• The team of leaders and experts from tea and coffee growing areas have said the coffee cherry revolving fund should have been accessed by coffee societies by now.
• It also wants a forensic and performance audit conducted on all coffee societies to establish the state of their leadership, equipment and loan books.
Image: /Felix Kipkemoi
The Tea and Coffee (TeCo) Initiative has petitioned the government to ensure the Sh3 billion Coffee Cherry Revolving Fund is operationalised in the next two months.
The team made up of leaders and technical experts from tea and coffee growing areas has asked the government to ensure the fund’s operating guidelines and management team are in place in the period.
To ensure the fund has self-sustaining structures and participates in transactions for value and not charity, the team recommended that the government should consider offering diversified financing instruments, including loan advances, bank guarantees and related risk sharing arrangements.
In a memorandum presented to the President while he was meeting Mt Kenya leaders at Sagana State Lodge on Saturday, TeCo further asked that the fund should be made available to coffee co-operative societies that meet a satisfactory audit rating.
The fund, the team said, has remained available and protected, though unutilised.
“A good number of well-run co-operative societies should have accessed the kitty and delivered real value to farmers,” the memo said.
The fund was announced by the President in April this year during the State of the Nation Address and was later incorporated into the budget.
It was hatched by the Coffee Subsector Reforms Implementation Committee and put in place by the President in 2016.
The committee’s chairperson Joseph Kieyah, however, recently announced that the fund will not be channelled through co-operative societies and that the government is still working on structures to make it sustainable.
He said farmers applying for the funds will have to prove how many kilos they have previously delivered to their cooperative society to qualify.
The kilos will then be used to give the funds as they will be multiplied with the average price per kilo and the total is what the farmer will qualify to receive.
The loan will then be recovered from the farmer after coffee payments are received at an interest rate of three per cent per annum.
Kieyah who was addressing Murang’a farmers while taking their views on the National Coffee Policy that the committee is drafting, further noted that the fund will remain inactive until all the structures are firmly in place.
He said the government has previously waived farmers’ loans amounting to Sh7.5 billion for Stabex loans and Sh5.5 billion to coffee cooperative societies and unions. The effects of the waiver on the sector were minimal as most of the money was gobbled up, he said.
TeCo also wants the Kieyah-led team to conduct a forensic and performance audit on all coffee cooperative societies.
The auditor general should lead the process of audit reviews in a period of three months with a particular focus on governance and performance to determine if the leadership teams meet the criteria to serve in a public office.
They also want the audit to determine whether coffee cooperative societies have viable business models as some of them have been formed following multiple splits and fall below the viability threshold.
“The audit should also establish the technical capacity of the societies and the state of processing machines, and other technology gaps,” the memo further read.
TeCo noted that extended periods of decline in coffee production and producer earnings have led to significant neglect of factory equipment, especially pulping machines and fermenting tanks.
Any effort to revitalise coffee societies will require a concurrent programme on rehabilitation and retooling of factory equipment to ensure both capacity and quality of produce is enhanced.
Further, the team wants the level of indebtedness and the legality of loans taken by coffee societies established as some have been known to source for irregular loans from coffee marketers while others questionably utilise the loan proceeds.
The team also wants the government to issue a conditional grant to county governments for agricultural extension services.
The kitty should be a conditional grant fashioned the same way as the Sh4 billion conditional grant to counties for hospitals.
Criteria for access to the grant would be based on production to encourage performance driven competition among counties.
“A conditional grant would offer counties great relief in offering targeted support to farmers and stimulate increased earnings in coffee growing areas,” the team said.
The team praised the government’s efforts to revive the sector but noted that there is a huge outcry of tea and coffee farmers over the slow pace of reforms.
Members of TeCo include its chairperson Njeru Ndwiga (Embu Senator), secretary Priscilla Nyokabi (former Nyeri Woman Representative), co-ordinator Kabando Kabando (former Mukurwe-ini MP), Gabriel Kago (Githunguri MP), Jude Njomo (Kiambu Town MP) and Waihenya Ndirangu (Roysambu MP).
Other team members include Francis Ngambi an expert in banking and capital markets, and Mutuma Nkanata, an expert in public policy and governance.