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Coffee stakeholders split over new industry regulations

The Government’s resolve to revive the coffee industry still faces hitches. Already, coffee value chain actors are divided over the new regulations that government is fast tracking.

A section of the players want government to drop the reforms and instead fast-track formulation of a coffee policy and an action plan on how to revive the industry while another group says the new coffee rules are overdue as the industry has been grappling with challenges which require urgent attention.

Government last week published and presented to stakeholders The Coffee (General) Regulations 2016 to implement proposals recommended by the National Task Force on Coffee Sub-sector Reforms appointed by President Uhuru Kenyatta last year.

Prof Joseph Kieyah, who led the task force, says the entire coffee value chain is highly abused mainly at the milling and marketing level at the expense of small-scale growers. The task force was required to review the entire coffee value chain and identify areas that require interventions such as production, processing and marketing of the bean.

“The taskforce recommends capacity building to support farmers in coffee husbandry to increase production, training of factory managers on processing and training of society board of management,” said Kieyah.

Key reforms to be implemented include strengthening and restructuring cooperative societies while Coffee Directorate and Cooperative growers will be required to present annual publications of milling tariffs and other charges before end of September every year.

Costs incurred by farmers while transporting coffee for milling will be reduced as movement permit to millers will be restricted within the nearest available mills and private miller licence be converted to grower miller licence. In addition to the same, government plans to introduce commercial pulping. But contentious proposals include establishment of a pricing committee that will determine coffee prices.

Membership of the committee will be drawn from the national and county governments and the Nairobi Coffee Exchange. Government has also proposed establishment of the Central Deposit Unit (CDU), a payment system that will handle all farmers’ proceeds, thus kicking out all the other players who handle the earnings.

Government argues implementing new reforms will help restore vibrancy in the industry by ensuring smallholder coffee farmers maximally benefit from their coffee while enhancing efficiency of the coffee value chain.

Farmers, cooperative officials, millers, marketers and dealers opine that government needs to fast-track formulation of a coffee policy and a clear roadmap to resuscitate the sub-sector.

“Due to abuse of governance systems in the coffee value chain, farmers have been reduced to just spectators,” said Kieyah adding that the raft of proposals developed seek to reorganise the value chain and ensure farmers play a bigger role in terms of coffee production, milling and marketing.

Last week Kieyah faced hostility from a section of stakeholders who opposed the rules and instead called for employment of a policy to guide drafting of new regulations.

He said private sector assistance to the farmers, though welcome, is highly abused by service providers. Millers and marketers have been advancing capital to smallholders to finance harvesting and buying farm inputs, money which is deducted after sale of coffee. This, Kieyah said, requires a comprehensive structure to protect growers from manipulation.

Millers and marketing association chairman Francis Mureithi says introducing commercial pulping is likely to encourage theft and smuggling of coffee. “This implies any interested person provided he has met the laid rules will set up a commercial pulping station in any coffee-growing area.

We expect death of cooperative societies as farmers are likely to start delivering their produce for crushing to the pulping stations,” said Mureithi. Kenya Coffee Traders Association vice chairman Dirk Sickmueller said current authorities charged with enforcement of regulations in the industry are averse to do so thus leading to low application of the rules. He said Kenya is lagging behind her peers in terms of production.

Uganda, for example, has increased its production by more than 25 per cent in the last 10 years owing to well-coordinated application of rules. Baricho Farmers’ Cooperative Society in Nyeri County chairman Wachira Mwago says introduction of a pricing agency and new payment system will lead to uncertainty in the industry.

Farmers, in support of the new rules, praised government’s renewed attention in the coffee industry saying they will be exposed to numerous beneficial opportunities. Adrian Atugi, an estate farmer in Meru County, says the current situation in the coffee industry requires injection of new ideas and goodwill from all participants.

Elias Kobia, 82, hit out at those opposing the rules saying they harbour sinister motives mainly to continue exploiting smallholders. Sarah Nyaga of the Kenya Coffee Producers Association said the pricing committee needs to have a slot for smallholders.

The pricing committee will determine prices based on research in the market and will comprise players along the value chain. “Introduction of the CDU is designed to lessen time taken to pay a farmer. It will operate like a bank similar to a system in the tea industry,” said Kieyah.

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