All eyes on Gachagua as he battles coffee 'cartels'

All eyes are on Deputy President Rigathi Gachagua to make good on his promise to end the reign of cartels and improve farmers' incomes in the coffee sub-sector.

The Deputy President, who is hosting a three-day coffee conference in Meru from Thursday, has vowed to flush out cartels from the coffee value chain, blaming them for impoverishing farmers.

"The President has asked me to eliminate about 17 middlemen who stand between the coffee farmer and the market. This will free up a lot of money that will go into the pockets of the farmers," Mr Gachagua said.

Although the previous government spearheaded the coffee reforms that led to the introduction of the 2019 Coffee Regulations, it has been accused of circumventing the law to enable the very players accused of exploiting farmers.

Players in the coffee sub-sector agree that the cartel is most active and vicious at the marketing level, empowered by laws that impoverish farmers. They hope the conference will put an end to this.

According to Mr Duncan Marete, the chief executive of the Meru County Coffee Millers Cooperative Union, the failure to enforce the Coffee Regulations 2019 to allow the Capital Markets Authority (CMA) to license coffee marketers is indicative of sabotage by the cartel.

"The essence of this regulation was to allow new players in coffee marketing and to allow price discovery. It was meant to end the tradition of the miller acting as both broker and marketer," says Mr Marete.

He notes that the law has been drafted in a way that excludes new markets, including the requirement of a Sh1 billion bank guarantee to obtain a marketing licence.

"We also wonder why the Nairobi Coffee Exchange will only operate for one day and take a break. When the auction is about to go on recess, it encourages panic selling and buyers can offer any price at that time. The auction should be open as long as there is coffee to sell," he says.

Mr Charles Mutwiri, an estate farmer who has been promoting coffee farming among the youth, cites the auction as the source of farmers' woes.

"The current system is skewed in a way that makes it too difficult for coffee farmers to make money. The auction model breeds cartels in the coffee sub-sector. The farmer must be allowed to determine the price of his produce," said Mr Mutwiri, who is also a director of the new Kenya Planters Cooperative Union (KPCU).

He suggests that a minimum guaranteed return of Sh48,850 (USD350) per bag of coffee should be set to end price uncertainty among farmers.

Coffee farmer

Ms Judith Kagwiria, a coffee farmer, admits that coffee marketing is so shrouded in mystery that a farmer doesn't know what price to expect.

"Coffee prices are mysterious and unpredictable. Even though I put money into growing the crop, I don't know what I will get for it. This needs to be addressed," she says.

According to Mr Joseph Kiogora, the chairman of the Meru Central Coffee Cooperative Union (MCCCU), the cartel is so strong and vicious that it is sabotaging government agencies.

"For example, we have had cases of coffee theft for a long time, but no suspect has ever been arrested.  The Coffee Act has been designed to allow the cartels to flourish and impoverish farmers," he says.

Mr Kiogora claims that even the direct sale option is sabotaged by the cartels, who do not want the farmer to earn a premium.

"Last year we had a coffee buyer from South Korea, but because Meru could not supply the bulk, we referred him to the Kipkelion District Cooperative Union. The buyer faced too many cartel barriers and almost gave up on the deal.

Later, Kipkelion was able to sell and pay the farmers Sh125 per kilo. The cartels can only be stopped by the good will of the government," says Mr Kiogora.

Ms Eva Muthuri, a coffee marketer who promotes women and youth farmers at Kathera Society, admits that empowering farmers to market their own coffee would be a game changer.

"The new generation of coffee farmers may not want to be members of a cooperative. The direct market should be opened up to enable farmers to form linkages and ship their produce," says Ms Muthuri.

Mr Sammy Wachieni, the CEO of Crowd Farm Africa, an agricultural consultancy and marketing company, says the cartel in coffee is strengthened by ineffective cooperative management.

"Our cooperative management model should be reviewed because their decisions make or break coffee farming. At the auction, 80 per cent of the coffee is bought by three foreign exporters. There is also a need to empower more local coffee exporters," says Mr Wachieni.

While fixing the end of the value chain, stakeholders agree on the need to fix the cost of production, quality and quantity of coffee produced by each farmer.

This, they recommend, can be done by providing extension services through district governments, subsidising inputs and rehabilitating coffee factories.

"Make extension services available to farmers, reduce production costs and make systems effective. With low production per tree and small farms, many farmers operate at a loss. A farmer can only make a profit with a production of five kilos per tree," says Mr Wachieni.

His views are supported by Mr Mutwiri, who says it is possible for Kenyan farmers to produce up to 100 kilos of coffee per tree.

"We need to prioritise coffee production by providing agronomists and experts to farmers. I work with the youth and I have been able to demonstrate that a quarter of an acre of coffee can earn more than Sh500,000 a year," says Mr Mutwiri.

Ms Muthuri says there should be a new focus on coffee research to address the production challenges posed by climate change.

"By involving women and youth in coffee farming at Kathera Coffee Society, we have increased production from 200,000 kilos to 500,000 kilos. The quality of the coffee in the cup is determined by the soil and the management of the crop," says Ms Muthuri.

According to Ms Kagwiria, the inability of smallholder farmers to access inputs equitably affects the income of those who produce quality cherries.

"If we are to make money as smallholder farmers, the production model should be uniform. That means uniform application of manure, fertiliser, chemicals and pruning."

"But if a farmer cannot afford the fertiliser, it breaks the uniformity of production and ultimately the quality and quantity of our produce," says Ms Kagwiria.

Mr Kiogora, the MCCCU CEO, says deliberate government bureaucracy continues to deny coffee farmers access to subsidised fertiliser, which affects production costs.

He says the lack of government extension officers has given rise to private agronomists whose interest is to push products on the farmer rather than increase production at lower cost.