The significance of the coffee sector to Kenya’s economy cannot be overstated, as it supports the livelihoods of 800,000 farmers and impacts an additional 5 million people. This sector is a crucial source of foreign exchange earnings for the country. Recognizing this, the Kenya Kwanza government has prioritized coffee as a key area for enhancement within its agricultural revitalization plans.
The journey toward reforming the coffee industry was initiated at a stakeholders’ conference in Meru on June 8, 2023, where various obstacles to the sector’s growth were identified. These issues range from decreasing coffee production and competition from other crops to delayed payments for farmers, significant debts, and exploitation by cartels, along with governance issues within the cooperative movement.
In response to these challenges, a comprehensive series of reforms have been launched, including the development of the Coffee Policy 2023, Coffee Bill 2023, and Cooperatives Bill 2023. Moreover, the Nairobi Coffee Exchange has been reorganized to allow cooperative unions to participate in auctions, significantly benefiting 15 licensed cooperative unions. Other measures such as the Direct Settlement System (DSS) have been implemented to eliminate delays in payments to farmers, and efforts have been made to clarify roles within the industry, including in milling, marketing, and brokerage.
A landmark step in these reforms is the Coffee Debt Waiver, prompted by farmers’ appeals during sensitization meetings for the Coffee Cherry Advance Revolving Fund (CCARF). In response, the Ministry prepared a Cabinet Memo that was approved, allocating Ksh6.7 billion to aid coffee farmers in settling their debts. This move aims to alleviate the financial strain on farmers due to outstanding loans and advances provided by financial institutions to coffee cooperative societies. The waiver will benefit farmers across all 33 coffee-growing regions in Kenya.
In the coming days, a multi-agency validation team will be formed to assess claims from cooperative societies and draft a report for the National Treasury, ensuring the release of funds. This process underscores the importance of transparency and integrity among cooperative leaders and their creditors. The government has made it clear that honesty is imperative throughout this exercise, warning that any form of exaggeration or falsification of claims will not be tolerated and may lead to prosecution.
This comprehensive approach to reforming the coffee sector highlights the government’s commitment to revitalizing a key component of Kenya’s agricultural industry and underscores the importance of integrity and accountability in the management of public resources.
Today, Cabinet Secretary for Cooperatives and MSMEs Simon Chelugui held a consultative meeting with the creditors of coffee cooperative societies in Nairobi to update them on the latest developments and our expectations. He was accompanied by the Principal Secretary for the State Department of Cooperatives, Patrick Kilemi, the new KPCU PLC Chairman Daniel K. Kiprotich Chemno, the Managing Director Timothy Mirugi, and the Commissioner for Cooperatives, David Obonyo, among other officers from the Ministry.
