Auditing of more than 500 coffee societies has begun in readiness for distribution of the Sh3 billion cherry advance to farmers.
The State Department of Cooperatives in radical reforms will see the cooperative societies audited on debt levels and insolvency status before they are issued with the funds.
Cooperatives Principal Secretary Ali Noor Ismail says the work is on following the coming into effect of the July 1 order for the soft financing announced by President Uhuru Kenyatta.
“Over 70 percent of the farmers are aggregated in cooperative societies and that is why we are auditing these entities so that we can use them in distributing the funds,” said Mr Noor.
The PS said the money, at three percent interest, was reflected in this year’s budget and farmers will get it as soon as the process is completed.
The PS will be meeting with the implementation committee on coffee reforms and officials from the department of crops today to draw a plan on the exercise.
Cherry advance levy was announced last March and it is aimed at helping farmers to meet financial obligations after harvesting.
Normally, a farmer harvests and sells crop through co-operatives but has to wait for more than a month for payment.
The government will recover the funds by deducting the amount advance plus a three percent interest rate.
The government says all coffee co-operatives will be required to present audited annual reports to the Agriculture Cabinet Secretary within six months of every calendar year.
The government plans to revamp 500 pulping factories in 31 coffee-growing counties and pump more resources for research and extension services.
The reforms are designed to boost production, reduce the cost of processing and milling as well as transaction costs at the auction market.
Kenya’s production has significantly dropped compared with regional peers like Uganda.
Since early 1990s to 2010/11 crop year, area under coffee has declined by 35 percent from 170,000 hectares to 109, 795 hectares as farmers abandoned the crop due to poor management.