Kenyan coffee growers may soon be enjoying substantive cuts of up to 30 per cent in the cost of export bags following recent industry reforms that de-linked dealers from their procurement.
Previously growers were only supplied with expensive sisal bags sourced through "dubious" schemes by dealers and the cost later recovered from them. But in a bid to clear flaws in procurement systems for the bags, the Coffee Board of Kenya (CBK), recently removed that
mandate from dealers, passing it on to millers who will now charge farmers directly for the bags.
"This is because packaging is part and parcel of a product. A product is bought in its package and the cost should not be separated," CBK managing director Solomon Waweru said. He said millers will now factor the bags in the overall costs of production, an issue that is anticipated to trigger competitiveness and clear any forms of cheating in the procurement process of the bags.
He added, "We shall see prices coming down because millers will be fighting to attract clients through cheaper offers."
Farmers currently pay Sh130 (1.95) for a single export bag, a cost considered "too high" by exporters.
Dirk Sickmueller, who chairs the Kenya Coffee Traders Association (KCTA), said the reform will open up the procurement process and help bring down cost of the bags.He said there were plans to introduce alternative packaging material such as jute, which would sell at Sh100 ($1.50).
But the new procurement structure has been unpopular with some growers who questioned why the cost had been passed on to them.
Business Daily
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