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
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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