukuu Farmers Cooperative Society, a prominent grouping of coffee farmers, will go down in history as the best example of how massive plunder can bring a thriving organisation to its deathbed.
The company, which produced one per cent of the total coffee in Kenya in 1989, and reputed to have had the best irrigation and coffee processing system in Kenya developed by the German organisation GTZ, is now a pale shadow of itself.
This is after the company’s machinery was looted and its land sold illegally, and general theft of other company’s assets by the management cheered on by a compromised regulator.
This is one example of how mismanagement of cooperatives has led to the collapse of the coffee sector.
A visit to the company’s premises at Donyo Sabuk on the edges of Machakos County revealed a firm whose potential is evident but which is now on the throes of death.
The sorry state of affairs would certainly make settler farmer, Sir William Northrup McMillan, who sold the 28,000-acre farm to the locals turn in his grave.
There is not a single coffee tree in the whole farm.
Only the office building that was declared a national monument by the National Museums of Kenya remains intact.
The building has underground tunnels constructed by Mr McMillan as escape routes.
The irrigation system and the coffee processing plant was stripped of its machinery and later sold out without the consent of the farmers.
Part of its land was also sold by subsequent management committees.
EXPIRY OF AGREEMENT
As they plundered the company, they kept the farmers busy with a myriad of litigations arising from agreements signed without due care.
A citrus fruit section, a nursery site and a sisal processing plant have all collapsed, with the more than 800 acres covered by the three activities being the subject of a land case between the farmers’ company and investors, who leased the land for a song and who do not undertake any activities leaving it idle.
And as espoused in the Cobweb theorem, which argues that farmers do not learn from previous events and therefore continue to make the same mistakes, the previous management of Muka Mukuu leased out the land previously under coffee to a fruit processing plant for period of 21 years for a pittance.
The company pays Sh800 per acre per month for the more than 1,200 acres, with Muka Mukuu earning about Sh9.8 million per year.
Besides the machinery and land, the management further descended on the indigenous trees, selling more than 10,000 that regulated the climate in the area.
This left the land bare and exposed to vagaries of climate change.
Current Chairman George Mutiso says while members would wish to restore the farm to former glory, he is categorical it would take a miracle to take it back it to the nostalgic GTZ era.
“We would want to restore the farm to its former glory but that would be a tall order following the massive looting and theft of the company assets. The land that would have been available for farming is now leased out for 21 years, which means it may only be available for generations to come. If some of us will be still alive then, we can see whether we can bring in a strategic partner.”
Mr Mutiso says the rain started beating Muka Mukuu after GTZ left following the expiry of the agreement between them and the Kenyan government.
GTZ had come in as a management agency following a loan agreement advanced to the farm by German Bank KfW and guaranteed by the government.
The money would be passed through the Co-operative Bank for onward transmission to the farm.
GTZ developed the irrigation system as well as setting up of the modern coffee processing plant at the time.
It invested in machinery, including tractors, and the infrastructure.
As a result, the farm became the biggest employer in the area since the irrigated coffee was being harvested and processed throughout the year.
Water was available from the River Athi that crosses the farm.
It is due to this investment that it produced one per cent of the total coffee yield released in the country in 1989.
In addition, it guided the settlement of members of the society who were initially squatters and workers in the colonial farm. They were allocated land after paying Sh1,050.
By: the time GTZ handed over the management of the farm to locals in the early 1990s, Muka Mukuu was a thriving business capable of sustaining itself.
The organisation handed over the management of the company to the elected members of the board while a local management agency, East Africa Agencies, was appointed to offer technical advice.
By: 1992, the local management agency appointed to manage the loan was kicked out by the members, with the leaders who had no expertise in managing the outfit taking charge.
Wrangles and mismanagement set in as the fees charged by the bank for managing the loan piled up.
THREATENING TO AUCTION
According to Mr Stephen Kiania, a committee member, the wrangles opened an opportunity for the officials to plunder the company.
The fees charged by the Co-operative Bank for managing the loan began to pile up as the company could not service its obligations.
Following bilateral talks between the Kenyan and German governments which resulted in debt write-off, the company benefitted after KfW also demanded the government writes off the loan it guaranteed the company.
This did not, however, pull the company out of its debt because the fees charged by the bank continued to attract interest.
By: 2008, the interest had piled to a whooping Sh200 million, with the bank threatening to auction the farm to recover its money.
It took the intervention of President Kibaki’s administration to write off all the debts for coffee farmers to save the company’s land from the auctioneer’s hammer and free its title deed.
SOURCE: DAILY NATION