Boost to coffee farmers as Kenya enters agreement with Colombia on value chain

Kenya and Colombia have entered an agreement on technical cooperation on coffee value chain engagement.
Speaking during a meeting with delegates from Colombia, Co-operatives Cabinet Secretary Simon Chelugui stated that co-operatives play pivotal role in shaping economies within the micro, small,and medium enterprise landscape.
“Your presence here exemplifies your unwavering commitment to peer-to-
peer partnership and the dissemination of best practices,” he stated.
He noted that coffee plays a key role in enhancing the livelihoods of smallholder
farmers in Kenya.
According to the CS, over 70 percent of coffee production in Kenya is carried out by the smallholders, who are organized into cooperatives.
With a staggering 28,000 registered cooperatives and a membership
surpassing 14 million, the cooperative movement stands as a bedrock of
empowerment for countless individuals at the grassroots level in Kenya.
The CS noted its resilience and inclusivity resonate deeply with the overarching objectives of government’s transformative agenda.
“Despite the myriad challenges facing our coffee industry, including fluctuating international prices and climatic uncertainties, Kenya’s coffee continues to uphold its esteemed reputation for unparalleled quality on the global stage,” he said.
In response to these challenges, the CS revealed that the government is implementing a raft of reforms aimed at improving coffee farmers incomes and thereby fostering rural prosperity and bolstering foreign exchange earnings.
He added that the Bottom-up Economic Transformation Agenda (BETA)
envisions a productive coffee subsector hence committed to increase coffee production from the current annual production from 51,000 metric tons to 200,000 metric tons by 2027.
Though in the 1980s coffee was the leading foreign exchange earner for the
country, the production of coffee deteriorated from a peak of 130,000
tons in 1983/1984 to a low level of 34,000 tons in 2020.
This even as Kenyan coffee enjoys global recognition for its high-quality attributes and attracts high premium prices.
Chelugui noted that paradoxically, farmers continue to get disproportionate returns.
“It is against this background that the coffee farmers across the country
made appeals to the Government for interventions and reforms to resuscitate the sector by addressing issues affecting research, extension services, production, processing, marketing, and financing of the coffee chain,” he said.
The Coffee Subsector Reforms Initiative
Under the Executive Order No.1 of 2023, the coffee reforms were prioritized as a key deliverable of government.
The reforms have been spearheaded at the highest level of government and key activities have included convening the first national coffee stakeholders’ conference in Meru in June 2023 that identified the bottlenecks which were summarized into key thematic areas.
The thematic areas pointed to the following challenges: low Production
& Productivity, inadequate Research & Technology Transfer to the value chain, Regulatory bottlenecks, weak linkages to coffee Markets, lack of a national coffee marketing strategy, lack of affordable
financing, quality Management and Institutional Reforms.
Subsequent to the Meru Conference, a roadmap was developed to address the identified challenges.
The following action actions have so
far been undertaken:
a) Sensitization of members of the National Assembly and Senate with a
view to fast tracking coffee and Cooperatives legislations.
b) Establishing a coordinated approach towards licensing of coffee value
chain players by the three licensing authorities, namely County Governments, Capital Markets Authority and Agriculture & Food Authority.
This was done to eliminate issuance of multiple licenses to stem conflict of interest and collusion.
c) Re-opening the Nairobi Coffee Exchange on 15th August 2023 by H.E
The Deputy President of the Republic of Kenya.
d) Coffee farmers through their coffee brokerage companies owned by
the cooperative unions for the first time accessed the Nairobi Coffee Exchange trading floor without going through other intermediaries.
e) The Nairobi Coffee Exchange onboarded the DSS provider and
operationalized the Direct Settlement System (DSS).
This has shortened the payment period to farmers, enhanced transparency &
accountability and increased financial inclusion by eliminating the USD 1 million bank guarantee requirement for coffee brokers to participate in the auction.
f) The Nairobi Coffee Exchange submitted the new NCE trading rules
aligned to the Capital Markets (Coffee Exchange) Regulations, 2020 and The Crops (Coffee) (General) Regulations, 2019. The new NCE Trading rules were approved by the Capital Markets Authority and adopted by the NCE and are now in operation.
g) The Cooperatives Bill 2023 has since been approved by the Cabinet
and submitted to Parliament.
h) On marketing efforts, the Kenya diplomatic mission delegation led
by the CS Ministry of Cooperatives & MSMEs in Belgium, Netherlands and Germany organized for coffee and tea cupping sessions, visits to meet coffee roasters, coffee shops and warehouses.
i) A delegation led by H.E The Deputy President of the Republic of
Kenya attended the World Coffee Roasters Forum in Colombia to
learn global best practices in production and marketing of coffee and
address the forum.
j) To enhance access to affordable financing by coffee farmers, the cabinet approved an additional Kes 4 Billion for Coffee Cherry Advance Revolving Fund.
The fund will improve the advances to
coffee farmers from the current Kes 20 per Kg to up to Kes 80 per Kg.
The CS revealed that although notable progress has been made under the reform initiative, there remain substantial ground to be covered towards realization of the intended benefits to the coffee farmers.
The following are the key outstanding issues in the reforms roadmap;
• Restructuring and modernization of the Nairobi Coffee Exchange to fully
align it to the coffee regulations.
Urgent areas requiring an extraordinary
intervention is establishment of a cupping lab
• On New KPCU, a number of pending interventions need to fast-track:
Completion of the liquidation process, refurbishment of the milling
plant, cupping lab and warehouses.
• Fastrack the approval of the Coffee Sessional Paper 2023 and enactment
of the Coffee Bill 2023 and Cooperatives Bill, 2023.
• Review and approve The National Coffee Development and Marketing
Strategy that was developed by the Coffee Subsector Reforms Implementation Standing committee.
• Anchoring coffee inputs Subsidy initiative under New KPCU to improve
accessibility and to strengthen the Co-operatives institutions and
Monitoring and Evaluation of the subsidy.
• Upgrading of the coffee quality lab at AFA Coffee Directorate to enable
testing and determination of the Maximum Residue Levels (MRLs) to
minimize the risk of rejection of Kenya coffee in the global markets.
Chelugui noted that during recent visit to Colombia country, delegation from gained valuable insights into coffee husbandry and marketing practices.
“We eagerly anticipate enhanced collaboration with Colombia particularly in the realms of coffee research, production, and value addition. As we gaze towards the horizon, our commitment remains unwavering in
further modernizing and refining the coffee sector, alongside invigorating
other pivotal value chains and fortifying regulatory frameworks,” said Chelugui.
He called on delegation from Colombia to embrace the unity in this journey of innovation and cooperation, cognizant of the profound impact it holds for the two nations and the broader global coffee
community.

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