Sh1bn set to settle coffee saccos’ debt burdens

Twenty six coffee societies and unions will benefit from Sh1 billion debt write-offs announced during the reading of the 2015/2016 budget on Thursday.

The amount is part of the Sh4.7 billion that the government committed to pay to rid coffee societies of huge debts, which were mostly piled in late 1990s when the sector was on the verge of collapse due to botched liberalisation.

Those to benefit are saccos and farmers’ unions left out in the first tranche of Sh5.8 billion released under the stabilisation of exchange (stabex) funds. The cash was disbursed through Co-operative Bank.

BENEFICIARIES

Of the Sh4.7 billion, Sh3.5 billion has been paid out and only Sh1.2 billion will remain after the current allocation is paid out.

The ministry of Industrialisation and Enterprise Development says the beneficiaries are Murata Sacco and Mugama Co-operative Union in Murang’a, Kiambu Coffee Growers, Taifa Sacco and Mathira Sacco in Nyeri as well as Kirinyaga District Union and Gichugu Farmers Sacco.

Others are Embu Farmers Union and Nawili Sacco in Embu, Meru Coffee Sacco (Thabiti), Meru Farmers Union, Meru Central Farmers Sacco, Ntiminyakiru Sacco, Meru Central Multipurpose, Meru South Sacco (Southern Star), Meru South farmers Union, Sazuri Sacco, Bungoma District Sacco, Wakenya Pamoja and Gusii Farmers Union in Kisii, Chesikati Sacco, Machakos Co-operative Union and Mt Elgon Union.

The government started debt waivers in 2003 to give the struggling coffee societies a new lease of life after a lean period in the 1990s. The debt waiver is meant to help the coffee societies put their balance sheets in order.

In the 1970s and 80s, coffee was a top foreign exchange earner but it has since been overtaken by tourism, tea and horticulture.

SPECIAL ATTENTION

The coffee business has received special attention from the government since 2003 with debt waivers. The State also set up Coffee Development Fund to enable farmers get cheap loans.

Coffee production has plummeted from 130,000 tonnes in 1988 to an average of 50,000 tonnes in recent years, due to various reasons that include poor handling of liberalisation of the sector and the collapse of the international market.

Coffee prices have, however, sharply improved in recent years with farmers earning three times more. This has been attributed to declining output in key global sources due to climate change and increased consumption.

International Coffee Organisation has projected that coffee prices will remain relatively stable with consumption globally growing at 2.4 per cent and production remaining lower than the demand.