The fruits of coffee reforms have started yielding results, Deputy President Rigathi Gachagua says.
Gachagua said the State backed reforms have seen successful implementation of separation of licences for milling, brokerage/marketing and buying of coffee which he said has removed the long-standing conflict of interest among players in the coffee sub-sector.

Gachagua noted that although the move attracted opposition from ‘actors in the sector’ the decision by the government to stay put later saw the players trooping back to the Nairobi Coffee Exchange (NCE).

“Some major players in the sector who had been benefitting from overlaps boycotted the auctions resulting in depressed prices at the Nairobi Coffee Exchange and noticeable low volume of coffee offered by farmers for sale at the auction only to later troop back,” he said.

Nairobi Coffee Exchange provisional results showed the produce sold increased to Sh824 million compared to Sh54.8 million recorded five months ago when the auction was reopened.

The results further indicated that the average prices increased to $194.22 (Sh29, 909.88) compared to $186.55 (Sh28, 728.70). The number of bags traded increased to 23,167, the highest ever since the auction was reopened on August 15, after a three-month recess.

According to the report the value of coffee increased to Sh824 million this week compared to Sh54.8 million recorded on August 15, 2023 accounting for a 1,403 per cent increase when the auction was reopened after a three-month recess.

The change of payment model to the Direct Settlement System (DSS), Gachagua noted, has improved the transparency to the farmers who he said are now involved in the coffee value chain unlike before when the whole system had been operated opaquely.

The Deputy President who was tasked by President William Ruto to oversee the coffee sub-sector reforms said with the Cabinet approval of additional Sh4 billion to New KPCU to enhance the Coffee Cherry Advance Revolving Fund, the coffee advance payment rates will shoot from Sh20 currently to Sh80 per kilo and a new operations advance of Sh5 per kg of cherry-to cooperative societies.

Guaranteed returns

He explained that the advance payment would be staggered in two phases where Sh40 per kilo will be paid at the factory once farmers deliver their cherry while the second payment will be done at dry mill level once parchment is delivered and quality determined.

“This is the realisation of our campaign pledge of Guaranteed Returns Prices even as we continue reforming the sector so that our farmers can have money in their pockets from years of exploitation,” Gachagua noted.

He said the Kenya Kwanza administration has also managed to look for a market for the coffee produce in what he said will market the Kenyan coffee to the world as opposed to the produce being used to mix with other varieties.

“Our Kenyan coffee produce is rated as specialty coffee but is usually mixed with other low grades and hence fetch lower prices, other than looking for direct markets, we have also agreed to open warehouses and sell our coffee to various coffee buying countries,” Gachagua added.

He disclosed talks were in advanced stage with Belgium, Dubai and Germany other countries to open warehouses where small coffee roasters will be bidding for the Kenyan produce and in turn give Kenyan farmers better pay through the direct sale system.

He noted that the State would facilitate the whole process in the pilot stages and when things run smoothly and structures established, the coffee societies through the New KPCU will be left to run the program saying by January 15 next year a payment system between the international and local warehouses will have been finalised.