January, 2009

Hundreds of acres under coffee in Thika district will soon make way for private developers marking a rising trend in the country where coffee estates are being edged out by growing real estate. The 1,380 acres of coffee estates owned by the giant Makindi, Mahoti and Jumapili farmers’ co-operative society are being disposed off to private developers following a loss making spree. According to The Coffee Quarterly, a newsletter produced by the Kenya Coffee Traders Association, the Kenya’s coffee estate sub-sector has become vulnerable to competition. “Over the last ten years, a number of coffee farms on the peri-urban locations have been lost to estate development,” the journal says. The journal notes that survival of the coffee estates depends a lot on the kind of incentives that the coffee sector receives to improve its competitiveness against other sectors. The decision to sell 1,160 acres of coffee in the Makindi-Mahoti farms highlights this growing danger facing coffee estates. Members of the society unanimously reached the decision to sell the land in a stormy meeting where farmers agreed to sell the land at Sh710,000 per acre. This was the highest bid placed for the land after the farmers advertised it in local dailies early this year. The second bid placed for the Makindi and Mahoti land was Sh668,000 while the third was Sh650,000 per acre. According to the Thika District Cooperative Officer Mr Charles Ndirangu, if the highest bidder is unable to meet the contract terms, then it will be passed on to the second and third bidders. “If all the three are unable to meet the terms then the land will be re-advertised again,” said Mr Ndirangu. The decision to sell the land which was bought in 1974 came after years of continuous loss making by the debt riddled society. The group, which has 5,179 members, hired the services of Springfield Valuer and Acumen Valuers Ltd to carry out the land valuation. Already 196 acres of the Jumapili coffee estate have been sold for Sh137 million after a resolution was reached by farmers last year in November. This enabled the group to clear outstanding debts amounting to Sh89 million while the rest was declared as dividends for the farmers early this year. This meant that each farmer got Sh18,840 in dividends marking the highest amount that members had gotten in 30 years. According to the society’s chairman, Mr Wilfred Gacheru, members had only received dividends totalling to Sh3,000 for a period of 30 years since the society was started. Most members who are now aged welcomed the sale of the properties saying that they have for long never benefited from the investment they made in the 70’s.