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Direct sales coffee pricing plan to boost farmers’ earnings

coffee

A coffee farmer in Meru. FILE PHOTO | NMG

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Summary

  • The price of coffee at the auction will be determined by the value of direct sales to ensure that farmers earn more from their produce.
  • The move will see farmers get the highest price for their produce at the Nairobi Coffee Exchange (NCE).
  • Mr Munya said this new pricing formula will also help stabilise coffee prices and minimise price fixing by unscrupulous traders who have been eating into farmers’ earnings for decades, pushing some to drop the cash crop altogether.

The price of coffee at the auction will be determined by the value of the local sales for the same grades to ensure that  farmers earn more from their produce, Agriculture Cabinet Secretary Peter Munya has said, marking a departure from the bids based system.

The move will see farmers get the highest price for their produce at the Nairobi Coffee Exchange (NCE).

Mr Munya said this new pricing formula will also help stabilise coffee prices and minimise price fixing by unscrupulous traders who have been eating into farmers’ earnings for decades, pushing some to drop the cash crop altogether.

The current coffee laws stipulate that prices should be based on the direct sales, a provision that has been in place since the introduction of direct sales at in the country in 2006.

“The farmer prices at the auction will be guided by the price that the coffee fetches in the international market,” said Mr Munya during a tour of central Kenya.

NCE has welcomed the move saying implementation of the directive will come as a win for both the auction and farmers.

“Its implementation will promote the auction as it will complement what is already there. It will also come as a win to farmers who will benefit from good prices,” said NCE chief executive officer Daniel Mbithi.

Mr Munya urged Parliament to expedite passing of the Coffee Bill 2020 to give reprieve to coffee farmers.

He also said that farmers will be given powers to choose factories that will process their coffee from a pool of three interested millers.

The bill also proposes farmers to have a representative at each coffee milling stage and buyer sourcing to ensure accountability in the whole coffee value chain.

Mr Munya urged farmers to tap into the cherry revolving fund to access cheap loans adding that Sh7 billion had so far been disbursed to revive the sector.

In 2019, the State announced it will issue farmers with cherry advance funds, which they can use to meet their financial needs as they wait for payment. Issuing of the funds has already started to coffee growers in the country.

Cherry advance levy was announced by President Uhuru Kenyatta and it is aimed at helping farmers to invest back in farming of the crop and meet other financial requirement as they wait for their returns from coffee cooperatives.