Coffee societies nationwide stand to benefit from a debt waiver if a legislative proposal to write off their debts is tabled and passed in parliament.
According to the Cabinet Secretary Ministry of Co-operatives and Micro, Small, and Medium Enterprises (MSME) Development Simon Chelugui, writing off debts accumulated by coffee societies has sparked a nationwide debate, urging legislators to support the request when it is presented in parliament.
Speaking at Chuka in Tharaka Nithi County during the Coffee Cherry Advance Revolving Fund Distribution and Coffee Production Sensitization Program on Thursday, January 18, 2024, CS Chelugui called on elected leaders from both national and county governments in affected areas to provide accurate figures of the debts held by coffee cooperatives to facilitate legislative action.
Chelugui’s remarks came after concerns were raised by Tharaka Nithi County politicians, led by Governor Muthomi Njuki, who pointed out that some debts of coffee societies in other counties had already been written off by previous governments.
Njuki emphasized the historical injustice faced by Tharaka Nithi, Meru, and other affected counties, where debts were not forgiven like in previous government regimes.
Legislators Patrick Munene (Chuka/Igamban’ombe), Kareke Mbiuki (Maara), and George Gitonga Murugara (Tharaka) echoed Njuki’s sentiments, expressing readiness to support and promote the proposal in parliament to alleviate farmers and societies from historical debts hampering the coffee sector.
“I was in parliament when the Public Finance Management (PFM) Act regulations to write off billions to revive the sugar sector were passed. Examine the same law so that we can initiate a new approach for coffee farmers,” Murugara suggested.
“Coffee societies are burdened with debts, with many under receivership. We urge you to ensure all historical debts are written off, and as parliament, we are prepared to enact laws to make it happen,” emphasized Maara MP Kareke Mbiuki.
Highlighting key reforms in the coffee sector, CS Chelugui announced a minimum guaranteed return to farmers, increasing the minimum gain to KShs 80 per kg.
He noted that an additional KShs 4 billion had been injected into the New Kenya Planters Cooperative Union (KPCU) after a supplementary budget approval, bringing the total funding to KShs 6.7 billion.
The government also plans to delicense individuals holding more than one license in the coffee value chain, citing the presence of numerous cartels between producers and consumers.
“We have 27 people between farmers and consumers, and we want all of them eliminated to enable farmers to profit in the coffee value chain,” Chelugui emphasized.
The CS also mentioned that millers were free to receive and operate the Cherry Advance Revolving Fund, provided they enter into a memorandum to recover the advance when coffee is sold.
Other reforms include revitalizing the Coffee Research Foundation for research and identification of new farming techniques, and the Capital Markets Authority to regulate the coffee exchange before auction, aiming to eliminate cartels.
The Coffee Board of Kenya will be tasked with seeking coffee markets, with the Kenya Kwanza administration targeting a production of 200,000 tonnes of coffee by 2027.
To address the dilapidated state of coffee factories, a program through the cooperatives commissioner’s office will be launched to aid in rehabilitation. In the previous program, almost 150 factories were rejuvenated.