Coffee yields $89.5m in five months
By Nicholas.Waitathu, March 14, 2024
Coffee farmers received $89,496,179 (Sh12.4 billion) in the last five months of the 2023/24 crop year, through the Direct Settlement System (DSS), a new payment platform managed by the Cooperative Bank of Kenya.
Since its launch in October 2023, the DSS system has successfully settled 17.2 million kilogrammes, equivalent to 339,803 bags of coffee, totalling $89.5 million, as per data from the lender.
Lisper Ndung’u, the acting CEO of NCE, said farmers have been receiving payments through the DSS system after every sale of coffee, in line with regulatory stipulations.
New system
“Despite initial teething problems, the system is now functioning effectively, ensuring that farmers receive their proceeds on time as per regulations.” Ndung’u stated,
The DSS has introduced unprecedented price transparency at the coffee auction, allowing even rural societies to monitor their coffee being traded in real-time.
The NCE secretariat emphasizes that the DSS is the designated technology platform for all future coffee trading activities, in line with the new coffee trading regime supervised by the Capital Markets Authority (CMA). This technology is a key component of the coffee sub-sector reforms initiated by the Government since 2016.
Developed by the NCE, the DSS facility aims to streamline payment processes for farmers after every sale. Coopbank was appointed on August 8, 2023, to manage the system after outbidding other commercial banks.
In addition to the DSS implementation, other reforms in the coffee sector include the registration of new coffee brokerage companies by the CMA and the clear separation of functions between the national government and counties.
On the back of ongoing reforms, however, a global coffee miller announced plans to shut its operations in Kenya claiming that the government-backed reforms in the coffee sector continue to disrupt the industry.
NKG Coffee Mills Kenya, a member of Germany’s Neumann Kaffee Gruppe, said it will lay off staff, citing recent regulatory changes in the industry, after the implementation of the Coffee Regulations, 2019 and Capital Markets (Coffee Exchange) Regulations, 2020.