State to clear Sh6.8bn coffee debts next financial year - PS Kilemi

Co-operatives Principal Secretary Patrick Kilemi addressing coffee farmers at Ihura stadium in Murang'a town.

The government plans to waive all debts incurred by coffee farmers in the next financial year, Co-operatives Principal Secretary Patrick Kilemi has said.

The government started the process of verifying the debts incurred by coffee cooperative societies early last year.

Out of the Sh10 billion that farmers claimed to owe, a verification committee was able to establish Sh6.8 billion and Sh2 billion included in the 2024-2025 budget.

But Kilemi noted that the funds presented issues in how they would be disbursed among the numerous coffee co-operative societies.

“But now the President has assured us that all the ShSh6.8 billion required will be allocated in the 2025-2026 budget to clear all these debts,” he said.

The debts accrue when coffee co-operative societies acquire loans but are unable to repay them to various reasons, including meager payments.

Others suffer coffee thefts that cause the co-operatives to make losses, making them unable to service the loans, and paying farmers dismally as the loans continue accruing penalties due to non-payment.

The loans then eat into farmers’ returns as a percentage of the earnings is cut and used to service them for many years, making their ventures unprofitable.

The PS spoke at Ihura stadium on Friday during a meeting with coffee farmers. He assured them that plans would be made to ensure they receive fertilisers and other agro-inputs in their co-operatives.

The farmers led by the chairperson of Murang’a Coffee Co-operative Union chairperson Francis Ngone had complained that they have been missing out on the subsidised fertilisers because the depots where they are supposed to pick them from are too far away from their farms.

Ngone appealed to the government to make plans to have the inputs distributed to coffee farmers through New KPCU.

“We are yet to benefit from the subsidised fertilisers. The structures that the National Cereals and Produce Board (NCPB) do not favour coffee farmers. We want New KPCU to take over this role because it has the necessary structures,” Ngone said.

Coffee farmers from Murang'a county during a meeting at Ihura Stadium in Murang'a town.

Coffee societies, Ngone added, have no issues paying for the coffee through the Direct Settlement System that is used to sell coffee and pay farmers.

The PS said a team of government officials will meet leaders from Murang’a coffee co-operatives to discuss how this can be facilitated to reprieve the farmers.

The PS further said the government has set aside Sh500 million to establish nurseries through the Coffee Research Institute which will in turn help farmers to transition from older varieties of coffee to new ones.

He said most coffee farmers have old coffee bushes that no longer produce optimally, reducing their earnings.

He noted that the average farmer in Murang’a county produces two kilograms of coffee per bush but that they need to produce seven kilograms to make good returns.

“Research shows that the average age of our coffee bushes is 20 years. We need to keep uprooting the older bushes and planting new ones that have a higher productivity,” he said.

The PS further pointed out that the country’s coffee production that stood at 50,000 metric tonnes last year is lagging far behind neighbouring countries such Uganda that had 400,000 metric tonnes and Ethiopia with 720,000 metric tonnes.

Globally,  coffee  is one of the biggest sectors with a worth of $900 billion yet Kenyan coffee farmers earned Sh33 billion only in 2023.

Kilemi said coffee has the potential to do much better than the tea sector with proper crop husbandry, explaining that with just one acre, a coffee farmer can make up to Sh1 million if they increased their yields to 20kg per bush.

The PS made an appeal to farmers to ensure they elect youthful leaders with integrity to lead their factories and coffee co-operative societies.

He noted that 80 per cent of the coffee produced in the country is sold by small-scale farmers through the co-operatives that are burdened with poor governance and corruption.

“We elect youthful political leaders but when it comes to our coffee societies’ elections, I don’t know what happens. You elect an old man in slippers and in two years, they are driving a guzzler and own the biggest rental buildings in the area,” he said.

Kilemi said the ministry is mulling introducing a term limit for leadership positions in the co-operatives and urged farmers to give their views on the matter.