Farmers to benefit from cheap loans

Cash crop farmers are set to benefit from low-interest loans after the government cleared a legal hurdle that has delayed the establishment of a commodity fund to finance the segment largely shunned by commercial banks. The fund automatically came into existence after the State published the Agriculture Fisheries and Food Acts (AFFA) in a gazette notice on August 1.

Agriculture secretary Felix Koskei said the formation of the agency was necessary to enable farmers get quick credit to improve productivity. “The new Act has established a commodity fund with a mandate to provide accessible and affordable credit facility to the framers,” Mr Koskei said on Friday.

The fund will advance low-interest loans to farmers who grow tea, coffee, pyrethrum, cotton, sugarcane and sisal.

The call for a special fund has gained momentum in recent months as risk-averse banks shun the agricultural sector which accounts for a quarter of the country’s annual production. The perception of agricultural ventures as overly risky saw commercial banks extend loans worth only Sh61 billion or 2.9 per cent of the Sh1.6 trillion offered to the private sector in the year to March.

Last week, officials said the money to be advanced to farmers by the Commodity Fund Trustee would come from licences as well as direct financial support from the AFFA agency. “This fund will be at hand to extend the credit services to the farmers,” said acting managing trustee Nancy Cheruiyot.

Ms Cheruiyot said credit given to farmers will support purchase of inputs and other farming needs in order to improve productivity. This comes at a time when a number of agriculture sub-sectors are ailing due to low funding, huge debts and running loss-making operations, forcing them to rely on the State for bailouts.

Sugar millers for example, made a total loss of over Sh6 billion in the last financial year with the government having to bailout the pyrethrum board that was crippled by debts.

Last week, the agriculture ministry merged the eight parastatals that existed independently putting their managing directors under the director-general of AFFA. The new directorates under AFFA include coffee, sugar, horticultural crops, fibre crops, nuts and oil crops, food crops and pyrethrum.

The minister appointed Alfred Busolo, formerly the managing director of the Pyrethrum Regulatory Authority as the interim director general for the coming three months pending the appointment of the board which will conduct interviews for the AFFA staff.

The interviews for the board chairperson were conducted last month with the names of the shortlisted candidates forwarded to the President for selection, after which the name of the person who would emerge successful will be forwarded to parliament.