The government has written-off historical debts amounting to Ksh6.8 billion owed by coffee farmers nationwide, knocking down one of the many recommendations by the National Task Force on Coffee Sib-Sector Reforms.
A task force appointed in 2016 by President Uhuru Kenyatta noted many challenges in the Coffee sub-sector leading to a decline of coffee production from 130,000 Metric Tonnes to an average of 40,000 Metric Tonnes.
After meeting all the stakeholders in the coffee value chain, it organized its recommendations around 8 main pillars which looked into legal reforms, subsidy programme, establishment of coffee cherry advance payment scheme, institutional support, youth involvement in promotion, modernization of Nairobi Coffee Exchange, marketing and audit of debts and debt waivers.
The Prof. Joseph Kieyah led Task Force noted government committed in 2011 to waive loans owed by farmers to cooperative societies and unions amounting to KSh1.3 billion and Stabex Funds amounting to KSh. 1.7 billion. It also noted there are other debts owed to various financial institutions.
It recommended that the government honours its promise to waive debts owed to cooperative societies, unions and Cooperative Bank. “However, the true status of these debts is uncertain and, in some situations, financial institutions are still holding farmers’ collateral despite debt waiver and therefore a further audit of these debts should be done before payments are made. More so, audit of all debts owed by farmers to various institutions should be done,” noted the task force.
The government on Monday said it is targeting to enhance production of coffee to the 200,000 metric tonnes by 2027. In order to reach the target, it kicked off the implementation of part of the reforms with waiver of the farmers debts.
“To facilitate the settlement of the debts accrued by farmers, coffee co-operatives, saccos and other creditors are required to submit to the ministry of co-operatives, within 7 days, the list of all farmers who owe them money and with all supporting documents for verification and processing of payments,” the Cabinet said warning that any fraudulent and fictitious claims shall be dealt with in accordance with the law.
The cabinet called on Parliament to fast-track the enactment of governance reforms for cooperatives to establish institutional safeguards, including the requirement that the process of borrowing is only authorized by farmers during the annual general meetings.
“To further bolster the coffee production value chain, the new Kenya Planters’ Cooperative Union (KPCU) will undergo modernization in accordance with international best practices, modern eco-pulpers will be established in all emerging coffee growing areas for primary processing, enhancing efficiency and sustainability,” President William Ruto’s Cabinet said.
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