Farmers' long wait for State promise to crush coffee cartels

Financial Standard
By Macharia Kamau | Jun 06, 2023


A coffee farmer in Murang'a attending his coffee during harvesting season. [Boniface Gikandi, Standard]

The Kenya Kwanza administration is embarking on a coffee sector reform journey, hoping that it can take on the challenges crippling the once vibrant industry.

Successive regimes, including the current one, have blamed cartels for running down the sector, which was once a leading foreign exchange earner.    

The result has been low earnings that have seen thousands of farmers abandon the crop.

More than 700,000 farmers and another five million Kenyans are employed by the industry and continue to suffer low incomes due to a dysfunctional system that appears to favour middlemen and other other “cartel” members.

Deputy President Rigathi Gachagua will this week lead a three-day forum that will seek to delve deep into the problems that have for decades held back the coffee sector and explore ways of resolving them.

“Coffee farmers have been neglected for a long time as middlemen muddle the waters. We want to see things change for the benefit of the hardworking farmers,” said Mr Gachagua. “Revitalisation of the coffee subsector in Kenya will directly impact the lives of smallholder farmers who, for a long time, have remained unheard and have been taken advantage of. The philosophy of the Bottom-Up economic transformation model envisages restoring dignity to the people at the bottom of the socio-economic pyramid, and that is what we are doing.” 

When allocating duties to the Deputy President early this year, President William Ruto moved the coffee reforms docket to the DP’s office. It was previously under the Executive Office of the President.

“The President has instructed me to lead reforms in the tea, coffee, and milk subsectors. This is aimed at putting more money in the pockets of farmers by linking them directly to consumers. The cartels are ruthless, but we will stop at nothing,” said the DP following the announcement.

Coffee was at some point a leading foreign exchange earner, accounting for 40 per cent of forex earnings, but production has dropped over the years.

The crop raked in Sh27 billion in 2022, a notable increase from Sh10 billion in 2020, but a negligible contribution to Kenya’s total exports of Sh873 billion last year.

Coffee production stood at 52,000 tonnes in 2022, according to data by the Kenya National Bureau of Statistics (KNBS).

Although this is a huge increase from 34,500 tonnes in 2021, it is still a fraction of how much the country produced in the late 1980s when production averaged 130,000 tonnes annually. The decline has been due to a mix of factors, including poor governance in the industry that resulted in poor earnings among farmers, some of whom have, in turn, abandoned the crop.

The previous Jubilee administration had made attempts to reform the coffee sector in a bid to take back to its glory days, which achieved mixed results and may be partly credited to the recent increase in production and earnings.

Former President Uhuru Kenyatta in March 2021 issued an executive order on coffee sector reforms, which envisioned reforms across different areas, including access to credit for farmers and the tabling of the Coffee Bill in Parliament.

Among the new approaches to revive the industry is the reintroduction of the Coffee Board of Kenya.

The Coffee Board of Kenya was  among the industry-specific regulators that were collapsed into the Agricultural Food Authority (AFA).

The Authority has, however, failed to live up to its expectations and is set to be disbanded as the sub-sector regulators, including the coffee, tea and sugar boards make a comeback. 

“Arising from the wide scope of the mandate of the scheduled crops under its purview, AFA has become institutionally unfocused and unable to improve either the performance of the coffee sub-sector or those of the specific value chains,” said the State at the time.

Coffee is grown in 31 counties. Smallholders are the majority at 700,000 and are organised into cooperatives, according to government data, while there are 4,000 estate farmers in the country.

The sub-sector supports approximately five million people through forward and backward linkages. The former administration had in 2016 constituted the National Task Force on Coffee Sub-Sector Reforms that was to look into the problems facing the sector and come up with recommendations to save the sector that has for decades stared at total collapse.

The 19-member committee led by Prof Joseph Kieyah made recommendations that have only been implemented piecemeal and half-heartedly.

The task force in its May 2016 report noted that the sector faced “unprecedented challenges, which have drastically affected the production levels.” 

“Key among them are low earnings from coffee despite its premium quality, delayed coffee payments, mismanagement and inefficiencies in cooperatives, restrictive coffee laws, high cost of production and lack of direct access to the trading floor,” said the task force.

The team also recommended prompt payment to farmers for coffee delivered to coffee mills, the opening up of the Nairobi Coffee Exchange for farmers to directly trade at the auction and putting in place a coffee production subsidy.

It at the same time called for reforming coffee cooperatives to strengthen them but also enable farmers to hold them to account and proposed such measures as capping administrative expenses at 15 per cent and punitive measures for entities that fail to comply with the law.

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