Coffee farmers to benefit from KPCU's entry into derivatives market

A farmer sorting coffee for milling. Meru County Coffee Millers Co-operative Union. Entry into the derivatives market is set to boost incomes for coffee farmers after the Kenya Planters Cooperative Union (KPCU) announced plans to begin trading next year. FILE PHOTO |  NATION MEDIA GROUP

By OTIATO GUGUYU
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Entry into the derivatives market is set to boost incomes for coffee farmers after the Kenya Planters Cooperative Union (KPCU) announced plans to begin trading next year.

KPCU chairman William Gatei said they are set to enter into partnership for the new financial instrument launched by the Nairobi Securities Exchange on Tuesday.

The derivatives market will provide advantages such as minimal upfront investment and lower transaction costs.

During a special general meeting held at Dandora Coffee Mills premises in Nairobi County, KPCU passed a resolution to trade coffee as an underlying asset to boost its revenues.

Mr Gatei says KPCU has identified partners who would enable it provide warehouse infrastructure to interested investors dealing with foodstuffs.

“KPCU has identified partners in order to enter into derivate markets and warehouse receipt system to only handle coffee but also other foodstuffs.

“Equally the initiative will also improve on food security guarantee cash available to the farmer immediately one delivers the product in any of the designated warehouses,” he said.

KPCU will be able to put to use the idle warehouses spread in all the coffee growing areas including Nairobi, Sagana, Meru, Nakuru, Kisumu, Kisii, Bungoma, Nanyuki and Tala.

FARMERS SHARES AT NSE

The board of directors also announced its intention to list farmers’ shares at the NSE as a way of maximising farmers’ incomes.

The announcement comes days after the organisation signed an agreement with an Israeli firm – Green Arava to irrigate coffee farm.

The agreement is under an arrangement to boost production and use produce to recover the cost of infrastructure.

KPCU came out of receivership in 2014 and has been expanding its revenue streams to enable it pay loans and other debts accrued over the years.