Home Business State will not relent on coffee reforms, says CS Chelungui

State will not relent on coffee reforms, says CS Chelungui

coffee reforms
Cooperative and Micro Small and Medium Enterprise Development Cabinet Secretary, Simon Chelugui

The government has affirmed that it will not relent on coffee reforms in a bid 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 to revitalize the coffee sector are a game changer.

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The Cabinet Secretary for the Cooperatives and Micro, Small and Medium Enterprises (MSME) Development Simon Chelugui indicated that 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 Bahati, Nakuru County, Chelugui stated that the reforms are aimed at strengthening institutional frameworks; improving governance structures in cooperatives and mainstreaming in the agricultural sector.

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

“Cartels will do all 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 Chelugui.

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

He added that the state is 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-government 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.”

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 to its knees, which was once a leading foreign exchange earner.

Chelugui indicated that Kenya was once the 7th highest exporter of coffee but had slid down 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 is 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 a middleman between the farmer and the buyer.

“More unions will receive licenses in due course,” said 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 said towards economically empowering small-scale coffee farmers in Kenya the Government had set the minimum price for a kilogram of cherry at Ksh80.

The CS stated that 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.

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

Chelugui said farmers will be paid the Ksh80 per kilo within a month after delivery of the coffee. He said Ksh40 will be paid once the farmer takes the coffee to the factory and the remainder of Ksh40 within a month after the coffee is pulped.

The CS assured 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 event farmers’ coffee fetched more than Ksh80, 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 Ksh24.8 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 94pc after it facilitated the sale of 9,730 bags out of 10,372 bags.

The farmers earned Ksh448.3 million in the sale, with New Kenya Planters Cooperative Union (NKPCU) scooping Ksh152 Million and Alliance Berries Limited Ksh94.1 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.

Chelugui said the 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 releasing Ksh6 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 marshalled 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 activity flooded with buyers of international repute weekly,” added the Cabinet Secretary.

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 having Starbuck 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.

Dennis Rasto
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