Coffee farmers in Meru County will start being paid upon delivery of cherries next week in a project expected to turn around the ailing sub-sector.
Growers will be paid Sh20 a kilogramme with the balance paid after the commodity is milled and sold.
The Co-operative Bank #ticker:COOP has loaned coffee societies Sh200 million as initial capital to enable them pay farmers for delivered cherries.
Co-op Bank managing director Gideon Muriuki said the money will be repaid at a concessionary interest rate with the facility set to be increased based on the volume of coffee.
“When we set out to implement this model, my worry was how the money was going to reach the farmer without being misappropriated. But when we studied the system of disbursement of funds, we were convinced that it is watertight, the reason we have made this commitment,” Muriuki said.
The project, adopted from Ethiopia, is being piloted in Meru County and will be replicated in other coffee-growing areas once successful.
Mr Muriuki spoke when the county launched the initiative at Heritage Hotel in Nkubu on Wednesday in a forum attended by farmers and officials of sacco societies from a cross section of the economy.
To ensure that farmers get their money intact, it will be wired from the bank to their sacco accounts. There are 47 sacco societies under the Meru Coffee Co-operative Union, with a membership of over 80,000 farmers.
“This project is important for Kenya and I have no doubt that if it works in Meru, other counties will replicate it for the benefit of the farmers. I am also sure that the national government is eager to see how it is implemented,” Muriuki said.
The lender’s subsidiary Co-op Consultancy Services will provide advisory services to saccos to ensure the project is properly implemented, he said.
Governor Kiraitu Murungi warned cartels in the coffee sector, saying they had no chance of stopping the route to liberation of farmers.