State to revoke licences of 'cartels' in coffee sector
Deputy President Rigathi Gachagua (centre) with Buuri MP Mugambi Rindikiri (left), governors Stephen Sang (Nandi), Kawira Mwangaza (Meru) and Kahiga Mutahi (Nyeri) at Three Steers Hotel in Meru County on June 9, 2023, where the DP is hosting the inaugural coffee conference.
The government will revoke the licences of marketers and millers alleged to be members of a cartel which exploits farmers in the coffee value chain.
In a culmination of statements by Deputy President Rigathi Gachagua that the government would deal with cartels in the coffee sector, Embu Governor Cecil Mbarire on Friday claimed that some companies were running a cartel and should be dealt with.
Ms Mbarire said the sector was dominated by three companies, which mill, market and buy through different company subsidiaries, manipulating prices.
"If we don't deal with these cartels, we're wasting time. I have named them, let us see what happens to me," she said during the ongoing Coffee Reforms Conference at Three Steers Hotel in Meru.
She claimed that the cartels bribe senior government officials as well as factory management to continue their corrupt practices.
“It’s about time we told them on the face that enough is enough. We cannot continue to cheat farmers yet the cartels ensure the cooperatives don’t work,” she said.
While responding to Governor Mbarire, Agriculture Cabinet Secretary Mithika Linturi vowed to revoke the licences of all marketers to allow fresh registration.
He said will fix the mess in the coffee value chain before laws are enacted to offer a lasting solution.
"As soon as we are back in office next week, I will start the process of revoking the licences and I don't care if they take me to court or not. I will deal with it as long as I have the powers as CS," said Mr Linturi.
Earlier, Mr Gachagua warned cartels, saying their days were numbered.
“Those who have been profiting from the sweat of the farmers should know that they have had enough. It is time for the farmers who toil on the farms to benefit from more than 90 per cent of the proceeds of coffee," Gachagua said.
The DP lamented that the merger of coffee cooperatives had dealt a heavy blow to the sector, saying the move had led to a waste of resources and left most of them heavily indebted. He said when societies merge into large organisations, they benefit from economies of scale.
Other CSs who addressed the conference were Moses Kuria (Trade) and Simon Chelugui (Cooperatives).
The governors from the coffee growing areas were led by the host Kawira Mwangaza, Stephen Sang (Nandi), Mutahi Kahiga (Nyeri), Paul Otuoma (Busia), Joshua Irungu (Laikipia) and Benjamin Cheboi (Baringo). Several senators and MPs were also present.
One of Mr Chelugui's recommendations, based on the Colombian coffee model, was that farmers should be paid promptly after the coffee is delivered.
The CS also said there was need for a strong financial infrastructure to support payments to farmers, as well as a price stabilisation fund to cushion farmers from market shocks.
"While coffee is sold in dollars, farmers are paid in Kenyan shillings. We should consider reversing this and ensure that the farmer is paid within 30 or 45 days. We also need a robust coffee research and development programme like in Colombia," said CS Chelugui.
"We need to find ways of funding the Coffee Research Institute and increase the number of extension workers. We found out that Colombian coffee farmers are supported by 1,500 extension officers," he said.
Mr Chelugui also cited the need to strengthen farmer institutions, including exemptions for coffee mills, the dissolution of the New KPCU and the restructuring of the Nairobi Coffee Exchange.
"Currently, there is no representative of the government and the farmer at the Nairobi Coffee Exchange. There's need for reforms to allow for proper price discovery," the CS said. He also called for the restructuring of the Coffee Board of Kenya to include all stakeholders in the value chain.
On coffee marketing, Mr Joshua Kariuki, managing director of Nyeri-based Kilele Coffee Limited, said farmers were excited that the government was taking the problems of coffee farmers seriously. He said little was being done to market the produce.
"If trade attaches in foreign markets were given the responsibility of marketing our brand, we would be talking about the Kenyan farmer being the biggest earner in the world," Mr Kaiuki said.
Mr Charles Mutwiri, one of the leading coffee farmers in Meru, said to fix the coffee sub-sector, the government needed to prioritise production, revitalise factories and address marketing gaps.
"Although we don't have much representation from the farmers, they have raised some of the issues affecting coffee. I hope the recommendations made here will be implemented," said Mr Mutwiri.
He said there was need to provide agronomists and subsidised inputs to lower the cost of production.
"We cannot talk about the market when our production is poor in quality and quantity. It is possible to increase production per tree from the current two kilos to 100 KGS if there are agronomists on the ground. With quality coffee and a fixed marketing model, farmers will have money," he said.
Mr Mutwiri suggests opening up the Nairobi Coffee Exchange to farmers and increasing trading days to three.
"Our problem is that a few buyers can meet at the auction and fix prices for the next trading day. We need to adopt the Ethiopian marketing model where the farmer has a say in the price of his produce," Mr Mutwiri said.
He proposed a minimum guaranteed return of about Sh48,850 (USD350) per bag of coffee to end price uncertainty among farmers.
The conference, which ends on Saturday, is expected to come up with recommendations that will be fine-tuned into a bill that will be presented to Parliament for debate and enactment.
