Farmers earn Sh17 billion as coffee reforms bear fruit

DP Rigathi Gachagua presides over Nairobi Coffee Exchange Auction. [DPCS]

Coffee farmers have started reaping the benefits of reforms in the sector a year after implementation.

Farmers are being paid through Direct Settlement System (DSS) initiated by the government to streamline payments in the sector.

With the coffee season 2023/2024 coming to an end, farmers have been paid more than Sh17 billion through DSS.

The regulators in the sector, Nairobi Coffee Exchange (NCE) and Capital Markets Authority (CMA) reported that as at May 28, a total of 496,440 bags weighing 30,472,708 kilogrammes had been sold through the auction in 2023/2024.

In the year under review, the premier grades of AA and AB grades of 287,445 bags in the market fetched Sh11.7 billion.

Regulators convened farmers sensitisation forums in Kiambu, Murang’a, Nyeri, and Kirinyaga last week.

Leaders in the coffee cooperatives sector lauded the DSS saying they receive prompt payments from the sale of their produce.

NCE Chief Executive Officer Lisper Ndung’u faulted coffee buyers for delay to deposit money in the DSS account.

“The buyers who fail to pay farmers' dues are pursued by the Agriculture Food Authority (AFA), the licensing authority,” said Ms Ndung’u.

Felix Muriithi Mwai, the chairman of Inoi Cooperative Society in Kirinyaga, appealed to the government to support farmers to increase coffee production.

"The government has over-policed the coffee sector in Kenya while little is being done on availability of inputs,” said Mwai.

Mercy Wanja, a farmer at Rung’eto Cooperative Society in Kirinyaga said there was need for the government to educate the growers on the DSS as a majority of them are in the dark.

“Kirinyaga farmers had been opposed to the DSS due to lack of information thus need for the Cooperative Department to conduct more awareness on the electronic system,” said Wanja. 

In the farmers forums facilitated by NCE, growers recounted challenges experienced at the implementation of Coffee Regulations 2019 owing to lack of details on the market. 

Cooperatives Cabinet Secretary Simon Chelugui commended the DSS system saying it has streamlined the coffee sector and ensured professionalism. 

Chelugui said the payment system under the control of the Cooperative Bank ensures the farmers and the service providers are paid on time.

“We are now working to have details of the cooperatives in the DSS system to ensure payment to the farmers and other service providers is prompt. This will end the culture of farmers seeking expensive loans from banks when their payment is delayed,” he said.

Cooperative Bank Agribusiness Manager Esther Kariuki said they are working in consultation with regulatory bodies to ensure service providers' charges are harmonised for effective payments.

“From July 1, the service providers contracted by the coffee societies and estates have been instructed to upload their invoices upon the closure of a sale for effective remittance of payment,” said Kariuki. 

Peter Githinji, a director at NCE said DSS ensures timely and transparent payment of coffee sales proceeds directly to farmers’ accounts.  

“The system reduces delays and financial mismanagement risks, enhancing farmers' financial stability and trust in the trading process,” said Githinji.

Nyeri Farmers Cooperative Union Chairman Newton Ndiritu said there was need for the government to assist growers access subsidised fertiliser.