Co-operatives reject State plan for direct payment to farmers

By , May 23, 2025

Co-operative societies have rejected plans by the government to pay coffee farmers directly saying focus should be on increasing production in the country.

Leaders in the sector instead want the government to allocate more resources towards supporting farmers through their respective cooperative societies or unions.

This comes at a time when the cooperative societies are at loggerheads with the government over plans to pay coffee proceeds directly to the farmers under the Direct Settlement System (DSS) scheme.

Currently, cooperatives receive dollar proceeds into aggregator accounts and negotiate competitive exchange rates, ensuring better value for their members. This proposed change would disrupt this model entirely.

The Nairobi Coffee Exchange (NCE) proposes a regulatory change that would strip farmers and their cooperative societies of the ability to manage dollar proceeds directly.

Under the proposal, export earnings from coffee—currently transacted in US Dollars—would be converted to Kenya shillings, with payments disbursed via mobile money payments or through a centralised banking platform under the DSS.

Coffee societies leaders however argue that attention should be on ensuring farmers have access to subsidized fertiliser and other farm inputs including chemicals and quality seedlings noting that this will put Kenya in the global map as one of the giant coffee producers.

In August 2023, the government introduced the DSS, and the Co-operatives ministry followed this with a directive in November saying that the system will take effect this year.

However, the co-operative societies maintain that by-passing them will render them insignificant and ultimately kill the co-operative movement, noting that they play a key role in collecting and marketing farmers’ produce.

During a meeting of societies leaders convened by the Murang’a Farmers Cooperative Union chaired by Francis Ngone, they asserted that adequate and inclusive public participation must be undertaken before implementing any system of direct payment to farmers.

 “A decision to by-pass us when it comes to payments is tantamount to leaving the farmers to operate on their own,” Ngone stated.

Similar sentiments were echoed by Godfrey Kanyiri Mwangi, the Chairman Kahuhia Farmers Co-operative Society who said that centralising sale and disbursement will impoverish coffee farmers in the country as they will eke meagre earnings from their hard work.

“This plan by the Government has been rejected by the farmers we represent because it undermines the spirit of co-operatives, a system that has been built over the decades and has been successful all through.  It is a plan that will weaken financial autonomy of grassroots farmers’ groups,” he said, adding that the plan will collapse farmer societies and cripple aggregators’ capacity to maintain quality.

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