The Ministry of Cooperative will disburse the coffee cherry fund before the end of the year after receiving half of the required amount from the Treasury.
Cooperative PS Ali Noor Ismail said the State is finalising the regulations guiding the funds.
The PS said the department has received Sh1.5 billion of the proposed Sh3 billion with the rest expected once the distribution has started.
Mr Noor said auditing of co-operatives, which is one of the prerequisites for disbursement of funds, is almost ending.
“The distribution of funds will start shortly after we have finalised on the regulations, we expect the exercise to commence before the end of the year,” he said.
Cherry advance levy was announced by President Kenyatta last March and is aimed at helping farmers meet financial obligations after harvesting crop.
Normally, farmers harvest and sell crop through co-operatives and have to wait for more than a month before payment.
But the cash injection will change this. The government will later recover the funds after farmers sell the produce by deducting the amount advanced plus a three percent interest rate.
These reforms are designed to boost production, reduce the cost of processing and milling as well as transaction expenses at the auction market.
Kenya’s production has significantly dropped compared with peers in the region with Uganda, which was at par with the country in the previous years now widening the gap.
Since the early 1990s to 2010/11 crop year, the 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.