There is high optimism in the coffee industry, thanks to aspiring and receptive reforms that the Government in conjunction with other stakeholders continue to implement.
On top of the anticipated achievements is increasing productivity from 2 kg to an average of 10 kg per tree by 2027 to boost annual production to at least 100,000 metric tonnes from the current 51,000 metric tonnes.
Cabinet Secretary for Cooperatives and Micro and Small Enterprise Simon Chelugui exudes confidence that key reforms being undertaken will restore the glory the industry enjoyed as the leading foreign exchange earner in the past.
“Between 1960s and mid-1980s, the industry was booming and most of the impressive development prospects was realized in coffee growing counties due to proceeds from the cash crop before the export earnings plunged and started recording a decline since 1987/88 crop year when it attained 129, 637 metric tonnes, ”said Chelugui during a Cooperative leaders meeting .
The CS however added that the Government is committed to revive the industry as it has targeted coffee as one of the economic sub sectors by the Kenya kwanza government to drive wealth creation in the rural areas.
This, he added will help in taming the grinding poverty and economic hardships the majority of farmers have been grappling with.
Equally he noted that invigorating the coffee industry will open up new economic opportunities and enhance the Kenya profile globally.”
“For a long time the coffee industry has suffered from lack of finance, poor governance competition from other beverages, for example, tea and juices. Massive split of the primary farmers coffee cooperative societies into smaller units has led to sharp decline of the crop production and contributed to mass exodus of farmers to other economic subsectors.
“In the last one year, the government has committed to enhance access to credit and guarantee minimum returns. This is geared towards boosting farmers’ morale to produce more, “he added.
Recently, the cabinet approved an additional Ksh4 billion for the Coffee Cherry Advance Revolving Fund, which will provide affordable financing for coffee farmers.
The fund Chelugui said will be managed by New Kenya Planters’ Cooperative Union (New KPCU) and aims to increase the Coffee Cherry Advance payment to farmers from the current Ksh20 per kilogram to Ksh80 per kilogram of Cherry delivered to the factories.
The funds which were additional to the Ksh 3billion released some years back by the former regime had seen low absorption and thus , the CS confirmed that the Government will deliberately search for better markets for farmers by inviting world known coffee dealers.
Restructuring the coffee industry started in June 2023, when Deputy President Rigathi Gachagua convened the first National Coffee Stakeholders’ Conference in Meru, where challenges were identified and strategies to address them were categorized into various thematic areas.
During the conference, the Government reaffirmed its commitments to crackdown on the middlemen and cartels accused of continuous extensive exploitation of small scale farmers.
Some of the reforms the Government is implementing are part of the recommendations highlighted by the 2016 established National Task Force on Coffee Sub-Sector Reforms to review the entire coffee value chain and identify areas requiring interventions such as production and processing.
For Kiambu County, the reforms have been through distribution of special blended fertilizer to 22 coffee cooperatives with over 10,000 coffee farmers benefiting from 300 tons of fertilizer inputs.
According to Governor Kimani Wamatangi the free farm inputs which was being distributed with a farmer receiving 10kgs of fertilizer each , are aimed at boosting coffee production in the region and ensure the coffee produced is of high quality.
Coffee has been one of the top foreign income earners and is one of the commodities that have made Kiambu what it is now but the value has significantly been declining to a myriad of problems.
According CS Chelugui, the changes in licensing regime where all the permits will be issued by the relevant agencies will further eliminate the issuance of multiple licenses and conflicts of interest that has been a challenge
This , he said will be done following the current coordinated approach for licensing coffee value chain participants that will involve County Governments, Capital Markets Authority (CMA), and Agriculture and Food Authority (AFA) that has been established
Farmers through their coffee brokerage companies are now able to access and participate in commodity marketing and the auction has so far has 15 licensed coffee brokerage companies with the majority being institutions established by the county cooperative unions.
Fourteen such companies have been admitted, with six actively participating in trading. On August 15, 2023, the Deputy President Rigathi Gachagua presided over the reopening of the Nairobi Coffee Exchange (NCE), marking a significant milestone in the sector’s revival.
Farmers are enjoying reduced payment periods following the implementation of the Direct Settlement System (DSS) at the NCE and thus enhancing transparency and accountability in transactions.
New trading rules at NCE have been approved by the CMA, ensuring a standardized and regulated trading environment.
During the last one year, Chelugui added marketing efforts were undertaken by Kenyan diplomatic missions in Belgium, Netherlands, and Germany and these efforts included coffee and tea cupping sessions, visits to coffee roasters, coffee shops, and warehouses.
The CS further confirmed that the Coffee Bill 2023 and Coffee Policy was presented to joint Senate and Motional Assembly Departmental Committees and their input incorporated. The Bill is at its second reading in the Senate.
The Key component of the Bill is reestablishing the Coffee Board of Kenya and The Coffee Research Institute as standalone institutions.
“This is expected to re-energize the growth and development of the coffee sub sector especially in the areas of research and market access,” Chelugui said added.
On earnings, the value of coffee sold at NCE at the close of the auction this year increased to Ksh 824 million compared to Ksh54. 8 million recorded five months ago when the auction was reopened, a market report reveals.
This accounted for a 1,403 per cent increase when the auction was reopened after a three month recess.
NCE Acting Chief Executive Officer Lisper Ndungu stated the auction closed at high note this year attributing the progress to enhanced quality of clean beans being offered for sale in the recent past.
According to provisional results released by the NCE secretariat this week, average prices increased to Ksh h29, 909.88 (USD194.22) compared to Ksh Sh28, 728.70 (USD186.55)
Number of bags traded increased to 23, 167, the highest ever since the auction was reopened on August 15, after a three months recess.
The total numbers of bags of clean coffee traded increased to 129,224 this week out of which close to 100,000 bags were sold accounting to more than 77 per cent of the total volumes traded,” said Ms. Ndungu.
Farmers, she added, have continued to receive their produce through the Direct Settlement System (DSS), a facility currently being provided by the Cooperative Bank of Kenya. The Bank beat other commercial banks on August 10, 2023.
Since August 15, the number of buyers increased from 17 to 18 as at the end of this week while the number of sellers or coffee brokerage companies increased to 10 compared to four that participated on Aug 15, 2023 .
Kenya is highly regarded globally because of producing fine Arabica coffee that has high aroma among other unique characteristics. In the last two weeks the auction has witnessed increased clean beans from some of the leading coffee growing counties,
Kirinyaga County is one that has started surfacing in the market and the farmers through the Kirinyaga Slopes Coffee Brokerage Company (KSCBC) delivered its first bunch of 2,242 bags of coffee valued at Ksh 87.8 million ( USD570,930 December 13, 2023 and then this week KSCBC sold the highest quantity of coffee at the NCE, delivering a total of 4,444 bags which were valued at Ksh 177.4 million (USD1,152,146.94)
“Grade AA retailed at ksh44, 506 (USD289) a notable improvement from Ksh39, 424, (USD 256) from the previous sale on December 13, 2023”, The Cabinet Secretary said
The government of day has assured stakeholders in the industry that coffee reforms are moving in the right direction and that soon farmers, who have for a long time not enjoyed the fruits of their labour, will start reaping benefits of the Kenya Kwanza government coffee reform agenda.
By Wangari Ndirangu
