- Last week, President William Ruto handed his deputy leadership over coffee sector reforms Under Executive Order 1 of 2023.
- Gachagua has vowed to end cartels
Image: EUTYCAS MUCHIRI
The National Coffee Cooperative Union (NACCU), a welfare group of over 800,000 farmers is ready to support Deputy President Rigathi Gachagua in streamlining sector reforms.
The Union was formed in 2017 to enable members to synergize their efforts when addressing common challenges as well as enable them to seize opportunities in the production, processing, and marketing of coffee among other areas of common interest.
The coffee sub-sector implementation standing committee, tasked with reviving the ailing sector, had been domiciled at the Office of the President during the previous administration.
Last week, President William Ruto handed his deputy leadership over coffee sector reforms Under Executive Order 1 of 2023.
Addressing the media after a consultative meeting with the Cooperatives and Micro, Small and Medium Enterprises Cabinet Secretary Simon Chelugui, NACCU and KPCU leadership welcomed the move.
The deputy president has been championing the rights of smallholder farmers and believes that farmers can double their earnings if cartels in the coffee and tea sub-sectors are weeded out.
According to him, middlemen are paying farmers less than Sh100 per kg of Cherry compared to an average of close to Sh120 which the same coffee fetched at the local auction.
Last year, Kipkelion Brokerage Company owned by Kipkelion Coffee Co-operative Society successfully exported a total of 134.4 metric tonnes of coffee valued at $908,160 (Sh103.5 million), earning farmers a clear Sh43 above local prices.
"This is a reap off. The sector needs to be streamlined to ensure farmers earn their rightful share,'' Gachagua said.
The union said it was fully behind the implementation committee led by Joseph Kieyah and supports the execution of all the eight pillars of the task force reforms report that has been gathering dust for a year now.
"The implementation of the findings is long overdue while the small-scale coffee producers continued to suffer".
The lobby now wants Gachagua to deal with the pricing issue as a matter of priority, accusing Nairobi Coffee Exchange (NCE) of justifying an artificial pricing mechanism at the Nairobi auction that has seen coffee prices drop by half.
According to the union, a 50 kilogram of AA coffee at the Nairobi auction is now selling at $200 (Sh24,530) down from $400 (Sh49,060) previously, the lowest price in 10 years.
According to the lobby, the reforms must address the following question: How will the small-holder coffee farmer maximally benefit from his coffee, and how can the coffee value chain be made more efficient and affordable for the smallholder farmers?
“That was a good move by the President as some of these changes require political goodwill and the DP is one person who has a serious political connection,” NACCU chairman Francis Ngone said.
The lobby also wants more representation of smallholder coffee farmers in the national dialogue, dismissing talks of coffee reforms being a political trap for DP as a diversionary narrative by coffee cartels.
"We remind Capital Markets Authority to look into the representation of farmers at the board of Nairobi Coffee Exchange as per the Attorney General's advisory on September 20, 2021,'' the union said.
Coffee production has been on a decline from an average of 130,000 tonnes in 2000 to around 40,000 tonnes per year in 2021 according to the Nairobi Coffee exchange.
Coffee is one of the most important cash crops in Kenya with a total production of about 50,000 tons annually making it the 25th largest exporter of Arabica coffee in the world.
Kenya earned $213 million from coffee export in the period January to November 2021, with the value surpassing the entire 2020 earnings which stood at 196 million dollars according to the Kenya National Bureau of Statistics (KNBS) export data.
During the 2021 trading period, Kenya's coffee prices ranged from Sh400 to Sh630 up from Sh250 to Sh590 in 2020, according to KNBS.
In 2020, the government disbursed to the union a coffee cherry fund worth Sh3 billion of which Sh185 million was spent to clear pending debt with the Kenya Commercial Bank (KCB) and Sh68 million was used to clear pending payments to farmers.
This was a relief to the 78- year old coffee union, which had been placed under receivership since 2009 after failing to honor a financial obligation amounting to over Sh700 million, owed to the lender, lawyers, and coffee farmers.