Players want scheme to cushion farmers against falling prices

Purple Tea plants at the Tea Research Foundation of Kenya in Kagumo in Kirinyaga County. PHOTO | BONIFACE MWANGI 

In Summary

• Stakeholders say guaranteed minimum returns plan would ensure growers get good pay from their produce regardless of how poor the prices are in the market

By MWANIKI WAHOME
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Stakeholders want the government to set up a scheme to cushion farmers against volatile prices of farm produce.

They are calling for guaranteed minimum returns as a measure against unpredictable prices.

Some experts are, however, cautioning that the scheme is not “the most viable initiative” to farmers’ poor earnings saying increased subsidy on farm inputs would have a bigger positive impact.

“What happens when the international prices fall below the set minimum? It is not sustainable and is also prone to corruption. It could also work against farmers as they could only get the minimum when the prices are good,” said Kenya society of agriculture professionals chairman, Mr Paul Mbuni.

“We need to look at cost of production and not at the peak end of the market.”

The government last month indicated that it would set up a fund to stabilise tea prices and cushion farmers against declining incomes following global glut of the green leaf.

Sectors that have called for guaranteed minimum returns are coffee, cotton and pyrethrum growers. Some farmers and political leaders have also been agitating for such a scheme to cushion earnings in the unpredictable international market.

“We are going to roll out a price stabilisation fund to cushion farmers from price fluctuations,” Agriculture Cabinet secretary Felix Koskei told a tea stakeholders forum. The meeting was organised by the Senate committee on agriculture.

The minister, however, did not provide details on the size of the fund, where the money would come from, or how the fund would be administered.

Stakeholders in the tea sector are the latest to join the chorus for setting up guaranteed minimum returns to improve performance of agriculture and ensure farmers enjoy good earnings.

Tea has experienced steady decline in prices leading to one of the worst bonus payouts in the industry’s history. The poor income was blamed on low prices in the global market arising from oversupply of the cash crop.

“The guaranteed minimum returns would require that farmers are paid against their yields. The problem of administration would be monumental, with the possibility of unscrupulous individuals seeking to gain from it. I would not go for it but subsidies,” said Eprahim Wachira, an agriculturist.

Fictitious accounts

Guaranteed minimum returns was abandoned in 1970s following massive mismanagement as the administrators had to deal with fictitious accounts and other logistical challenges.

Mr Mbuni said the political agitation for guaranteed minimum returns would lead to loss of benefits as each of the regions seeks to access such funds.

Instead of introducing the scheme, the experts said the government should improve infrastructure and provide credit while subsidising inputs to boost production of crops and hence farmers’ earnings.

International tea and coffee prices have been declining in the last few years setting off alarm bells over the future of the two commodities that are the livelihood of about three million Kenyans.

The pyrethrum segment has gone through a lean period leading to near collapse and the setting up of guaranteed minimum returns is one of the recommendations meant to prop up its revival.

Tea prices dropped by a massive 38.6 per cent between January and October last year, triggering a call by stakeholders for government intervention through a review of levies to cushion the farmers’ earnings.

The prices have not recovered sparking fears that farmers may abandon the crop. Some factories have paid a paltry Sh8 per kilo in bonus payment.

Coffee prices have gone through a steady decline in six years, recording only slight improvement this year. This is a dim prospect for the industry that has only recently recovered from the 1990s slump.