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State will not relent on Coffee reforms, CS Chelugui says

The government has affirmed that it will not relent on coffee reforms in the campaign to weed out cartels in the sector.

The State has assured Kenyans that it is determined to bring the sector back to profitability and that the ongoing raft of reforms and strategies adopted to revitalize the coffee sector are a game changer.

Cooperatives and Micro, Small and Medium Enterprises (MSME) Development Cabinet Secretary Simon Chelugui says the Cooperatives Bill 2023 that had received the Cabinet’s approval and the Coffee Bill 2023 which is before the Senate will revolutionize the sector.

Addressing coffee farmers in Nakuru Mr Chelugui stated that the reforms are aimed at strengthening institutional framework, improving governance structures in cooperatives and mainstreaming in the agricultural sector.

He revealed that the government was keen to rein in private profiteers who have controlled the market and set whatever prices they wanted to pay for farmers’ coffee adding that the cartels were not happy with reforms in the coffee sector.

“They will do anything at their disposal to derail these reforms. Some of them will be coercing our farmers in a ploy to sabotage government reforms. We advise you to ignore them and support the government reforms which will liberate you from exploitation and boost your coffee earnings,” said Mr Chelugui.

The Cabinet Secretary said that strengthening of institutional frameworks that oversight cooperatives is a shot in the arm for smallholder agriculture which is the mainstay of millions of Kenyan households.

He added that the state was further actively promoting and registering workers’ cooperatives which have the potential to aggregate young professionals and artisans graduating from educational institutions into viable units.

The Cooperatives Bill 2023 introduces the Inter-governmental Cooperatives Relations Technical Forum while also strengthening the office of the Commissioner of Cooperatives to enhance governance.

“Farmers will no longer depend on profiteers who had hitherto controlled the value chain activity including deciding which price to buy or sell coffee,” Chelugui said.

He said that the government appreciates the role that coffee plays in economic growth noting that the coffee sector is a key component of the Bottom-Up Economic Transformation Agenda (BETA).

Successive regimes, including the current Kenya Kwanza administration, have pointed an accusing finger at cartels for bringing the sector, which was once a leading foreign exchange earner, to its knees.

 Mr Chelugui indicated that Kenya was once the 7th highest exporter of coffee but it had since dropped to position 25 globally. The result has been low earnings that have seen thousands of farmers abandon the crop.

Chelugui said the Kenya Kwanza administration was determined to reform the coffee sector with eyes trained on the challenges crippling the once vibrant industry.

The Cabinet Secretary stated that under the new reforms, additional coffee cooperative unions have been licensed to sell coffee directly at the Nairobi Coffee Exchange (NCE) and overseas thereby eliminating the need for middlemen between the farmer and the buyer.

“More unions will receive licenses in due course,” said Mr Chelugui, adding that the Coffee Bill, designed to reestablish the Coffee Board of Kenya and the Coffee Research Institute as independent farmer institutions, has gone through the second reading in the Senate.

He disclosed that to economically empower small-scale coffee farmers in Kenya the Government had set the minimum price for a kilogram of cherry at Sh80.

“The new policy with echoes of Guaranteed Minimum Returns (GMR) that was pledged by the Kenya Kwanza government will be implemented in the 37 coffee-growing counties. Cherry fund is one of the key reforms that will return coffee farming to profitability,” he added.

The fund will be administered by the New Kenya Planters Cooperative Union (KPCU).

Chelugui said farmers will be paid the Sh80 per kilo within a month after delivery of the coffee, adding that Sh40 will be paid once the farmer takes the coffee to the factory and the remainder of Sh40 within a month after the coffee is pulped.

The CS guaranteed that all small-scale coffee farmers will benefit from the fund and urged them to increase production so that they can earn more.

He added that in the event farmers’ coffee fetched more than Sh80, the balance will be paid off to them as a bonus and in the event the prices go down, the government will cushion them with the GMR.

According to a report by the Nairobi Coffee Exchange (NCE), farmers earned more than Sh24.8 billion from the sale of coffee last year.

The report states that cooperative societies and estates sold 635,905 bags of produce out of deliveries of 729,511 bags through the NCE.

The report further indicates that coffee sold between 2022/2023 and 2023/2024 shows an increase in sales, owing to the high production of the commodity.

On December 5 last year, the Nairobi auction registered the highest sales of 94 percent after it facilitated the sale of 9,730 bags out of 10,372 bags.

The farmers earned Sh448.3 million in the sale, with New Kenya Planters Cooperative Union (NKPCU) scooping Sh152 million and Alliance Berries Limited Sh94.1 million.

In the year under review, 75 per cent of the buyers participated in the auction, with the trend improving from October 1, 2023, as more farmers brought in produce for sale.

Mr Chelugui said trading in the coffee sector was successful as those who had attempted to derail the reform agenda were back buying the commodity in bulk.

“There are buyers who attempted to blackmail the government through abandoning the market, but after the release of Sh6 billion for Cherry Fund, they trooped back into the market,” said the Cabinet Secretary.

He noted that between August 15 and December 19, 2023, NKPCU and Alliance Berries Limited marshaled thousands of bags of coffee into the market from the farmers in the cooperative societies and estates.

“We started very low, but now NCE is a hive of activities flooded with buyers of international repute weekly,” added the Cabinet Secretary.

Mr Chelugui was confident that this year more coffee would be channeled through NCE owing to the farmers’ confidence in the process.

He urged Kenyan coffee farmers to increase production to satisfy the growing market.

“There is a delegation of Koreans looking for our coffee, while the government is exploring ways to have Starbucks and C Dorman as major buyers for our coffee,” said Chelugui.

He added “NKPCU will work closely with the farmers in implementation of the reforms in the sector focusing on increased production.

By Anne Mwale

 

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