New push to root out coffee sector cartels

The Agriculture ministry has made new proposals aimed at reviving the coffee sector and restore it to its former status as a key foreign exchange earner.

The Coffee Bill, 2020, which is currently up for public participation, bans hawking of loans to farmers by Saccos and marketing agents with coffee as collateral, introduces the much anticipated direct settlement system (DSS) and caps how much millers can charge farmers for milling their produce.

Agriculture Cabinet Secretary Peter Munya said the government is intent on reforming the sector, particularly rooting out cartels, which have deeply infested the sector and use laws to exploit the farmer.

“The sector has been receding badly. The production per tree has been going down, the acreage has also gone down," he said.

"These reforms are intended to bring back the sector and give confidence to the farmer to continue investing in the crop,” Munya said when he launched five Bills targeted at reviving various crops.

Among the major proposals in the Bill include capping the amount that millers can charge farmers at Sh4,000 per tonne.

Millers will also be required to invest in equipment to minimise losses, which the proposed law caps at 18 per cent.

“We have capped by law the maximum that a miller can charge at Sh4,000 per tonne whether it is a private, cooperative or government miller,” said Munya.

“We have also seen milling losses is an area they manipulate to steal earnings from the farmer. To be fair, we have capped it at 18 per cent," the CS said.

"There have been instances where these milling losses have been as high as 25 per cent.”

Millers will also be selected competitively by members of the coffee factories. Currently, millers are selected based on recommendations by factory officials.

The Bill will require buyers of coffee to remit payment within seven days after bidding for the commodity at the auction.

Payment will be through DSS, which means direct payments will be made to all those who have offered a service for the coffee – millers, marketing agents, coffee factories, estate accounts and individual farmers.

Failure to pay within seven days will attract penalties that include meeting the difference in the value of coffee when it is re-offered for resale at the auction if it fails to realise the price the millers had offered.

The defaulting millers will also have their licences revoked.

On loans, Munya said farmers now have the option of taking cheap credit from the Cherry Revolving Fund at an interest rate of three per cent.

He noted that marketing agents and millers have been pushing farmers to take loans against their coffee and the growers end up with little as the loan repayments take a substantial chunk from their sales.