Radical reforms to create new dawn for coffee industry

Hillary Wambugu checks the health of coffee bushes in Nyeri on May 23, 2018. The industry is set for revamp. PHOTO | FILE | NATION MEDIA GROUP

What you need to know:

  • Mr Ndwiga said one of the key problems facing the sector is declining production arising from farmers’ frustration.
  • Among the interventions is to rollout a three-year subsidy programme to supply farmers with inputs and refurbish run down factories.

The troubled coffee marketing sector is set for a drastic overhaul to pave way for modernisation spearheaded by President Uhuru Kenyatta.

Top on the list are plans to carry our a forensic audit of over 500 cooperative societies across the country to determine the status of billions of shillings in debts owed by farmers to the societies and societies to financial institutions.

Proposals to set minimum production levels to determine societies’ viability for registration or continued operation are also on the table to tame splintering of the cooperatives and reduce escalating overhead costs.

PRODUCTION

The audit also targets the role played by the cooperative department.

“A decision has been made at the highest level of government that meaningful reforms cannot be effected in the current state of affairs without a special audit to determine what we are dealing with. A team has been set up comprising Cabinet ministers and stakeholders to drive this effort,” Senate Agriculture Committee chairman Njeru Ndwiga said.

The shake-up is set to start at the end of this month, he said.

Mr Ndwiga said one of the key problems facing the sector is declining production arising from farmers’ frustration.

“This is a thorough forensic audit to enable the reforms the President wants implemented. The message the President wishes to send to coffee farmers is that the absence of active government involvement in the sector is the reason all manner of players set in to exploit the farmers. The government is stepping in to change this,” Mr Ndwiga said in an interview.

SUBSIDY

He said a conference of elected leaders from 31 coffee growing counties is being planned for the government to explain the change of tack.

A section of coffee societies has been opposed to the proposed reforms drafted by a task force set up by President Kenyatta in 2016 and chaired by Prof Joseph Kieyah.

Among the interventions is to rollout a three-year subsidy programme to supply farmers with inputs and refurbish run down factories.

The move targets to boost annual production to 90 metric tonnes in three years from the current 38 metric tonnes.

“The government is no longer going to keep off the coffee sector and leave the farmer at the mercy of profiteers. We are proposing ceilings of requisite production levels set, say a minimum of 1.2 million tonnes for a society to be deemed viable for registration,” Mr Ndwiga said.

INNOVATE

If this is effected, many societies will have to merge. “Part of the problem is a plethora of players riding on the back of the farmer to make a living, even as production dwindles. The audit will also generate updated data on the number of farmers and acreage under coffee. Some inputs like subsidised fertiliser have been going to ghost farmers,” Mr Ndwiga oberved.

Some small societies are also heavily indebted to the Commodities Fund (formerly Coffee Fund), he said.

Meanwhile, the International Coffee Organisation (ICO) has called on the government to implement more reforms so as to improve small-scale farmer earnings through higher production and better beans quality.

ICO Executive Director Jose Sette said at the close of the 124th ICO session in Nairobi that the sub-sector, globally, is facing numerous challenges including low prices, declining production, competition from other beverages and a crowded value chain, adding that collaboration and adoption of innovations are needed.

TIMELY PAY

Mr Sette commended the Kenyan government for its endeavour to institute reforms that include the recent establishment of a Sh3 billion revolving fund for farmers. The fund will be operational from July this year.

A key change in the new rules includes the introduction of commercial pulping to kick out millers and creation of a central depository unit to ease payments to small-scale farmers.

Prof Joseph Kieya said farmers will be paid within two weeks once coffee is sold at the Nairobi Coffee Exchange.

Under the new rules, once coffee is sold dealers will be required by law to remit the money to the marketer within seven days. The latter is supposed to remit the cash to cooperative societies within the same period.

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