Nairobi Coffee Exchange (NCE) will be convening coffee farmers forums in the counties for the sake of interacting with farmers.
There is remarkable success associated with the coffee reforms, with farmers getting a better deal despite challenges encountered in the past one year. In the coffee year 2023/2024, the farmers receive their payment through the Direct Settlement System (DSS) run by Cooperative Bank of Kenya.
In the farmers’ sensitisation forums in the counties of Kiambu, Murang’a, Nyeri and Kirinyaga, facilitated by Nairobi Coffee Exchange (NCE) and Capital Markets Authority (CMA), the farmers leaders said there has been remarkable improvement. In the meetings, the farmers called for strengthened reforms, availability of subsided fertilisers, payment of the produce through dollar accounts, collaboration with Coffee Research Institute (CRI) to help combat pests and diseases.
The farmers also raised concerns over delayed milling calling for more players to be licensed by the county governments to help the farmers get better returns from the sector. The regulators issue circulars to guide the multi billion shillings industry to profitability, through ensuring the players adhere to the laid down regulations.
One of the conditions set to end the delayed payment, the regulators, the service providers have the timelines to issue invoices through the DSS, failure to which the full amount be remitted to the growers. Deputy President Rigathi Gachagua said he was in support of the regulations designed to support the growers to stability.
Gachagua says the introduction of the regulations weeded out the cartels that had controlled the sectors to serve their interests. ” Right now the government has initiated ways and means towards increasing coffee production from the current 51,000 metric tonnes to 100,000 metric tonnes,” said the deputy president.
NCE Chief Executive Officer Lisper Ndung’u says the players in the value chain are closely monitored by the regulators to ensure they work in respect to the regulations for the interest of the farmers in the 33 counties. ” In the value chain there are farmers, millers, marketing agents, warehouse managers, buyers all who have been placed in the Direct Settlement System (DSS) that pays for the services rendered,” said Ms Ndung’u.
NCE has also directed that the societies in the crop year 2024/2025 must be linked with the DSS where the leadership will be free to monitor the transactions freely. “At the inception of the reforms, there were challenges in DSS as farmers’ details entered were incorrect thus making it difficult in the remittance of payments,” said Ndung’u.
Regulations demand, buyers banks the farmers payment five days after the auction, with delays penalised. Cooperative Cabinet Secretary Mr Simon Chelugui said the DSS platform is a relief, owing to the prompt payment after the sale of the produce.
The CS said the regulation demands the farmers have their money five days after the auction. ” The government is committed to ensure the farmers’ concerns related to payment are given priority. In the regulations with each players having a specific role to play unlike before when one could handle all the tasks,” said Chelugui,
Officials from the Capital Markets Authority said they are out to ensure the players adhere to the policies, with buyers who delay in effecting payments being penalised.
The regulators demand the millers, warehouse managers, marketing agents among other service providers upload their charges through the DSS as of July 1st to ensure there is transparency in the value chain and facilitate payments after the weekly auction.
As at May 28, 496,440 bags weighing 30,472,708 kilogrammes were sold through the auction in the coffee year 2023/2024 fetching more than Sh17 billion. In the meetings, the farmers called on the regulators to ensure they are paid in dollars and the government to assist them access subsidised fertilisers to support an increase of production from 51,000 metric tonnes to 100,000 metric tonnes.
The regulators appreciated Kirinyaga farmers for continued production of the quality coffee that has attracted the international buyers,Chairman at Inoi Cooperative Society in Kirinyaga, Mr Felix Muriithi Mwai said the government should support the farmers towards increased production of the commodity.
Mwai said Kenya should emulate Uganda where the growers concentrate in increased production through their government support. “In Kenya the government has over-policed the coffee sector, while little is being done on availability of inputs to support increased production,” said Mwai.
Morris Mwangi a a farmer at Rung’eto cooperative society in Kirinyaga said there was need for the government to introduce the extension officers to ensure the modern farming practises are followed to the latter. Mwangi said more education is required on functions of the DSS as majority of the farmers are in the dark on its operations.
“Kirinyaga farmers had been opposed to the DSS due to lack of information thus the need for the cooperative department to conduct more education on the wellbeing of the electronic system,” said Mwangi. In Murang’a, the farmers led by Francis Ngone, the chairman at Murang’a Farmers Cooperative Union said there was need to strengthen the reforms as the regulations are critical.
Ngone said 80 percent of the reforms have been achieved, calling on the implementation of the remaining ones. ” The formulation of the coffee policies started way back in 2016. It has been a long journey, but we are about to get through,” said Ngone.
But farmers at Kaganda cooperative society recounted the challenge of waiting for payment months after the auction of their coffee. Rev Mwangi, the factory chairman said it was traumatising that coffee was sold in February only for money to be channeled in the accounts two months later.
“There was no explanation over the delay and the scenario should come to an end,” said Mwangi. The Cooperative Bank Agribusiness Manager Ms Esther Kariuki said they are working with consultation with the regulatory bodies, to ensure service providers’ charges will be harmonised for effective payments thereafter.
“From July 1st, the service providers contracted by the coffee societies and estates have been instructed to upload their invoices upon the closure of a sale for effective remittance of payment,” said Kariuki. Peter Githinji, a director at NCE, said DSS ensures timely and transparent payment of coffee sales proceeds, directly transferring funds to farmers’ accounts.
Githinji said there was a need for dialogue among the farmers to ensure issues are resolved amicably. “The system reduces delays and financial mismanagement risks, enhancing farmers’ financial stability and trust in the trading process,” said Githinji who represented the NCE chairman Kenneth Gitonga in Nyeri and Kirinyaga county forums.
Chairman of Nyeri Farmers’ Cooperative Union Mr Newton Ndiritu said there was need for the government to assist the growers with subsidized fertiliser as the majority have not accessed the input. ” Nyeri farmers are yet to get the fertiliser from the government stores. In future something should be done to ensure equality,” said Ndiritu.
Chairman of Kenya Coffee Producers Association Peter Gikonyo said there was a need for farmers to be paid through dollar accounts. ” Regulations should be adhered fully by the players for the benefit of the growers,” said Gikonyo.