Coffee sector regulator has embarked on a plan that will pay farmers monthly for bean deliveries instead of the current six-month cycle that has left many producers struggling to meet their financial obligations.
The Coffee Directorate on Wednesday said it was partnering with Co-operative Bank #ticker:COOP and the Meru County government in the pilot phase of the programme that, if successful, will be extended to coffee farmers countrywide.
“We are piloting the programme in Meru before rollout in other coffee growing regions. Paying farmers part of their earnings on a monthly basis should help minimise the pain they go through with the current delays,” said Grenville Kiplimo Melli, head of the directorate.
The monthly payments are part of the total amounts due to each farmer for a season’s deliveries, and are being computed using past delivery records and reconciled with actual deliveries at the end of the season before final payments are made.
Mr Melli said the aim is to break the current cycle that only pays farmers after their produce is sold.
Under the programme, which starts with the April crop, Co-operative Bank will finance farmers unions with county governments acting as guarantors and recover its money from the sales proceeds.
The bank acknowledged that it is working with the directorate, but did not disclose interest charged on the funds. Final payments will be made once the crop has been sold at the auction.
Regular payment is the latest attempt to woo farmers back to coffee growing after many years of disillusionment arising from mismanagement of the sector and the resulting late payments.
Kenya’s coffee output dropped from about 200,000 tonnes a year in early 1980s to an average of 40,000 tonnes currently as disgruntled farmers uprooted the crop in favour of other economic activities. The directorate estimates that this year’s total output will rise to 55,000 tonnes this year a 15,000 tonnes rise from last year’s 40,000 tonnes.
Mr Melli was speaking at a coffee workshop organised by African Fine Coffees Association (AFCA) in Nairobi. AFCA executive director Samuel Kamau said low youth involvement is partly to blame for poor performance of coffee as a cash crop in Kenya.
“The system does not support inclusion of the youth in agriculture and their absence has subsequently led to continuous decline of output,” said Mr Kamau.
“To correct the situation we must adopt modern technology in the sector to attract the youth,” he added. Kenya’s coffee continues to fetch premium price in the world market, making it the most valued beverage at the New York Exchange, which is the world’s largest auction for the commodity.
Kenya’s Arabica, which is highly sought by roasters for blending with other coffees, fetched $330 for a 50 kilo bag in last week’s trading with Indonesian produce coming in second at $259 for a 50 kg bag.
Despite Kenya’s coffee being in high demand in world markets, the country only accounts for 0.5 per cent of the total global output.