The New Kenya Planters Cooperative Union (NKPCU) has launched their strategic plan 2023-2027 which is aimed at increasing coffee production, sustaining and thriving the coffee sub-sector in the country.
Ministry of Cooperatives and MSME’s Development Cabinet Secretary (CS) Wycliffe Oparanya said that the Strategic Plan lays out a comprehensive roadmap for building a resilient and prosperous coffee industry.
Speaking during the launch, Oparanya stated that the coffee industry is a cornerstone of Kenya’s economy and remains one of the leading foreign exchange earners and a critical source of livelihood for many rural households across the country.
Oparanya said that the government has prioritized coffee in its agenda through its Agricultural and Medium, Small and Micro Enterprises (MSMEs) Pillars.
He acknowledged the nexus between MSMEs and cooperatives with the latter being a key enabler of financial inclusion for MSMEs highlighting that cooperatives play a very critical role in facilitating financial inclusion for MSMEs through the mobilization of resources for lending and investment.
Additionally, he said that the MSMEs and cooperatives provide opportunities for aggregation of coffee cherries for delivery to factories, as well as the aggregated marketing of the processed coffee.
He noted that over the past one year, a remarkable growth and resilience has been recorded where exports rose to 47,957 metric tons from 42,858 metric tons the previous year.
“This growth highlights the unwavering demand for Kenyan coffee on the global stage, with the total export value reaching an impressive USD 252.12 million,” said the CS.
Oparanya added that on the domestic front, there has been an increase of 19 percent in coffee consumption, with coffee houses expanding from 506 to 79, indicating a thriving coffee culture within the borders.
The CS noted that there has been a decrease of six percent in the production of clean coffee where 48,649 metric tons of clean coffee were produced compared to the previous year’s production of 51,853 metric tons. He attributed the change majorly to erratic weather patterns and the natural cyclical nature of coffee production.
He noted that the area under coffee cultivation has grown to 111,902 hectares, supported by quality seedling programs that provide farmers with superior planting materials.
“Looking ahead, we project production for the 2023/24 season to increase to 54,800 metric tons, a testament to our efforts in enhancing fertilizer availability and extending support services to farmers,” said the CS.
Oparanya stated that the coffee production rose slightly by 0.1 percent to 168.2 million bags in the 2022/2023 coffee year.
He said that while this growth was modest, regional production faced challenges where Africa’s production declined by 7.2 percent due to unfavorable weather affecting major producers.
“Despite these challenges, Kenya continues to be the third-largest producer of Arabica coffee in Africa, with our rich, high-quality beans renowned worldwide,” he said.
The CS said that despite registering these achievements, the coffee sector still faces significant challenges including high input costs, shrinking coffee-growing areas, delayed payments, climate change and fluctuating market and weak governance in cooperative societies.
Additionally, he noted that an outdated legislation has hindered the sector’s growth potential causing production to decrease from a peak of 128,000 metric tons in 1989 to 34,500 metric tons in 2020/21.
The CS announced that the government is committed to reform the coffee, tea and dairy sectors in order to enable the government to address longstanding challenges through policy, legal, and administrative measures.
He highlighted the key reforms including the development of the Coffee policy, Coffee Bill and Cooperatives Bill 2024 are meant to address various issues, including the governance in the coffee sector, restructuring of the Nairobi Coffee Exchange (NCE) and enabling coffee cooperative unions to actively participate in auctions.
Other reforms include Operationalization of the Direct Settlement System (DSS), streamlining of the roles within the coffee value chain by separating milling, marketing, and brokerage to enhance transparency and efficiency while eliminating conflict of interest, expansion of the Coffee Cherry Advance Revolving Fund from Sh2.7 billion to Sh6.7 billion, increasing payments to farmers from Sh20 per kilo to Sh80 per kilo and modernization of New KPCU through rehabilitation of mills and warehouses.
Oparanya stated that his ministry is very keen on the adoption and utilization of technology in the cooperative movement, including the shared service platforms for cooperatives to enhance efficiency, transparency and accountability; while also cutting down on the operational costs.
Furthermore, he announced a continuous capacity building and training for cooperative members, directors and other officials as a critical issue since it enhances service delivery to members.
“The ministry, in collaboration with the Cooperative University of Kenya, is working on a syllabus and training manuals for stakeholders within the cooperative sector,” he said.
Oparanya emphasized on the development of a dividend policy for cooperatives by the Commissioner for Cooperatives in order to ensure that no cooperative borrows to pay dividends or declares dividends when they have made losses.
“Cooperatives are collapsing due to bad dividend manners where officials of cooperatives declare dividends even when they have made losses or borrow money to pay dividends,” he observed, adding that sometimes officials pay unrealistic and exaggerated dividends that do not match the performance margins of the cooperatives.
The CS said that the spirit of the cooperative movement of service to members as opposed to profiteering, must be preserved as he emphasized on the critical role that governance plays in the cooperative movement.
He stated that the ministry is developing a cooperatives guide, similar to the Mwongozo code of ethics for state corporations that will provide a blueprint for the management of cooperatives.
By Sharon Atieno