As the Kenyan government dilly-dallies on what to do with dwindling coffee returns to farmers, Parliament has received a private member’s Bill that might set the minimum price guarantee for both tea and coffee — if passed into law.
The Bill might also allow coffee farmers to sell their produce at the farm gate to societies — rather than wait for payments after milling and selling of the processed beans. The Bill, by Kiharu MP Irungu Kang’ata, comes in the wake of an exposé by the Nation on the woes the coffee sector is facing and seeks to shield the farmers from unscrupulous brokers who have been rigging the market prices.
“The intention is to have a price guarantee that will motivate farmers to continue tending the crops. This is the only way we can rescue the sector,” Mr Kang’ata told the Nation.
“It will also revolutionise the coffee sector given that farmers will get their pay upon delivery.” The Bill seeks to have a fund that will be used to pay the farmers in case the international prices collapse below the guaranteed minimum returns. “The proposed amendment will provide incentives to the coffee and tea farmers so as to boost their production and in turn increase their returns,” says part of the bill.
Farmers in Nyeri have already given the government an ultimatum to come up with a coffee rescue plan and are planning a meeting in Murang’a to address problems bedevilling the sector.
Also, Nyeri MPs asked President Kenyatta to urgently intervene and stop cartels that have stymied the sector. Mukurwe-ini’s Kabando wa Kabando complained coffee networks have to penetrate Parliament and “compromised” investigations.
The new Bill also seeks to give the Agriculture Fisheries Food Authority powers to formulate general and specific policies and to facilitate marketing and distribution of scheduled crops that include tea, coffee and sugar. It will also collect market intelligence on both local and overseas markets.
If passed, the new rules will change the age-old management of the coffee sector where farmers wait for their pay after coffee has gone through the various marketing processes, including milling and auction. It might also introduce new players in the market and create new roles for co-operatives which receive the cherry from farmers.
“Like in the milk sector, co-operatives will be receiving and paying farmers on delivery. Anyone interested in the cherry can buy and mill,” Mr Kang’ata told the Nation. “Farmers will no longer have to worry about theft of their coffee or where it is sold and at what price. The price will be set in advance.”
In order to guarantee maximum returns to the farmer, the Bill seeks to promote the establishment of wholesale markets in identified major centres and agricultural produce collection centres “to serve as“ buying stations of farm products, packaging houses, pick-up points and meeting places of farmers’ and growers cooperatives.”
“My research shows guaranteed minimum returns has been applied elsewhere, for example, in the USA, poultry products benefit from the scheme. In Kenya, this will entail the government guaranteeing farmers before the planting season that they will be paid their produce at a certain price notwithstanding the market price,” says Mr Kang’ata.
“Where prices go below that set price, the government pays the farmers the deficit. Thus, the government shoulders all market inefficiencies and the attendant corruption in the value chain as exposed by the Nation newspaper.”
The Nation exposed how an age-old conspiracy between regulators, traders and brokers, has over the years deliberately kept coffee prices down – even as our top grade Arabica coffee continued to fetch premium prices at the international market. It also exposed the price-rigging that happens in the value chain and how the previous Coffee Act was used to frustrate farmers while entrenching cartels within the coffee chain.
The current structure gives farmers little say on their coffee - and immediately they pick it and deliver the cherry, they fall at the mercy of cartels which works together with the Coffee Directorate, formerly the Coffee Board – the regulator of the industry.
Credit: Nation Media Kenya