Good news as Farmers set to receive 40pc of coffee proceeds upfront

Coffee farmers will soon start receiving 40 per cent of the value of their produce immediately they deliver their cherries to factories.

According to the Agriculture and Food Authority (AFA), the Government is currently piloting the cherry advance payments together with the Meru County Government through the Co-operative Bank. The model will then be replicated in all other coffee-growing areas.

“We are going to start paying our coffee farmers like tea farmers. The first farmers will get the money in May, when they start harvesting the current crop,” Coffee Directorate boss Kiplimo Meli said in Nairobi yesterday.

The prompt payments are part of the reforms planned by the Government aimed at revitalising the sector.

The reforms, proposed by the committee on coffee led by Joseph Keiyah, have started to take shape and are expected to greatly improve farmers' welfare.

The team had proposed that farmers should get at least 40 per cent of the prevailing market prices or Sh15 per kilo on delivery of their cherry instead of waiting for up to eight months to be paid.

“We proposed this so that farmers could meet their short-term needs rather than wait for six to eight months,” Prof Keiyah said.

“This would be structured as an advance and so to guard against high interest, we wanted the Government to create a revolving fund so the advance would be made at near-zero rates and paid off once the farmer’s coffee is sold,” he said.

According to Samuel Kuria from the State Department of Co-operatives, the first payment will be based on a three-year average price but as the programme advances, it will fetch the prices based on the quality of the cherry delivered by the farmers.

“We already have 53 co-operatives in the Meru Union who are interested and willing so the money will be advanced to them through these structures and the county will be the guarantor,” Mr Kuria said.

He added that eventually, 11 unions from Kisii, Embu, Kiambu and Kirinyaga among others would be incorporated.

Another proposed reform is the creation of a Central Depository Unit account, which has been met with a lot of opposition. Currently, marketers are paid and then pay all players in the value chain, a system that undercuts the farmer, who is usually the last to be paid.

This will be replaced by a centralised system that will have all the players' bank account numbers and their proportion of the proceeds. They will all be paid at the same time.

“What is central to our proposal is the farmer. He owns the product and everyone else is an agent who should be working for the interests of the farmers. We expected people to resist but it is fundamental to understand that if production does not improve we will be all out of business,” Keiyah said.

He said farmers needed incentives from the Government to ramp up production from the 2kg per tree to the potential of 40kg in order to meet market demand.