Disbursements to farmers from the Coffee Cherry Advance Revolving Fund (CCARF) have hit Sh6.7 billion, new data shows, indicating a sustained thirst for cash among growers hit by shaky earnings from the once vibrant sub-sector.
Data from the New Kenya Planters Cooperative Union (New KPCU), which administers the multi-billion-shilling fund, shows that by the end of last week, 497,221 farmers had borrowed Sh6.7billion—marking a six-fold increase in the value of cash disbursed since November last year when some Sh1.1 billion was dispensed after the Cabinet approved a fresh Sh4 billion injection into the kitty.
The CCARF was set up to provide a low-cost cash advance to smallholder coffee farmers. Farmers use the money to finance their daily needs, including the purchase of inputs such as fertiliser. The fund targets farmers with land under coffee not exceeding 20 acres.
According to regulations of the CCARF, a member of a registered cooperative society or a smallholder estate affiliated to the New Kenya Planters Co-operative Union Limited (New KPCU), which administers the funds, can access advance pay equivalent to 40 percent of the prevailing average sales price at the Coffee Exchange; Sh20 per kilogramme of cherry delivered or 40 per cent of the payment rate to members by a cooperative society.
Coffee farmers borrow from the CCARF at low interest rates below market offers. The loans are recovered from farmers through the Direct Settlement System (DSS) once they sell their coffee.
The DSS enables the farmers to receive direct coffee payments immediately after payment from buyers, as opposed to an intermediary.
Borrowers come from 27 out of the 33 coffee-growing counties, said New KPCU managing director Timothy Mirugi.
According to the parastatal, the largest share of loans was disbursed to 82,927 coffee farmers from Nyeri county who borrowed Sh943.4 million followed by 99, 258 farmers from Kirinyaga county who took Sh845.6 million.
Meanwhile, a total of 129,501 farmers from Kiambu, Murang’a, Embu, Meru, and Tharaka Nithi counties borrowed Sh820.6 million, Sh579.2 million, Sh449.9 million, Sh319 million and Sh46.7 million respectively.
Other top borrowers include Kericho where 32,258 farmers took Sh624.5 million, Bungoma (Sh414 million), and Trans Nzoia (Sh319.2 million).
“The increase in loan advancement has been prompted by lack of collateral conditionality apart from coffee and cherry required, no cumbersome paperwork like the financial institutions as long as you are proved to be a coffee farmer who is producing coffee in Kenya,” said Mr Mirugi.
The New KPCU boss added that the DSS, which was introduced in August 2023 and is being run by the Cooperative Bank of Kenya, has made the process of getting Cherry Fund loans easier.
Farmers are not limited on what they can do with the Cherry Fund loans. They can use the money to settle their bills such as repaying debt, paying school fees, buying groceries, and other needs.
The increased uptake of loans from the kitty also comes ahead of the busy Christmas period where Kenyans typically indulge in increased spending to mark the annual celebrations.
Mr Mirugi added that the increased borrowing of loans from the fund has led to the introduction of coffee in nontraditional regions such as Trans Nzoia, Uasin Gishu, Nandi, Migori, Nyamira, Baringo, and Kisii.
“We have witnessed an increase in coffee bushes in parts of Rift Valley, Western, and Nyanza region, an indication that national coffee production will increase greatly in the next three years,” he added.
